Economic Governance Reforms to Support Inclusive Growth in the Middle East, North Africa, and Central Asia

Author/Editor:

Christopher J. Jarvis ; Gaelle Pierre ; Benedicte Baduel ; Dominique Fayad ; Alexander de Keyserling ; Babacar Sarr ; Mariusz A. Sumlinski

Publication Date:

January 13, 2021

Electronic Access:

Free Download. Use the free Adobe Acrobat Reader to view this PDF file

Disclaimer: The views expressed herein are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary:

This IMF Departmental Paper presents the key areas in which countries of the Middle East, North Africa, and the Caucasus and Central Asia (MECA) can enhance governance and fight corruption to achieve their economic policy goals. It draws on advances that have already taken hold in the region.

Series:

Departmental Paper No. 2021/001

Subject:

English

Publication Date:

January 13, 2021

ISBN/ISSN:

9781513520759/2616-5333

Stock No:

EGRSIGEA

Format:

Paper

Key Messages

Countries in the Middle East and North Africa (MENA) progress in improving economic governance. However, surveys suggest that citizens and businesses continue to view weak governance and corruption as serious problems in the region. Governance indicators broadly corroborate this view.

Improving governance and fighting corruption are key to addressing the COVID-19 pandemic fallout and building forward better for a sustainable and inclusive recovery. For instance, stronger control of corruption in the MENA is associated with higher domestic revenue, increased public investment efficiency and better education outcomes such as improved access to education. (See IMF, Fiscal Monitor, Curbing Corruption, April 2019)

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While governance priorities will vary according to national circumstances, reforms could target: 

  • Greater transparency and accountability. This includes: broader access to information -including budget and central bank information, open and transparent procurement processes with publication of the contracts and as well as the owner of the company wining the contract (beneficial ownership), strong internal controls and external oversight of public finances that includes independent audit, greater accountability of State Owner Enterprise (SOE), and enhanced asset declaration regimes.
  • Streamlining rules and enforcing them well. Complexity of institutions that deal with taxation and public spending and related Public Finance Management (PFM) rules and regulations could be simplified, thereby increasing their efficiency. Streamlining business procedures would help reduce red tape -and vulnerabilities to corruption- and improve investment climate as would better enforcement of rules and an enhanced financial supervisory framework. 
  • Beefing up the anti-corruption framework by adopting laws and regulations, drawing on international conventions and good practices, putting in place effective institutions to enforce them, strengthening Anti Money Laundering/Combating the Financing of Terrorism (AML/CFT) frameworks, and facilitating information-sharing at the domestic and international levels. 

High-level commitment and engagement of national stakeholders, particularly businesses, unions and civil society organizations, are key to successfully carry ambitious and sustainable reforms. Digitalization can transform government services and interactions with businesses and individuals thus increasing transparency, efficiency, accountability and public trust.

The IMF is supporting MENA countries through policy advice and capacity development to further improve governance, in particular in the areas of fiscal governance, central banking and financial supervision, AML/CFT, and statistics. With the approval of its enhanced framework for engagement on governance in 2018, the IMF has also expanded its surveillance to transnational aspects of corruption which include bribery of foreign officials and concealment of corruption proceeds.

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