Transcript

Transcript of October 2020 Middle East and Central Asia Department Press Briefing

October 19, 2020

PARTICIPANTS:

JIHAD AZOUR
Director, Middle East and Central Asia Department, IMF

WAFA AMR
Senior Communications Officer, Communications Department, IMF

MS. AMR: Good morning and good afternoon to everyone joining the press conference on the Middle East and Central Asia Economic Outlook. I am Wafa Amr, from the Communications Department. This is Jihad Azour, Director of the Middle East and Central Asia Department. He will give a few opening remarks and then we will be taking your questions.

MR. AZOUR: Thank you, Wafa. Good morning and good afternoon everyone and thank you for joining us.

Our annual meeting marks the second time this year we gather virtually under the shadow of the global pandemic and economic crisis. Today I would like to discuss how these historic developments continue to affect the Middle East and Central Asia region, which is the focus of our regional economic outlook that we have released this morning.

As I reported in July, countries in the region responded swiftly and resolutely when COVID-19 hit. And many of the emergency measures from those, boosting health sectors to policies aimed at assisting households and businesses, help countries cope with the crisis's immediate impact. However, given the uncertainty surrounding the pandemic's trajectory and the scale of the challenges it has created, countries in the region continue to face a difficult economic environment.

For oil exporters in the Middle East, North Africa, Afghanistan, and Pakistan region, growth is now projected at minus 6.6 percent in 2020—reflecting the combined impact of the decline in oil prices and production cuts, and the lockdowns. Oil-importing countries that benefit from lower oil prices are being mostly offset by hampered trade, tourism, and remittance—with growth in 2020 projected at minus 1 percent. And for the Caucasus and Central Asia, a contraction of 2.1 percent is expected for 2020, driven by the region's oil importers. The REO discusses three key aspects of the crisis that could shape the region's future for years to come. And I would like to briefly discuss these now.

First, the pandemic may inflict deeper and more persistent economic scarring than previous recessions in the region given severe vulnerabilities entering the crisis and its unprecedented nature. In fact, it is estimated that the output in the region would return to trend, only after a decade. Additionally, fiscal revenues in the region have declined sharply due to the lockdowns and the oil shock. This is occurring of course at the same time that the variety of fiscal measures have been employed to save lives and livelihoods. For instance, oil exporters are expected to experience a $224 billion revenue shortfall this year.

The result? Some countries will incur their highest deficit in 20 years. In turn, higher deficit will raise their burdens, eroding fiscal space in some countries. Lastly, the crisis has heightened corporate default risk and credit risk for banks in the region with potential losses that could amount to $190,000 billion, or 5 percent of GDP. If unaddressed, these developments may threaten financial stability and efforts for great financial inclusion.

Addressing these challenges will be vital for the region. In the REO, we outline a number of key policy priorities that countries should consider depending on their available policy space. In the immediate future and for all countries, containing the health crisis and cushioning income losses to the extent possible remain top priorities. Additionally, countries with policy space should consider implementing broader stimulus packages to lift demand while exiting emergency support gradually to avoid sudden income losses. Countries with more limited space should focus on reallocating expenditures toward health, education, and critically needed social programs while working to cut inefficient spending and increase tax progressively.

On the financial front, policy makers should continue to carefully balance the sustained provision of credit and the preservation of financial stability during the crisis and its immediate recovery. Fragile and conflict affected states should be supported including through grants and possibly temporary suspension of debt payments by official bilateral creditor. Beyond the recovery, countries will need to attack the legacies of the crisis, including an evaded debt and eroded external buffers. In parallel, structural reforms should aim at expanding access to opportunities by investing in strong and climate-friendly infrastructure, broadening the reach of digital technology and fighting corruption.

In closing, I would like to note that the IMF commitments to the region are never stronger than in times of great challenge. So far this year, the Fund has provided nearly $17 billion in financing to 14 countries in the region increasing IMF's credit outstanding by nearly 50 percent relative to 2019. We will continue working with the authorities to provide policy advice, technical assistance, and financial support when needed. While we undoubtedly face many more difficult days, the goal of building inclusive, prosperous, and resilient economies through the regions remain within reach in the coming years. And we look forward to working together with countries in the region to achieve this goal.

Thank you very much, and now I will be happy to answer your questions.

MS. AMR: Thank you, very much, Jihad. Thank you. Could you please send your questions via Webex? On Webex you can ask the questions in person or send a message. If you use a chat you can send your question also via chat or raise your hand via chat.

