Transcript

Transcript of October 2022 Middle East and Central Asia Department Press Briefing

October 13, 2022

Speakers:

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

WAFA AMR, Senior Communications Officer, IMF

MS. AMR: Good morning. Thank you all for joining us for the press briefing on the Middle East and Central Asia Regional Economic Outlook. I’m Wafa Amr, from the Communications Department. It’s really very nice to see you here in person again. We have with us Jihad Azour, Director of the Middle East and Central Asia Department, and he will start with opening remarks. We do have interpretation into Arabic. Thank you, Jihad, please go ahead.

MR. AZOUR: Thank you very much, Wafa. Also, good morning and welcome to the 2022 IMF Annual Meetings. We are glad to have you back here. It’s always a pleasure to have this in-person meetings. Before answering your questions, I would like to make a few remarks about the economic outlook for both the Middle East and Central Asia region, and I will start with MENA, and then Central Asia.

The region is being hit by a confluence of shocks. Global slowdowns still high in volatile food and energy prices, and faster and stronger tightening of global financial conditions. Nonetheless, economic activity in the region has been resilient thus far, with multispeed recovery continuing in 2022; and we project that the region will grow at 5 percent this year, up from 4.1 percent in 2021. However, the worsening of global conditions will weigh on the outlook for next year with growth slowing to 3.6 percent. Growth is projected at 5.2 percent this year for the oil exporters, with high oil prices and robust non-oil GDP growth of setting the global headwinds. However, economic activity in these countries is expected or so to slow next year as OPEC-plus production cuts, and oil price decline, and global demand is expected to slow.

In contrast, the region’s emerging market and middle-income economies are facing a deep term-of-trade shock, weakening of global demand, and tighter financial conditions, which could translate into higher government service debt and worsening of debt dynamics. The real GDP is foreseen to grow at 4.9 percent this year, up from 3.6 percent last year, with an acceleration mainly driven by Egypt’s performance during the fiscal year 2022 before slowing to 3.9 percent in 2023.

Meanwhile, low-income countries are struggling with high commodity prices, limited progress in vaccination rollouts, and country-specific fragilities. Accordingly, growth in low-income countries will remain weak at just 0.8 percent this year.

Inflation continued to increase and has become now broad-based. Headline inflation in MENA is projected at 14.2 percent, on average, for this year, and expected to remain elevated in 2023.

Now, let me turn to the outlook for Caucasus and Central Asia. The adverse impact of the war in Ukraine on the Caucasus and Central Asia economies has been milder so far. Relative to the latest forecast in April, the CCA growth for 2022 has been revised up by 1.2 percentage points to 3.8 percent this year. Robust growth in the first half reflects a smaller than expected contraction in Russia, robust foreign exchange inflows, as well as resilient trade.

Still, uncertainty remains very high. CCA countries are exposed to spillover from the war through trade, tourism, remittances, and financial channels, with economic activity likely to be increasingly affected as sanctions remain in place for an extended period. The full growth is projected to slow to 3.5 percent over the medium term, which is significantly below the region’s historical average of almost 7 percent.

Headline inflation, which has accelerated despite recent monetary policy tightening, is projected to remain in double digits at 12.9 percent this year, and 10.5 percent in 2023.

I would like to say a few words about the risks to our outlook, and there are many. As I have mentioned, and as you will hear throughout the Annual Meetings, global growth has slowed, and risks are extraordinarily high. Let me highlight some of the key risks that are relevant to the outlook of the region. One, persistently high commodity prices and pervasive food shortages remain a top concern. Amid low strategic food reserves, rising fertilizer costs could present risks to 2023 agricultural harvest, reducing food security and potentially raising social tensions.

Another concern is the potential for tighter than expected financial conditions that could tip the balance toward financial instability and debt distress in certain cases.

Three, broadening inflation is also a concern, as it may require deeper disinflationary policies, which have the potential to be more costly than expected. And the question now is what countries across both MENA and CCA need to prioritize.

First, countries should seek to restore price stability while, at the same time, protecting vulnerables, preserving fiscal sustainability while maintaining social stability, and also ensure food and energy security, and manage lingering pandemic-related risks.

Two, the worsening of global environment, as well as also the tightening of macroeconomic policies, and the limited policy space in several countries raise the urgency of pressing ahead with structural reforms to bolster economic growth while transforming economies to become more resilient, sustainable, and diversified, as well as also becoming more inclusive.

