Managing Director’s Remarks at the Arab Fiscal Forum Virtual Ministerial Meeting
IMF News, November 17, 2021
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- Published: November 17, 2021
Global and Arab growth outlook
- Global growth projected at 5.9 percent for 2021.
- Arab world growth projections: 4.4 percent for 2021 and 4.5 percent for 2022.
- Unemployment in the region peaked at 11.6 percent; recovery in employment is lagging despite growth.
Key risks and challenges
- Divergence across countries driven by:
- Access to vaccines and speed of vaccinations.
- Availability and use of fiscal policy space.
- Entrenchment of divergence particularly affecting fragile and conflict-affected states.
- Supply chain interruptions causing mismatches between demand and supply; recent examples include disruptions in Europe.
- Inflationary pressures driven primarily by demand-supply disconnect, but potentially aggravated by:
- Continued supply disruptions.
- De-anchoring of inflation expectations.
- Weather phenomena impacting agricultural productivity and food prices.
- Disproportionate impact on vulnerable groups and sectors:
- Young people, women, migrants, low-skilled workers.
- Small businesses in tourism and other contact-intensive sectors.
- Indicators of labor market stress include people dropping out of the labor market or leaving school.
Policy priorities and recommendations
- Vaccination
- Number one priority: vaccinate the world to meet targets of 40 percent of people in all countries by the end of this year and 70 percent by mid-next year.
- Country-specific policy calibration
- Recognize varying economic positions across countries and tailor fiscal and monetary actions accordingly.
- Monetary policy stance
- Central banks should stay vigilant to inflationary pressures; clear signaling and pre-emptive action may be needed where upside risks materialize.
- IMF is evaluating scenarios of monetary and fiscal policy in advanced economies and potential spillovers to emerging and developing economies.
- Fiscal policy and medium-term frameworks
- Implement medium-term fiscal frameworks to balance immediate needs (health, targeted lifeline spending) with transformative investments and debt reduction.
- Use frameworks to reduce adjustment needs, ease policy trade-offs, and build trust with markets and citizens.
- Transparency and accountability
- Embrace transparency and accountability to improve spending efficiency, eradicate misspending, reduce corruption, and make government programs deliver for citizens.
- Use timely, accurate, and accessible reporting and monitoring; leverage technology to make resource flows visible.
- Public investment and private-sector mobilization
- Public money should catalyze massive private investment to achieve transformational and climate-related objectives.
- Social inclusion and labor market mobilization
- Design support for vulnerable people that facilitates their entry into the labor force rather than long-term dependence on support programs.
- Sustain the middle class by sharing growth benefits and building skills for tomorrow.
Examples of country actions and digital tools
- Saudi Arabia: 2018 Etimad public financial management platform consolidating bidding and procurement, and enabling contractors and suppliers to manage claims online.
- Jordan: Regular online publication of procurement data for COVID spending, including contracts and beneficial ownership information.
- Morocco: Chikaya portal handled 700,000 public complaints; a majority of users are satisfied.
- Egypt: Knowledge Bank cited as one of the world's largest digital libraries for building resilient people.
- Climate commitments: Bahrain and the United Arab Emirates with net-zero carbon emissions commitments; Saudi Arabia launching ambitious green initiatives.
IMF engagement, support, and tools
- Analytical work: stepped-up analysis and country-specific calibration, including a special series of COVID-19 notes on fiscal governance, digitalization, and public investment.
- Surveillance: oriented towards economic governance reforms to support inclusive growth.
- Capacity development: provided through the Middle East Center for Economics and Finance in Kuwait and the Middle East Regional Technical Assistance Center in Beirut.
- Lending and financial assistance:
- $16.6 billion in assistance for nine Arab countries.
- Debt relief provided to three countries.
- Arab world received $37.1 billion of the IMF’s $650 billion allocation of Special Drawing Rights (SDRs); work underway to amplify impact by channeling some SDRs from strong countries to those who need support most.
- Collaborative initiatives: IMF working in symbiosis with the Arab Monetary Fund on multiple topics, and responding to member requests to expand work on digital money, sustainable and inclusive growth, and labor market mobilization.
Kristalina Georgieva — Managing Director; November 16, 2021