So, we do have some questions now that were sent online. We are going to begin with a question from Egypt. We have several questions, Jihad, from Egypt.

So, we will start with the question from Extra News Egypt, TV Channel and it is from a Doa’a Gad Elhaq. I will ask the question in Arabic. In your opinion, and as a partner in the Egyptian Economic Reform Program, and after you expected growth to reach 2.8 percent at the end of the year, and 5.6 percent by 2025, are these expectations a testimony to the solid monetary and fiscal policies in Egypt that allows Egypt to face the challenges that could lie ahead as a new wave is expected? There will be more questions on Egypt.

MR. AZOUR: Thank you, Doa’a. Let me clarify, the growth expectations. It's 3.5 in 2020. The Egyptian Reform Program contributed significantly to improving the general economic indicators. Before the pandemic, the growth was 5.5 percent. The deficit declined. There was a great improvement in the monetary situation with the rise in reserves available to the Central Bank. The Egyptian government gradually expanded the safety net to include more people through the Takaful and Karama Program. These improvements allow the government to stand up to the first wave of the pandemic. The Egyptian government adopted a number of protective measures—health measure and economic measures to support the economic activity—particularly since the Egyptian economy was considerably impacted by the impact of the pandemic, particularly tourism and exports.

The IMF, as you know, Doa’a, contributed to supporting these efforts by two basic points. The first was the rapid finance facility of $2.8 billion paid in April this year. It was formed to support the economic stability and to boost their monetary stability and support Egypt as it continues its structural reform program. A $5.2 billion, a total of $8 billion in assistance. We've seen an improvement in the economic indicators, and we expect growth to be better than expected. The balance will see an initial surplus. And we've seen a major decline in inflation, however, there are challenges ahead.

The first is to continue to defend against any additional pandemic wave. Second, boost stability and more importantly to continue to deepen the structural reforms that contribute to unleashing growth and giving a bigger role to the private sectors in the future.

MS. AMR: Thank you, Jihad. And from a Hiraan Online Duhat Abdenmenine. What are the reasons for Egypt's positive economic outlook for 2020?

That's it.

MR. AZOUR: I think I have answered in Arabic, the same question. Egypt has in the last three years, introduced a number of reforms that helped Egypt gradually reduce its final fiscal imbalances improve. Broad economic situation where in 2019, Egypt was able to reach levels of growth of 5.5 percent and at the same time, strengthened their monetary stability with high level of reserves at the Central Bank. Of course, this crisis had a severe impact on the Egyptian economy. It affected several sectors including tourism, trade, and export industries.

And the government has reacted swiftly be introducing certain number of measures to protect lives through social and medical measures, in addition also to protecting livelihoods through various programs. Including an additional cut in the interest rate by 300 basis points in April followed by 50 basis point in September. In addition to that, there's a number of stimulus programs that were provided to the private sector in order to reduce the impact of the COVID-19 and the shock that this pandemic had on the Egyptian economy. Of course, Egypt's economy also suffered from slowdown in remittances and a slowdown in global trade activities that went down by more than 12 percent this year.

Going forward, it's important to maintain the pace of reforms and to accelerate the structure reforms to allow private sector to be in the lead for the next economic recovery phase.

MS. AMR: Thank you. The last question you answered is from a Ms. Yasmine Selim. What is your assessment of the current monetary policy in Egypt?

MR. AZOUR: The monetary policy in Egypt has proved its effectiveness and gradually moved toward inflation targeting that this year we saw a continuous decline in inflation. The level of reserves at the central banks are at the record high, and we saw Egypt regaining quickly access to market with the recent Euro bond transaction, green bond, that was positively received by the market. Of course, going forward, it's very important to stabilize the economic situation especially with the risk of the second wave, accelerating the recovery that will provide sustainable macroeconomic sustainability and also help the monetary policy implementation.

MS. AMR: Thank you, Jihad. We have a question from Abeer Hasala from Al Hafez newspaper. Do you have the estimates for the MENA region economic losses as a result of COVID-19? And what are the IMF's estimates for refinance needs for the region?

MR. AMR: Thank you, Abeer, for the question. Of course, the losses are different from one country to another. As you know, Abeer, oil exporting countries were hit by a double whammy shock in addition to the impact of COVID-19 and the confinement measures needed in order to protect lives. The decline in global demand for oil that led to a sudden drop in oil prices, reaching levels we've not seen in the last two decades. That in real terms, rates that we didn't see since 1973 had a big impact on the oil exporting. And therefore, oil exporting countries are expected to have a drop in their revenues by $224 billion this year because of this combined shock.