We’ll explore the outlook, the risks, and policy priorities of both regions in greater depth when we launch our Regional Economic Outlook in Dubai later this month and then in Uzbekistan, in some account, in early November. At those events, we will also discuss the two analytical chapters for this REO that are dedicated to the fiscal implication of surging commodity prices in the case of MENA countries, and the distributional impact of Russia’s war in Ukraine on the CCA.

Before opening the floor to questions, I would like to underscore the IMF continued commitment to supporting countries throughout the region, and this through policy advice, technical assistance, where we are scaling up our support both for MENA and CCA with a new center in Kazakhstan, and in many cases, financial support. Since the outbreak of the COVID crisis, the IMF has supported both MENA and CCA, plus Afghanistan and Pakistan with US$21.3 billion in financing. And, in addition, in 2021, we provided, through the SDR allocation, additional boost to reserves by US$49 billion.

Again, thank you very much for joining us here in Washington, and also for those who are online, I would like to welcome you, and I would be happy to take your questions.

MS. AMR: Thank you, Jihad. For journalists online, please send your questions to the press center. We’ll start here with you. Yes, please, go ahead.

QUESTIONER: Hello. Thank you, Mr. Jihad. Thank you, Ms. Wafa. I -- my name is Ahmad Yacoub. I am the Managing Editor of Al-Ahram -- Egyptian Newspaper. My question is about the Egyptian affairs and the cooperation between Egypt and the International Monetary Fund. I would like to ask about the latest developments of the negotiations between Egypt and the IMF, concerning the loan, and total size of the loan, and the economic prospects about Egypt, in terms of growth rate in the current fiscal year and the upcoming fiscal year, and the inflation rate, how we can deal with the inflation rate right now, and a time of approval of the new loan for Egypt. Thank you.

MS. AMR: Thank you. We do have several journalists wanting to ask about Egypt. So, shall we take all the questions, first, on Egypt?

MR. AZOUR: Yes, please.

QUESTIONER: I will ask in Arabic. I am an anchor in the Egyptian television. I will speak about something different from what my colleague has said. Some of the issues that have been raised, there are very tight conditions to provide the loan to Egypt and to other countries, in general. Is it possible to consider that the current conditions, which are very exceptional, and that the developing countries suffering from -- in light of the Coronavirus and the war, does this require to lessen the conditions from the Fund, which would lead to increasing the price of the foreign currency, vis-à-vis the local currency? So, this will lead to increasing the burden on the vulnerable and the poor. So, some other issues that are required by the Fund, we may find issues in the countries. So, the governments try to get rid of some of their -- or sell part of their share in the companies to the private sector. This is good, maybe, in terms of economy, but at the social level, it may lead to some problems. Thank you.

MS. AMR: Please. There’s a microphone here.

QUESTIONER: Yeah, thank you. Julian, The Africa Report. And I’m sorry if this is the question that he asked about. Just following up on Egypt, President Sisi had asked that you lift the applicable standards. It wasn’t clear what he was talking about. Is it subsidies? Is it, you know, the military’s involvement in the economy for this new IMF loan? So, if you could talk a little bit about that and, you know, what kind of standards you will be holding Egypt to, to get such a loan. Appreciate it. Thank you.

MS. AMR: Thank you very much. I also want to recognize a question I got online from Reuters, Lewis, Aidan Lewis. And his question is, are you satisfied that Egypt will be able to come up with additional funding to complete the expected EFF Program? So, if there are no more questions on Egypt, Jihad, please.

MR. AZOUR: Thank you very much. I will split my question into maybe English and Arabic. First of all, the cooperation between the IMF and Egypt is very strong. Since 2016, the Fund has provided, at two instances, support to Egypt, in order to address economic, social, and financial challenges. Back in the first program, we have been able, with a reform agenda that was set by the Egyptian Authorities to help in bringing financial stability, strengthening the reserves of the Central Bank, restoring growth, and improving economic and social conditions. Part of the original program was an important social pillar that had an objective in order to shield and protect the low-income people and provide, especially for those in the rural area, with direct and targeted support.

We also took into consideration the importance of strengthening the competitive capacity of Egypt, through structure reform. Egypt is a country that has a huge potential and a very active private sector, and therefore, the purpose of those reforms were to accelerate growth, in order to create jobs. During the COVID crisis, the Fund has been very responsive in providing Egypt with two tranches of support, with a total amount of $8.8 billion, in order to help Egypt address the impact of the COVID shock and allow the country to be better prepared to protect lives and livelihoods.

