## Transcript of a Group Interview with Managing Director Dominique Strauss-Kahn and Middle East Journalists

_IMF News, April 7, 2011_

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## Bibliographic details
- Published: April 7, 2011

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### Context and overview
- Date and location cited: Washington, D.C.; Wednesday, April 6, 2011. Transcript title dated April 7, 2011.
- Interview framing: a “historical moment for the Middle East and North Africa” with major political and economic challenges arising from citizen demands for freedom and democracy.
- IMF engagement described:
  - Masood Ahmed, head of the Middle East and Central Asia Department, was reported to be in Damascus for a regional finance ministers meeting.
  - The IMF’s immediate focus emphasized technical assistance and policy advice; financing would be considered only if needed.

### Economic impacts and projections
- Tourism and growth
  - Tourism “has significantly decreased during the first quarter” with uncertainty about summer recovery.
  - Tunisia: growth forecast for the year revised downward “to something which is between 1 and 1-1/2 percent from something which was above 3 percent.”
- Fiscal and subsidy pressures
  - New government measures to respond to public demands (food and fuel price pressures) may create fiscal challenges.
  - Estimated cost cited for subsidies/support “as big as 3 percent of GDP.”
- Commodity-price transmission
  - Food and energy price impacts noted as significant: “something which ranges around 3 percent for energy and 1 percent of GDP for food prices.”
- Cross-country divergence
  - Oil exporters expected to have a good year; oil importers expected to face difficulties.
  - Current account surpluses of oil-exporting countries projected to rise sharply in 2011 compared to 2010 (described as “doubling, something like this, in 2011 compared to 2010”).

### Country-specific assessments
- Tunisia
  - Financial system assessment: “the average situation of the financial system in Tunisia is rather good.”
  - Growth outlook: forecast cut to “between 1 and 1-1/2 percent” from “above 3 percent.”
  - Distributional concerns: prior macro assessment “was not bad” but distributional issues warrant closer attention.
- Algeria
  - Public investment program referenced: “public investment program launched since last year [for] 5 years, about $200 billion.”
  - IMF view: economic situation “rather good”; 2011 expected to be “a rather good year for Algeria” due to high oil and gas prices.
  - Reserves: “The reserves that the Central Bank of Algeria has accumulated are huge.”
  - Policy emphasis: use resources for infrastructure and improving the business environment to attract foreign investment.
- Libya
  - Oil exports “have decreased significantly” with uncertain and potentially prolonged recovery; economic consequences “will be important.”
- Syria
  - Vulnerability to food and fuel price increases emphasized; policy advice to focus on protecting the most vulnerable with targeted measures rather than across-the-board subsidies.
  - Fiscal cost sensitivities highlighted given Syria’s status as an oil importer.
- Morocco
  - Political reform: King Mohammed VI’s March 9 constitutional reforms commended as timely and relevant to political stability and business environment attractiveness.
  - Regional integration: stronger economic integration among Tunisia, Algeria, and Morocco seen as important to boost growth and job creation.
- Egypt
  - IMF prior macro policy advice credited with achieving “rather good” macro outcomes (growth, current account, fiscal situation), but distributional effects and inequality seen as critical unmet challenges.
  - Perception issue: public accusations that previous economic ministers “followed the prescriptions of the World Bank and the IMF” noted as a potential obstacle for future cooperation.

### Social and labor-market indicators highlighted
- Youth unemployment: “around 25 percent when it is not more.”
- Female youth unemployment: “for girls reaching sometimes 35 to 40 percent.”
- Jobs needed (demographic challenge): cited figure of “80 million jobs to be created to just absorb youth unemployment.”

### Policy recommendations and IMF approach
- Short-term emphasis
  - Prioritize technical assistance and policy advice; avoid premature financing which signals problems to countries.
  - Advocate targeted support for the most vulnerable rather than broad universal subsidies to contain fiscal costs.
- Medium-term and institutional emphasis
  - Promote regional economic integration (Maghreb) as a way to boost growth and job creation.
  - Use oil-sector resources (e.g., Algeria) for long-term infrastructure investment with regional spillovers.
  - Strengthen governance and institutions (public procurement rules, public expenditure management) as part of programs where applicable.
- Evolution of IMF surveillance and mandate
  - IMF to expand surveillance content: incorporate distributional effects, unemployment, and social perceptions more systematically into Article IV consultations (“Article IV is the name of the report we make every year”).
  - Collaborate with other institutions (World Bank, UN agencies, NGOs) to use their expertise on inequalities and social tensions; IMF will “learn by doing” and develop indicators beyond traditional macro variables.

### Institutional and political constraints
- Leverage limits
  - IMF’s capacity to influence policy depends on whether a government requests assistance; advice alone has limited enforcement power.
  - The IMF’s multilateral board can exert peer pressure when programs require conditionality, but sovereign governments may ignore advice when unwilling.
- Communication and fairness
  - Acknowledged public criticism that IMF advice contributed to unrest; response stressed that macro outcomes were “rather good” but not sufficient without inclusive growth.
  - IMF acceptance that it must do more on inclusion and governance within its mandate without becoming a political or sociological expert.

*Transcript of a Group Interview with Managing Director Dominique Strauss-Kahn and Middle East Journalists, April 7, 2011 (interview in Washington, D.C.; quoted remarks dated Wednesday, April 6, 2011).*

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## References

- [Algeria and the IMF](http://www.imf.org/external/country/DZA/index.htm)
- [Arab Republic of Egypt and the IMF](http://www.imf.org/external/country/EGY/index.htm)
- [Libya and the IMF](http://www.imf.org/external/country/LBY/index.htm)
- [Morocco and the IMF](http://www.imf.org/external/country/MAR/index.htm)
- [Syrian Arab Republic and the IMF](http://www.imf.org/external/country/SYR/index.htm)
- [Tunisia and the IMF](http://www.imf.org/external/country/TUN/index.htm)
- [IMF Policy Advice -- A Factsheet](https://www.imf.org/en/about/factsheets/imf-surveillance)
- [Transcripts](https://www.imf.org/en/news/searchnews)
- [PRESS CENTER](http://presscenter.imf.org/)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2015/09/28/04/54/tr040611_