For the oil importing countries, the situation changed from one country to another. Countries where tourism and service industry are important, they could have a loss in output by on average 5 percent. That also could be the drop in job opportunities. For countries in conflict or fragile countries that are dependent on the lifeline of remittances, the drop in revenues could reach double digits, and therefore, it's very important for those countries to keep the policies of protecting the economy from the scars of the pandemic, but also to start very quickly preparing for the recovery.

MS. AMR: Thank you. We have two questions from Jordan. The question from Yusef Damra (phonetic), Al-Ghad (phonetic) Newspaper, and then same question from Raef Sheyab, Petra News Agency. Has the first review been completed? Bearing in mind, that the talks started almost a month ago—what are the main recommendations presented to the Jordanian side on the backdrop of COVID-19 pandemic? What is your assessment of the economic situation in Jordan? And, lastly, what is the difference between the EFF and the RFI programs for Jordan?

MR. AZOUR: Thank you, Yusef and Raef for these multiple questions. Let me start with the first one. We have started the first review of the program that has been approved by the board of the Fund back in April this year. It was the first program that was approved post-COVID, and this program was adjusted to allow Jordan to use the flexibility that is needed to combat the COVID-19 crisis.

This review has started. And as you know, this is a remote review done through video conference, and therefore, the process of the review may take time. Also, we have a new government that we have already started the discussion with the new economic team. And most important, portfolio's the same people that we have worked with in the past.

Let me cover the issue of the difference between an RFI and an EFF. Rapid finance facility is an instrument that was designed in order to help countries address the impact of the pandemic. This is fast disbursed and also agreed on a very short period of time—a few weeks. There is no reform-based conditions, but there are, I would say, requirements in terms of transparency to make sure that the utilization of those funds are dedicated to address healthcare, social issues related to fighting the pandemic.

The EFF is more to support a reform agenda that the government in Jordan has designed and presented in 2019, if you recall, in London at the London conference. This program aims at achieving a certain number of objectives. The first one is: preserve macroeconomic stability by gradually reducing the deficit and curbing the debt dynamic, and also strengthen the monetary stability by strengthening the reserves of the central bank. This is the first pillar of the program.

The second pillar is to strengthen the economic competitiveness of Jordan in order for it to create additional jobs, by improving business environment, increasing the level of attractiveness of Jordan's various sectors to investors, and also reduce the cost of production, reducing the cost of labor, as well as also reducing the cost of energy. And this is why the reform of NEPCO, and the energy sector was a priority.

Third pillar is the social pillar: to strengthen and widen the social coverage in order for it to provide additional social protection, and also to improve labor protection and labor markets.

MS. AMR: Thank you. We go to Tunisia now. We have a question from Amira Mohammed from Mosaique Radio. What are your expectations for Tunisia at the end of the year, and could Tunisia in 2021 achieve a positive growth? What is the fate of the negotiations between the central bank and the IMF? And what is the reason for the delay and how we can address it?

MR. AZOUR: As far as the expectations for Tunisia this year, it will be impacted by the COVID-19 pandemic which has hit several countries hard, including Tunisia because of the need for protective measures to stand up to this pandemic. Countries in the region, in general, effectively managed and confronted this pandemic. The fatalities in the region were far less than more advanced countries, but there was an economic cost to these measures. The Tunisian economy will see a negative growth, 7 percent this year. Next year it is expected to reach 4 percent positive.

There's no doubt that the Tunisian government adopted measures to alleviate the burdens of the pandemic on the economy, economic and social measures through a set of programs, financial programs, completed with central bank measures to increase liquidity in the banking sector, and secure financing programs for the private sector. As you know, the IMF contributed to providing support, rapid support, $750 million. Tunisia was the first country in the Middle East to receive 100 percent of its quota in the IMF through this program.

Tourism and service industries and sectors, such as exports were hard hit by the pandemic, particularly exports to Europe and other countries. Therefore, it's important to continue on two tracks. First, to maintain the protective measures that save lives, and to maintain the economy through the measures adopted by the government.