And our support to Egypt, in terms of technical assistance, in terms of policy support, has been continuous, over all this period. Recently, Egypt, like other emerging markets, was hit by a certain number of external shocks that have increased the level of vulnerabilities in many emerging economies. And the country has been faced with a certain number of food security issues because of the impact of the war in Ukraine, as well as also some impact on remittances and to -- mainly, sorry, revenues from tourism.

Of course, as very strong partners, we have started, based on the request from the Egyptian Authority, to explore an opportunity to provide assistance to Egypt, in terms of a new program. This program has a certain number of key pillars. One is to protect Egypt from exogenous shocks, that there are many. And this is where the importance of adapting the monetary policy, to shield the economy from those external shocks. Maintain a fiscal discipline that is very much needed, while strengthening the social protection mechanisms, through the various instruments, Takaful and Karama and other type of instruments that have helped provide the protection for the low-income people.

Of course, addressing the issue of inflation, as you see, it’s a global priority. And when inflation reaches double digit, it becomes an issue, not only for the monetary stability, but for the overall stability. But also, I think the role of the private sector in Egypt has proved to be very effective, both in terms of the competencies in the private sector and the ability to drive growth in the economy, over the medium term. And this is why there is also a certain number of important reforms, on the structural side, that will allow Egypt to maintain a high level of growth and address some of the issues that were brought in by the current exogenous shock and crisis.

This is where we stand, okay? The negotiation have started, they’re progressing, and we will, as soon as we reach staff level agreement, we will inform you about the size and the content of this agreement.

MS. AMR: Okay. Yes, please, go ahead here, in the front.

QUESTIONER: Hi. Thank you. Cameo Shaquoia, from The Africa Bazaar. I have a question regarding Tunisia. As you know, the Central Bank of Tunisia recently increased bank fees and interest rates, hindering access to consumer loan. I was wondering if you could provide any updates on what the IMF is doing. And are you working with the Central Bank of Tunisia? And also, if you can provide updates on Sudan and Somalia also.

MS. AMR: Thank you very much. We also have a question on Tunisia, online, from Angus MacDougall, Reuters. When do you expect to sign a staff level agreement with Tunisia? Can you outline what you expect from it?

MR. AZOUR: Thank you very much. I need to answer the question, also, in Arabic. Well, we already had several rounds of discussion with the Tunisian Authorities, in the context of providing support through a new program. In the last two years, we provided one and a half billion dollars to Tunisia, 750 immediately after the COVID shock, and another one of similar amount, last year, with the SDR allocations.

Of course, Tunisia is a country that has been hit by the confluence of shocks, and the recovery in 2021 and 2022 allowed Tunisia to recover, partially, some of the impact of the first wave of shock, which came with COVID. A certain number of important reforms were already planned by the government and the government team, which are encouraging steps, in order to allow Tunisia to address their fiscal imbalances, as well as, also, to arrest the risk of inflation and improve economic conditions. This was complimented by an active social dialogue that has had the various partners to work together. We are also currently in negotiation with the Tunisian Authorities, and the negotiations are progressing. And then, again, as soon as an agreement is reached, we will inform you more about the detail. When it comes to the central bank actions, as you know, the priority, today, is to reduce the risk of inflation. And reducing this rate of inflation would require to use certain number of measures, on the interest rate side, as well as, also, on the provision of liquidity. And therefore, those are part of the instruments that the central bank usually -- or could resort to, in order to address inflation.

The question in Arabic is about the conditions, in fact, as it was in the past, currently. The program takes into consideration the social conditions and insists on having that the most vulnerable and marginalized segments are protected from any conditions or from any measures to be taken. There is a necessity in Egypt and in other countries to enhance the social protection system, in order to correct the path of subsidy, which is less effective because it’s the less targeted or not targeted.

It has to be more targeted, more targeted to the segments and the groups that are more vulnerable to face the adverse impact of the increase of prices and inflation. Increase of prices and inflation impacts the vulnerable and those who have limited sources of income. Therefore, we also emphasize the importance of expanding the network of social protection and using the limited resources available, at the local level, which are under more pressures, due to having more crisis. It needs to be reformed.

Therefore, the objective in the -- of the program is, first of all, to maintain stability because there is no welfare without stability, no welfare without stability. We need to confirm and to emphasize in the light of the economic developments all over the world. We need to go -- or emphasize the importance of stability on the monetary side, on the financial side, and with regards to inflation. These are the main priorities to enable the investor to increase the level of the investment and the citizen to be able to have purchasing power and to maintain it. And it -- no doubt, the world is changing, and the world is changing, and these need -- this would need adaptation from every one of us.

