What the Arab Spring Has Taught Us
IMF Blog, October 20, 2011
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Bibliographic details
- Authors: Masood Ahmed
- Published: October 20, 2011
Context and overview
- Author: Masood Ahmed
- Date: October 20, 2011
- Observes an historic shift in the Middle East and North Africa (MENA) following popular uprisings that began 10 months ago, driven by desire for greater freedom and a fairer distribution of economic opportunities.
- Acknowledges that IMF efforts focused on building macroeconomic foundations, liberalizing economic activity, and market-based reforms improved many economic indicators, but did not sufficiently address how the benefits of growth were being shared.
Clear lessons from the Arab Spring
- Even rapid economic growth cannot be maintained unless it is:
- inclusive,
- creates jobs for the growing labor force,
- accompanied by social policies for the most vulnerable.
- For economic reforms to be sustainable, their gains must be broadly shared, not just captured by a privileged few.
- Widespread corruption:
- deprives citizens of economic benefits,
- undermines inclusive growth.
- Absence of transparent and fair rules of the game will inevitably undermine inclusive growth.
- A socially inclusive agenda requires economic and financial stability.
Economic pressures and fiscal policy guidance
- The region has faced considerable uncertainty and economic pressures from domestic and external sources; the recent worsening of the global economy will add to these pressures.
- Countries have stepped up spending to respond to needs and aspirations; higher spending is necessary in the short term but:
- it needs to be designed so it can be unwound later to sustainable levels to limit long-term fiscal consequences.
- Given difficult economic circumstances, some countries will need official financial support.
National reform strategies and international support
- Countries should formulate national reform strategies to build confidence and provide a basis for sustained inclusive growth.
- Commonly accepted goals to be encompassed in national strategies:
- higher, job-creating economic growth;
- greater social and economic inclusion;
- strong institutions ensuring accountability and good governance;
- social protection for the most vulnerable.
- Leadership should come from countries themselves; the international community can contribute by providing an ambitious and multifaceted program of support, including:
- financial assistance,
- market access,
- labor mobility,
- credit guarantees.
- The Deauville Partnership is noted as a potential valuable platform to drive the process forward.
IMF commitments and operational adjustments
- IMF stands ready to provide financial support in the amount of about $35 billion to the region’s oil-importing countries, if requested.
- This $35 billion offer is in addition to the $38 billion pledged by the international and regional financial institutions.
- The IMF is:
- expanding technical assistance,
- looking at how to adapt its work to reflect the lessons of the Arab Spring,
- taking greater consideration of how policy recommendations affect different parts of the population.
Outlook and region’s strengths
- While acknowledging many uncertainties and challenging months ahead, the article emphasizes potential long-term benefits of the Arab Spring.
- Regional strengths listed:
- a dynamic and young labor force,
- vast natural resources,
- ancient civilizations and rich culture that attract scholars and tourists,
- a large regional market,
- an advantageous geographic position,
- access to some key markets.
- The current period of transition is expected to ultimately result in improved living standards and a more prosperous future for the peoples of the region.
IMF blog post: "What the Arab Spring Has Taught Us" by Masood Ahmed, October 20, 2011.