In regards to the consultations, there's continuous consultation with the government. I had a meeting last week with the minister of finance and the central bank governor where we discussed the economic developments. Weeks before the government is expected to submit its 2021 budget, the IMF will conduct Article IV consultations with Tunisia in the next weeks. The relationship with Tunisia continues. So far, there has not been a request from Tunisia for a new program and if there is such a request by the Tunisian authorities, the response will be positive by the IMF.

MS. AMR: Matthew Lee from City Press has two questions, but we'll start with a question on Yemen. What is the status of the use of the new DL bank notes printed by the central bank in Yemen? And any actions taken by the IMF?

MR. AZOUR: The IMF has been over the last few years—given the difficulties faced by Yemen and the Yemeni people—providing extensive technical assistance and support in order to protect and preserve institutions and preserve the institutions that are in charge of the economic management, the central bank, and ministry of finance.

Recently, the Fund has provided grants because Yemen, as you know, is not eligible yet for borrowing, and therefore, the Fund in the context of what the Fund has developed post-COVID as support to low income and fragile states, provided Yemen with grants, as well as also with postponement of debt services. Of course, the challenge of Yemen has been compounded by the decline in remittances that constitutes an important lifeline for Yemen, and also is an important element of the provision of foreign currencies that is badly needed for Yemen.

MS. AMR: Thank you. We'll move to Lebanon. We have a question from Lea Fayyad, LBC. Do you believe that the IMF program is the only solution for Lebanon to get out of its crisis? And is it required from the next government to present to the IMF a detailed program?

MR. AZOUR: Thank you, Lea. The first step is for the Lebanese government to present a comprehensive and credible reform program that helps address the economic, financial, and social challenges that Lebanon is facing due to the multiple shocks that Lebanon went through, and the last one was the explosion in last August. This program has to be credible and implemented with support of all the parties. It has to aim at restoring confidence, as well as also restoring macroeconomic stability.

The program also needs to address the losses that exist in the financial system, and repair the financial and the bank inconsistencies to, again, be able to finance the economy. The third priority is to allow through the reform agenda the economy to restart and create jobs that are badly needed for the young Lebanese population.

In addition to that, to more important priorities: one is to address the loss‑making entities or the losses that are incurred in the public sector, in particular, in the energy sector as well as also in other areas.

And last, but not the least, widening and deepening the social protection framework in order to provide social assistance to those who are currently in deep need of it, especially with the increase in the level of poverty, as well as also with the jump in inflation.

When it comes to the relationship between the Fund and the Lebanese authorities, the previous ‑‑ the current government that is in caretaking mode has presented ‑‑ back in April ‑‑ a plan that was approved in the Council of Minister and based on as requested the Fund assistance.

The Fund always will provide support to Lebanon, as our managing director stated recently. And we look forward to working with the next government based on the Lebanese program, the Lebanese reform agenda, in order to engage the discussion. And, ultimately, if Lebanon wants a program from the Fund, the Fund will provide that.

But also, it is important that Lebanon get support from the international community, especially after the dramatic explosion back in August. And this support should be in form of grants, as well as also in terms of financing.

MS. AMR: Thank you. We will stay on Lebanon. We have a question from Lamea Abil Alsharq Alawsat. Please go ahead and ask your question, Lamea.

QUESTIONER: Hello?

MR. AZOUR: Lamea, we are listening to you.

MS. AMR: Go ahead, please.

QUESTIONER: I have two questions. And the first question is about Lebanon. In your report, you are adding Lebanon to sovereign countries. How will you, as the IMF help Lebanon to go through all of these problems?

And the other question about Gulf countries, your estimation for the economic activity in the Gulf area were quite pessimistic for the coming year. So how do you estimate the economic activity after the pandemic in the Gulf countries and your expectations for the growth rates in the Gulf areas? Thank you.

MR. AZOUR: Thank you for your question. I think I have already answered the first one on Lebanon. The IMF stands ready to help Lebanon. We are looking forward for the next government and for a comprehensive reform program. And if the Lebanese authorities are interested in engaging in discussion with the Fund for Fund support, the Fund stands ready for that.

Your second question is on the Gulf countries. As you know, this crisis was a double whammy crisis for all exporting countries, in particular, in the GCC. In addition to the pandemic and the needed measures in order to protect lives and the populations that has led to gradual slow down and shutdown of the economy, the decline in oil demand globally and the drop in oil prices has affected deeply the economies of the oil exporting and also the GCC economies.

We project for this year that growth will be negative by six percent with rebound expected in 2021. And this drop in growth is because expectations for oil price for this year will be on average between $42 to $45, with a potential increase gradually after 2021.

