Speech

Concluding Remarks by IMF Managing Director Christine Lagarde

Amman, Jordan
May 12, 2014

AS PREPAPRED FOR DELIVERY

I am inspired by the energy and positive spirit of all of you who have participated in this conference. Your exchanges have moved forward the agenda on how to build the futures of the Arab Countries in Transition, with strong growth, good jobs, and fairness

You generated a multitude of great ideas in the two plenary sessions and yesterday’s workshops. These ideas show concrete ways of moving forward toward a better future. I cannot do justice to the richness of the ideas generated here, but I liked in particular the following:

On macroeconomic policies, I was impressed by the deep sense among most of you that in each country a strong and shared vision is needed to guide the economic future. Together with strong and effective leadership, such visions are needed to master the multiple challenges and bring about strong buy-in among societies to create jobs and raise living standards. I also agree that it is very important to improve the composition of government spending to achieve more fairness, more efficiency, and ultimately more inclusive growth. In this context, I strongly concur with you that there is a need to find resources to boost public investment. Let me say as well that I was very happy to hear the strong voices —which were not as prominent earlier—that called for building strong and targeted safety nets and for phasing out expensive and inefficient generalized subsidies. I have no doubt that these reforms will be difficult. But I am confident that they can be achieved if explained well and done gradually.

On transparency and governance, most of us share the view that this is an area where the region has to improve significantly to establish more accountability of the state vis-à-vis its citizens, but also to attract investors and build credibility around the direction of the economic transitions. I am encouraged that many of you see strengthening the judicial system as a priority to improve the enforcement of rules. In addition, more transparency and better governance in both the public and the private sector will depend on developing a strong civil society, including legitimate better representation of youth and women. I am confident that important progress can be made—some changes will take time, but many steps are available for quick implementation that do not represent insurmountable hurdles—like making budget information and company data available online so that all voices can be heard as a key step to establish more accountability, and investors can make more informed decisions. Let me be clear here: sustainable development will not be possible without phasing out corruption and the rent seekers’ economy.

We also widely agreed that creating more employment for the youth is of paramount importance and acknowledged that this requires a comprehensive approach that involves reforms in many areas, including redefining the role of the state away from being an employer to becoming an enabler for a dynamic private sector, creating education systems that provide bridges to productive employment, designing labor market regulations that protect workers without unduly constraining employers, and establishing a business climate conducive to greater competitiveness. I am also very encouraged by having seen strong buy-in over the past two days for the need for doing much more to empower women. Reforms in all these areas will take time, but we have to start the process now. In the short run, and if sufficient additional external financing can be mobilized, scaling up public investment could make an important and visible contribution to reducing unemployment.

Finally, there is much to do to improve the business climate and move from a system of privileged access and rents to a system of competition. There was very strong support among you for this agenda. Making progress involves streamlining regulations for setting up firms, improving access to credit, and putting in place insolvency frameworks that are less punitive and encourage more entrepreneurship. With so many projects initiated across the region, there seems to be significant opportunity for learning from each other.

As we leave Amman, we have to scale up what many governments are already doing, and do so in a big way and with urgency. The challenges in the region don’t allow for complacency.

I hope that we together can assess progress with your goals periodically.

In the meantime, we need to take the work forward at the level of each country, flexibly, and based on each country’s specific needs. In doing so it is important to regularly engage with all stakeholders, including the very people for whom the policies are designed for, to check if we are on the right track.

Let me conclude by saying that the IMF stands ready to support you with your challenging transitions. These are daunting undertakings, but I am confident that they will lead your countries to more prosperity and a bright future.