Therefore, we need reforms to increase the capacity to attract investments. In the past, the region has attracted the flow of capitals in the form of portfolio investments. So, the challenge in the future would be to attract investments that are dyad investment that would create jobs. These investments, led by the private sector, and would require a number of environments that would incubate and flourish these investments. Therefore, the role of the private sector is very important. It’s fundamental and vital. And the country -- the state has to be supporting and not competing with it. Therefore, we have to give space to the private sector to work and grow.

MS. AMR: We have a question on Qatar. And the question is in Arabic. What are the economic prospects for Qatar, in the coming two years after the World Cup ends? And what are the inflation rates, currently?

MR. AZOUR: Qatar has managed, in the past two years, to face the COVID crisis and accelerate economic development, and there were investments that were benefited from, in order to build and prepare for the World Cup. This has contributed to improving the economic activity for the non-oil sector and also improving recently in the oil and gas prices have also helped accelerating the economic flourishing.

In the next year, we expect that to continue, we expect that that trend will keep. There will be improvement in growth. Also, this is due to the investments that are made by Qatar currently in order to enhance its ability to produce gas and to export it. So, we expect it to be the largest country exporting liquified gas, [LNG].

In addition to all that, there was a number of measures that were taken to maintain the stability at the fiscal level and to enhance the ability of Qatar to increase the level of resource. With regards to prices overall, the GCC countries, because maybe due to it has a low share of food staff and commodities in their consumption. It was not impacted at the same level as other countries did from the increase of prices at the global level.

In addition to that, there was some kind of continuity of subsidizing some commodities and some also measures to lessen and reduce the increase in prices. Therefore, the levels of inflation have remained less than they are globally in this region. So, we have to be cautious because there is an increase in inflation currently at the level of the world and in the region. On Somalia and Sudan.

QUESTIONER: Could you remind me about the question?

MS. AMR: She wanted an update on Somalia and Sudan.

QUESTIONER: I have a follow-up on Tunisia. How confident are you that the government will implement on the reform?

MR. AZOUR: Sorry, could you repeat your question?

QUESTIONER: How confident are you in what the governments is currently doing in Tunisia right now? That they will implement the reforms? Thank you.

MS. AMR: And the questions on Somalia and Sudan, were just, if you have any updates on those.

MR. AZOUR: Well, on Somalia, as you know, in 2020, we have reached a decision point for the HIPC initiative. And since both the government of Somalia, as well as also the international community work together in order to prepare Somalia to reach what we call the completion point and finalize the debt relief operation. Government in Somalia has maintained the drive of reform despite the various challenges. One is the impact of Covid. Second, is the climate issues. As you know, Somalia is suffering at the same time from drought as well as also as from the flood. In addition to that, a delayed political process that has led recently to the election as well as also the appointment of new cabinet.

Therefore, the work with Somalia is progressing, despite the challenges. Somalia has been able to address certain number of important challenges including challenges related to food security. We recommend that Somalia receives more grants as a support to address the food security issue, especially giving the dire situation and the impact of climate issues on Somalia.

We expect that if things continue to move and the way they were moving recently and according to our plan to achieve some time at end of 2023, the process and reach a completion point. Sudan, as you know, the Fund has not suspended its engagement with Sudan. We are following up on the situation, especially economically and social situation that has also deteriorated over time. Climate did not help. The increase in price of food and food security issues are also issues that have delayed the process of progressing in the HIPC initiative. As you know, we have an ECF with Sudan that is expected to expire at the end of 2022.

On Tunisia, well, one, we have to recognize that Tunisia, like several countries in the region have been subjected in the last two years to severe and successive shocks. Covid and the impact of Covid on an economy that is open dependent on tourism was high climate issues. And recently the increase in inflation, especially headline inflation, increase in price of food and commodities. And, therefore, the government has recently put together a team, and this team has managed to come up with a comprehensive reform program. This program is a homegrown program, and that has been discussed with the key stakeholders in the civil society in order to reach a common ground on some of those priorities. Of course, the current environment doesn't help, and therefore, in order to maintain stability and accelerate growth, certain number of reforms are more important than others.

The Fund is supportive, has supported, as I mentioned earlier, so the case of Tunisia twice in the last two years. And we are actively working with the Tunisian authorities to find the best way to help them address those challenges and accelerate through the program their capacity to regain, I would say, their trajectory of growth.

MS. AMR: Thank you. Please go, gentlemen over there. Thank you.