However, with the extension of OPEC Plus Agreement, oil production also has been limited. In addition, certain number of non‑oil sectors, like, tourism, airline logistics, were affected by the impact of the pandemic.

Of course, this outlook is subject to change, especially as we live in an uncertain moment. And it will depend on a risk of a second wave, a potential faster recovery in the advanced economies that could bring additional demand for oil; and, hence, increase the price of oil.

MS. AMR: Thank you. So, we have a question from Halgard Abraham, Forbes and Davide Barbuscia from Reuters on Saudi Arabia. So, we're moving to Saudi Arabia before we move to the Caucuses and Central Asia.

The question from Halgard: Saudi Minister of Finance has challenged the IMF that the economy will perform better than the Fund's expectation in 2020. Do you insist on your expectations for Saudi, for the Saudi economic contraction?

MR. AZOUR: Well, Halgard, as you know, 2020 was a year like no other. Nobody was expecting the severity of the first and the second shock that have affected deeply the economy of the world, as well as also the economies of the region. Saudi is the largest oil producer. And, therefore, the various developments had an impact on the Saudi economy.

We have revised upward our revisions in October, compared to July. And we expect that gross will be negative this year by 5.4 percent for Saudi, with a recovery in next year, where we expect gross to be ‑‑ in 2021 ‑‑ at 3.1 percent. Of course, this outlook will depend on the evolution of oil price, oil demand, and the potential extension of the OPEC Plus Agreement.

But I think what is important to mention here is all GCC countries have already introduced certain number of measures to mitigate the impact of the shock. And this also has led to provide the support to the non‑oil sector. Saudi was one of those who have provided social, economic, and financial support, social support to employees using the labor insurance system in order to provide direct transfers to employees, as well as also forbearance of some of the fees, in addition to the liquidity measures that were introduced.

MS. AMR: Thank you. And we'll go to a Reuters question, Davide, on Saudi Arabia as well. Saudi Arabia transferred $40 billion and deserves from the Central Bank to its sovereign fund this year. What is the IMF's assessment of this move, in light of eroding buffers, due to the pandemic and lower oil prices?

Should Saudi Arabia keep foreign reserves as much as possible untouched to defend its currency peg? In addition to tripling the VAT, what else can Saudi Arabia do to boost then oil revenue going forward? Should then income tax be considered in the medium‑term?

MR. AZOUR: Davide, on your first question, is a technical question that it's only a transfer with the creation of the WIF between the Central Bank this summer that usually in the past was in charge of managing some of the reserves. And it's a technical issue.

Your question on what are the additional measures needed? As you know, in our report for 2019, we have recommended that for the medium‑term for sustainability, and in the context of the medium‑term framework, diversifying revenues outside oil and based on the success of the various reforms that were introduced in the last four to five years, we recommended that gradually the value‑added tax could be ‑‑ in terms of freight increase and other type of non‑oil revenues ‑‑ could be developed.

Those recommendations are still valid as part of a medium‑term trend, part of a fiscal framework that allow gradually reduced dependence on revenues from oil and allow government to have more flexibility on the fiscal side.

When it comes to the last question, which was on?

MS. AMR: It's on the non‑oil growth.

MR. AZOUR: On the non‑oil growth, of course, the non‑oil growth for Saudi was also hit by the various measures that were introduced to protect lives from the expansion of the pandemic, reduced tourism, as well as also other type of activities had to be gradually reduced to protect the healthcare and social situation in the country.

We start seeing, starting third quarter, a regain in activity with a gradual reduction in the stringency of measures, and also, we start seeing flow of people coming back to Saudi.

MS. AMR: Thank you. We move to the CCA. We have a question from Olzhas Auyezov (Reuters) of Thompon Reuters. Has Kyrgyz Republic's new government reached out to the Fund? And how does the Fund plan to work with it against the backdrop of the worst recession in 20 years?

We also have a question from Inner City Matthew Lee, also on Kyrgyz. What is the IMF's assessment of the turmoil in Kyrgyz Republic? Can or will the IMF do anything to assist including a continued COVID‑19 response, as well as debt to China, its impact?

MR. AZOUR: Well, as you know, the Fund has been responding to Kyrgyz's needs in a very rapid way. The first country that benefitted from the rapid fund facility for combatting COVID was Kyrgyz Republic. And we had augmented our support later in the year in order to provide the needed resources for Kyrgyz to fight the COVID‑19 pandemic.

Of course, the Kyrgyz economy is an open economy and depends, like other economies in the region, both in Central Asia and Caucuses, on remittances and the drop of remittances because of the aftermath of the COVID-19 shock had a severe impact on Kyrgyz economy and led to a negative growth of 12 percent this year expected for Kyrgyz Republic.

Of course, the support that the Fund has provided to Kyrgyz allowed also authorities to get access to other type of international assistance from multilateral institutions. And the Fund stands ready to help the Kyrgyz economy and the Kyrgyz people address one of the most challenging crises that the economy is going through.

We are in continuous dialogue with the authorities with the Central Bank, as well as also with the government. And we will keep through the dialogue possibility to provide additional support to Kyrgyz Republic.

MS. AMR: Thank you. I will go to Kazakhstan from Astana Tengri News. What measures would you recommend to Kazakhstan to successfully implement economic structure of transformation?

MR. AZOUR: Well, thank you for this question. Let me say first that Kazakhstan has been successful in managing the double whammy shock of the COVID‑19, as well as also the drop in oil price being an important player in the oil and gas scene internationally.

Authorities have introduced a certain number of measures to protect lives through social distancing, through testing and tracking. In addition, the authorities have introduced a certain number of fiscal measures and support to the economy through liquidity measures from the central bank. And they have resorted to greater flexibility in the exchange rate in order to protect the economy from the external and exogenous shocks.

Recently, the president of Kazakhstan has outlined the agenda for structural reforms for the coming years. And this agenda goes in the right direction in promoting through structural reforms, the capacity for Kazakhstan to attract additional investment, to provide support to small-and-medium-sized enterprises. And also, to promote fast-growing sectors like technology, like other sectors that can boost growth going forward. Recently, Kazakhstan has also improved the quality of the financial system. And this has showed its, I would say, value during this crisis.

MS. AMR: Thank you. Before moving back to the Gulf countries, questions on the Gulf, we have Matthew Lee from Inner City also with us just to see if he has any updates or to follow up on his questions. Matthew.

QUESTIONER: Oh sure, thanks, thanks a lot. You answered the question on Kyrgyzstan, so I was really happy about that. I know you mentioned the Caucasus, so does the IMF have any view of the situation in Azerbaijan and its impact on regional economies. If you could do that, it would be great. But either way, thanks a lot for answering the Kyrgyz Republic question.

MR. AZOUR: Matthew, thank you very much for your question. As you know, we like others called for an immediate cease fire and negotiated a settlement of this conflict. Of course, we have an excellent relationship with all countries in the region. And we have, as you know, Matthew, provided for several countries in the region, assistance in the context of the COVID and before that to promote reforms as well as also to support countries who are going through adjustment. And hopefully, our new technical assistance center that will be created next year will be a platform to allow those countries accelerate the pace of reform to improve their resilience and to strengthen their economic growth.

MS. AMR: Thank you. So, we're going to go back to questions and one question on the UAE and Arabic and the other one in English from the question from Abeer Shammala from Alkhaleej newspaper. What are the reasons for reducing the expectations of growth so sharply for United Arab Emirates and economies of the GCC compared to April? And what are the main reforms that are needed in the region in order to recover and make growth after COVID. When do you expect the region to recovery completely from the repercussions of the COVID and the crisis?

MR. AZOUR: Thank you, Abeer, for this question. As a matter of fact, this type of crisis which is unprecedented and witnessed by the global economy and the economy of the region has led especially for oil exporting countries to face challenges that are very big to the rate of growth because they have been affected by the decline of oil prices. And, the reduction that has been done with regards to the levels of production exports of gas and oil.

And also, the government of the United Arab Emirates was one of the most serious governments and effective in facing COVID-19. And it has worked in a fast manner in order to take some measures to protect the citizens and to secure a high level of procedures and measures to lessen and mitigate the pandemic and its effects.

The United Arab Emirates has developed a number of mechanisms to work with, which are unprecedented. Not only at the level of the region but also at the level of the world. It created mechanisms for protection and also mechanisms for follow up. But no doubt that in the United Arab Emirates and its economy it is the most diversified at the level of the region and the most open in the world.

It has been affected because of the deterioration in the oil sector and also in trades and the global economic movement. It has been affected in terms of tourism and transportation whether air or sea transportation, this has affected the United Arab Emirates.