QUESTIONER: Thank you. John Everton from the Banker. There's been an IMF visit to Lebanon recently where there was frustration expressed about the pace of reform there, following on from the SLA signed in April. Can you tell us what your thoughts are about the probability of the reforms going through and a wider deal being reached? Thank you.

MS. AMR: Thank you very much. And we do also have another question online from Camille from MTV on Lebanon. How can the IMF convince leaders in Lebanon to implement the demands of the International Monetary Fund?

MR. AZOUR: Well, first of all, as you know, we have reached staff level agreement after a long period of discussions and program negotiation with the authorities in order to help Lebanon address one of the most acute and severe crisis for Lebanon in a century, and one of the most complex crisis currently in the world. Based on this staff level agreement, there are certain number of measures that are needed in order to not only to have the program becoming effective, but also, to jump start reforms the Lebanese economy.

What are those measures? One is to pass a budget, which is an important and basic milestones. This is your baseline year. Two is to address the issues related to trust and confidence. And this is why certain number of measures like the Bank Secrecy Law, as well as also, some reforms that are needed to strengthen transparency and fight corruption. Those are very important to restore confidence. Address the issue of the losses of the financial sector that we are accumulated and are preventing Lebanon from the recovery, and also, constitute the major liability on the balance sheet of the state.

Those are important steps in order to allow the program to start, as I said, and also to allow Lebanon to start the recovery and strengthen the support of the international community. Progress has been made, but progress has been slow. Only few measures have been so far implemented and there is still progress on others.

The Fund remains committed to support Lebanon as our Managing Director mentioned earlier today, but I think it's very important for those basic measures to be implemented and implemented on time, especially that Lebanon is also subjected to other type of shocks. Food and food security issue is an issue that Lebanon is facing in a very acute way. And some assistance was provided by the World Bank and others to help Lebanon.

In addition, also to the risk in terms of brain drain and other issues that Lebanon is facing. We encourage the authorities to accelerate and pursue those needed measures in order to have the program come into effect.

MS. AMR: Thank you, Jihad. We do have questions online. Mohmmad Aluban from Jordan’s mamlaka TV. With the launch of economic reforms in Jordan. How will Jordan overcome the problems of unemployment and poverty? And how can it reduce the size of its large debt? Does the IMF have a new cooperation with Jordan to support food security in the country?

MR. AZOUR: The Fund and Jordan have worked together in the last two years to help Jordan mitigate the successive shock. We adjusted the program we had signed with Jordan back in 2020 to provide the Jordanian authorities with the capacity to respond to the Covid shock by allowing additional flexibility on the fiscal management. And this was very helpful and allowed the Jordanian government to save more lives and address livelihood of the population. Over the last two years, Jordan was able to implement important reforms that allowed Jordan to maintain its macroeconomic stability despite the severe external shocks and the challenges that the Jordanian economy is facing like other economies in the region. This is, of course, something that allowed the Jordanian to maintain the confidence of investors and keep inflation under control. Of course, like other parts of the world, the Covid crisis has left important scars and one of them is on the level of unemployment. Jordan had in the past an issue with youth unemployment and this has been made more challenging with the Covid crisis. The best way to address it, and this is the gist of our discussion with the authorities in the context of the program that we still have with Jordan is how we accelerate structural reforms. How we reduce cost of labor, how we reduce the cost of energy, in order to allow the private sector to have a better competitive position in order to invest and grow. Also, investing in improving fiscal management is also a way for Jordan to keep not only its public finance under control but also to provide confidence especially for a country that has already high level of debt. Last but not the least there are certain number of transformative projects that Jordan is currently considering that will help improve business environment and we hope that those projects will allow Jordan to address gradually the issue of unemployment which I think this is one of our two key priorities for the region is how to address unemployment, women’s participation in the economy on one hand and also how to protect the population from the shock of prices, price of food, price of fuel, and gas, and also the increase of price of interest. Those are important shocks, exogenous shocks, that we are working with the region, not only through financial support but also through policy consultation and technical assistance to help them act very quickly and swiftly to address those weaknesses and allow them to on one hand protect their economies and benefit from the capacity to recovery.

MS. AMR: Thank you, Jihad. We do have a question on Pakistan, two questions, actually, from Iram Abbasi from Voice of America. Will the IMF consider rescheduling debt to Pakistan amid devastation due to floods if asked by the Pakistani government? On Pakistan, Pakistan’s Finance Minister is [inaudible) request, will the IMF grant some relief to Pakistan in terms of repayment? The second question is on fuel prices in Pakistan. They have been reduced. Do you think it’s a violation of the IMF deal? Also, how confident you are with the current government to fulfill its commitments to the IMF?