And also, due to the high level of reserves that are kept by the United Arab Emirates, this country has managed in addition to protecting lives. It also managed to secure a number of programs, related to financing through the central bank which have contributed to lessening and mitigating the effects of this crisis on the citizens and also on the economic sectors. Because the central bank has lessened the level of interest and has raised finance, accelerated finance and provided liquidity in the banking sector this has led to mitigating the repercussions of this pandemic.

In the coming periods, no doubt this crisis is a transformational one and this has been clear through the crisis. And it seems that there are many points that we can build on. Technology has proved effective in helping to face this pandemic. And also, it has proven to be able to adapt to the economy that will be created after the pandemic.

Therefore, it is necessary to invest in all the mechanisms of remote education and technology which will help remote working because the region is still weak compared to the other regions of the world. And also important is investment in other technological sectors that are environment friendly.

In addition to that, we should attach great importance to deepening through financial inclusion at the international level to support SME's and also startups due to the large number of youth—educated youth in the region and in the GCC, they can be the hope for the future.

The countries of the GCC and oil exporters, if they take these measures, will be able within a reasonable period of time to accelerate growth and they can recover and create growth. This is especially important as the expectations of oil prices are not very promising and because there is not going to be a high increase in prices. It will be less by about 20 to 25 percent as compared to before the pandemic. Thank you.

MS. AMR: On the UAE from the Gulf Today. How do you see the impact of second wave of the pandemic on the country's economy?

MR. AZOUR: Well, of course, Wahid, everybody is feeling the risk of a second wave. What one could say is countries have already learned from their previous experience and have improved the measures of the detecting, testing, tracing and treating COVID-19. And countries in the region have already increased the investment in their medical infrastructure for that.

In addition, we have already seen several programs that have been put in place that can be scaled up. Of course, second wave will have a negative impact on the overall economic activity. And this is why we are recommending to countries to maintain for the time being the various programs that have been introduced in order to elevate the pressure on the livelihood or people and provide a floor to the economy. But, of course, the level of uncertainty that we are all living today is casting a shadow on the capacity to recover and recover fast in 2021.

MS. AMR: Thank you. We move to Georgia from Forbes. Can you speak about the government's debt in Georgia and what the purposefulness of the financial assistance Georgia is getting from the IMF?

MR. AZOUR: Well, Georgia has been one of the countries in the region that has implemented over the years important reforms that allowed Georgia to improve its macroeconomic stability. And that was very useful during the pandemic shock that hit the Georgian economy hard because it's an open economy where tourism, trade and integration into the global value chain is relatively high.

And therefore, with all what has been improved over the years, Georgia was able to address the wave of the pandemic shock with successful measures. In addition to that, as you know, the government has introduced a certain number of measures on the public finance side in order to provide additional support.

And also, there were a certain number of measures that the central bank provided in terms of liquidity and support through the banks in terms of reserves requirement. And at the same time, the central bank used all of the macroeconomic policy tools including the exchange rate in order to protect the Georgian economy from the exogenous shock that Georgia was facing.

All these reforms will, of course, need to be continued going forward in order to deepen what has been already developed in terms of increasing the competitiveness of the Georgian economy. Furthermore, it will be important to address some of the risks of scars that some of the sectors are facing like tourism, for example, as all sectors that are connected to trade partners were affected by the crisis. And also, by helping new sectors to grow, especially in the technology side. And we saw during the crisis, some silver linings that show Georgia’s potential for fast growing the economy going forward.

MS. AMR: We have one last question on Qatar from news agency. How do you see the economic indicators in Qatar in light of COVID-19?

MR. AZOUR: The situation in Qatar to a great extent is similar to what we see in other countries. Qatar has done directly, has worked directly in order to face the pandemic with a number of protective measures and health measures as well. In addition, it has taken certain measures to support the situation of the citizens and to safeguard a number of programs that would contribute mitigating the repercussions of this pandemic on the economy of Qatar.

The decline of oil prices and gas has had its impact on the economy, especially the investments made by Qatar currently in order to prepare for the World Cup 2022. So, overall, it is expected that the economy of Qatar will decline in terms of growth, which will be positive 4 to 5 percent this year and it will be expected to recover next year with positive growth. And also, we expect that the World Cup in 2022 will lead to improvements gradually to the economy of Qatar.

MS. AMR: This ends the press conference for the Middle East and Central Asia economic outlook. Thank you all for joining us.