MR. AZOUR: Thank you, Wafa. Of course, we were saddened by the loss of human as well as also livelihood in Pakistan with the flood and we presented, and we reiterate our condolences for the people of Pakistan. As you know, the Fund has been very supportive to Pakistan over the last period. We have a program with Pakistan that has been extended and increased in size. This is to help Pakistan deal with the confluence of shocks starting with the Covid crisis where we provided additional flexibility.

We accelerated some of our disbursement to recently the exogenous shocks and the shock of increase in price of food and commodity. We had recently completed a review that provided Pakistan with $1.2 billion and hopefully we will be fielding a mission in November after the annual meetings to Pakistan in order to start with the authorities preparing for the next review. We are waiting currently for the assessment of the damages that World Bank and UNDP are conducting in order to see what are on one hand the repercussions on public finance and the impact on the economy and on the society.

Based on this assessment, we will need to update our numbers and based on our discussion with the authorities, we will also listen to them to see what are their priorities, and how the Fund can help. Of course, on the issue of subsidy, as in other parts of the world, subsidy that is targeted to support certain items has proved not to be very effective. I would say it has proved to be very regressive. And in our regional economic outlook we are again looking at this issue that is showing that this is not the best way to use the very limited fiscal space that exists. Therefore, we are encouraging Pakistan as well as also other countries to move from an untargeted subsidy that is a waste of resources and to dedicate those resources to those who need it. I give you one simple example. The region spends on social protection 2 percent of GDP and in certain cases what countries are spending on subsidies could be the double of that.

Therefore, it’s very important to use this moment where challenges are mounting, where increase in prices is hurting, to reallocate the resources for those who need it most. And this is something that it’s not, I would say, part of the IMF conditionalities, this is part of what is needed in order to provide the right protection for those who need it at the time where inflation is very high.

MS. AMR: Thank you, Jihad. Do we have any questions in the room? Yes, please, go ahead.

QUESTIONER: Yes, thank you. Julian Pecquet, from The Africa Report. Just had a follow-up question on Sudan, so if I heard you right, you said that you have not suspended your assistance. I’m wondering, you know, how that’s consistent with your push for a good governance after the coup and also a number of other countries have suspended aid, have suspended debt relief. As you probably know, the Sudanese finance minister is here making the rounds, saying that that is undermining the country’s economic reforms. I would love to get your thoughts on that. Thank you.

MR. AZOUR: In the context of the ACF, we have not suspended the relationship with Sudan, but, as you know, we are having limited engagement with the Sudanese authorities. We are following up on the situation, especially on the economic and social situation that has deteriorated over the last year because of confluence of issues. Of course, the HIPC process is a milestone type of process, it’s not a time-bound process.

There are certain number of important reforms and measures that need to be implemented and that we are part of the program itself in order for Sudan to reach what we call the completion point and have the debt relief concluded. We have last year with the support of the international community reached an important milestone with what we call the decision point for one of the largest, I would say maybe the largest operation of debt relief.

We urge the authorities to accelerate both the reform agenda and the transition in order to address the issues that have been compounded with the food security shock, the climate issues, as well as also the social deterioration.

MS. AMR: Thank you. We have one last question online from Bahrain. How do you see possible global recession impacting the Gulf States?

MR. AZOUR: Well, the global recession is affecting countries in the region in different ways because it is accompanied with increase in oil price and commodities and for all exporting countries that has compensate for the impact of increase in interest rates as well as also the potential or the current slowdown that we see globally. In addition to that, countries in the GCC were able to maintain lower level of inflation and have kept the reform programs that they have started and that have helped them diversify their source of revenues and not to go into, I would say, prosecutorial policies. These have helped increase their reserves, strengthen their both current account and fiscal accounts and reduce any pressure on markets. In addition to that, some countries have already with the level of reserves accumulated will be in less need for borrowing going forward in the markets.

MS. AMR: Thank you very much, Jihad. This concludes our Press Briefing for the Middle East and Central Asia Regional Economic Outlook. I would like to thank you and all the journalists joining virtually for joining us. I would like to remind you that the report for the Regional Economic Outlook will be published on October 31st and please do join our Western Hem press briefing at 3:00 p.m. today and the Asia Press Briefing at 7:00 p.m. today. Thank you all again.