{
  "title": "Transcript of Middle East and Central Asia Press Briefing",
  "publication": "IMF News, April 21, 2017",
  "sourceUrl": "https://www.imf.org/en/news/articles/2017/04/21/tr0417-middle-east-and-central-asia-press-briefing",
  "canonical": "https://www.imf.org/en/news/articles/2017/04/21/tr0417-middle-east-and-central-asia-press-briefing",
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  "summary": "A more favorable global environment—including higher expected growth and some firming of commodity prices—is providing some breathing space for the MENAP region.",
  "publishDate": "2017-04-21",
  "sections": [
    {
      "heading": "Regional outlook: MENAP (Middle East, North Africa, Afghanistan, and Pakistan)",
      "content": "- A more favorable global environment—including higher expected growth and some firming of commodity prices—is providing some breathing space for the MENAP region.\n- Non-oil growth for the MENAP oil exporters:\n  - Expected to accelerate from 0.4 percent in 2016 to 2.9 percent in 2017.\n  - Headline growth reduced by production cuts following the OPEC agreement.\n- MENAP oil importers:\n  - Headline growth projected to increase from 3.7 percent in 2016 to 4 percent in 2017.\n- Medium-term growth projections are described as too low to create enough jobs or improve living standards.\n- Major regional social and humanitarian context:\n  - An estimated 10 million refugees and twice as many displaced people are affecting countries in the region."
    },
    {
      "heading": "Fiscal position and consolidation priorities",
      "content": "- Fiscal deficits and debt levels:\n  - Fiscal deficits for oil exporters were 10 percent of GDP last year, but are expected to fall below 5 percent this year, in part due to higher oil prices.\n  - Oil importers deficits expected to drop from 7.2 percent in 2016 to 6.6 percent in 2017.\n  - Many countries—especially oil importers—carry average debt levels of about 80 percent of GDP.\n- Policy imperatives for both oil exporters and importers:\n  - Fiscal consolidation and structural reforms.\n  - Recommendations include:\n    - Consolidate at a pace appropriate to each country and as growth friendly as possible.\n    - Give priority to productive spending (education, technology and innovation, health care).\n    - Protect the poor and vulnerable (examples: takaful and Karama programs mentioned for Egypt).\n    - Reduce exemptions and expand the tax base to make reforms fairer and more inclusive.\n- Noted policy measures already adopted in some countries:\n  - Plans for a value-added tax in the GCC countries.\n  - Streamlining current spending in Algeria and Oman.\n  - Energy subsidy reform."
    },
    {
      "heading": "Structural reforms and diversification",
      "content": "- Structural reform objectives:\n  - Diversify economies, spur private sector-led growth, boost competitiveness and productivity.\n  - Generate jobs for millions of new jobseekers expected to enter the labor force over the next five years.\n- Country-specific implementation focus:\n  - For countries with plans (example: Saudi Arabia), the emphasis is on implementation.\n  - For the Caucasus and Central Asia (CCA), plans developed by Georgia and Kazakhstan are encouraged to be implemented to diversify away from commodities and remittances.\n- Tunisia and Jordan: emphasis on stabilization plus recovery through reforms that improve business environment, financial sector reform, and support for small and medium enterprises to boost inclusive growth."
    },
    {
      "heading": "Caucasus and Central Asia (CCA) — outlook and financial sector risks",
      "content": "- Growth forecast:\n  - Growth for the CCA is forecast to increase from 2.4 percent in 2016 to 3.1 percent in 2017.\n- Key vulnerabilities:\n  - Recent shocks have left the region with higher debt and weaker financial sectors; medium-term growth outlook remains subdued.\n  - Financial sector concerns:\n    - With few exceptions, restructured and overdue loans have increased further.\n    - Banks remain undercapitalized.\n    - These weaknesses are a drag on growth and pose a risk to public finances.\n  - Policy guidance:\n    - Carefully consolidate fiscal positions—too much consolidation could hurt growth; too little could undermine fiscal sustainability.\n    - Urgent need for financial repair and bank recapitalization where required.\n    - Continue structural reforms to improve business environment and legal frameworks."
    },
    {
      "heading": "IMF engagement, programs, and capacity building",
      "content": "- IMF financial support and program activity in the region:\n  - Providing financial support to 10 countries in the region, including new arrangements for Egypt and Georgia (Board approval noted).\n  - Egypt: Board agreed to grant a $12 billion loan; first tranche disbursed.\n  - Program timeline note for Egypt: program was approved in 2016 and \"is running for six months now\"; described as a \"three years' program\".\n- Advisory and technical assistance highlights:\n  - Advice and analytical work on energy price reform in the Arab countries and structural priorities in the GCC.\n  - Capacity building: anti-money laundering in Afghanistan; introduction of a new currency in Somalia; development of the value-added tax in the GCC.\n  - Plans for a conference in early 2018 aimed at identifying ways to boost inclusive growth in the MENA region.\n- Programs tailored for conflict-affected countries:\n  - Lending arrangements tailored to help countries cope with humanitarian and economic costs of conflict.\n  - IMF working with partners to mobilize broader international support."
    },
    {
      "heading": "Country Q&A highlights and policy notes",
      "content": "- Egypt:\n  - Program approved in 2016; six months of implementation noted.\n  - Priority: bring inflation down from 30 percent further down; monetary instruments (interest rates) are emphasized.\n  - Debt sustainability is a main priority; program design aims to progressively bring down the level of debt.\n  - Social protection measures included (takaful and Karama) to protect low-income groups during subsidy removal.\n  - Second tranche disbursement timing: will depend on completion of the program review; a mission expected \"probably by end of April or so\" to finalize the review (no firm disbursement date given).\n  - Program described as having brought strong confidence, translated into strong capital inflows and stabilized the situation.\n  - Sequencing: prioritize inflation reduction before pursuing some additional fiscal measures; program is three years' duration.\n- Bahrain:\n  - Observations: FX reserve levels reported as \"down below $2 billion\" and said to cover \"less than two months\" of (unspecified) import cover.\n  - Bahrain, like other GCC countries, was hit hard by the drop in oil price; buffers are lower for some countries.\n  - Policy advice: pursue fiscal consolidation; authorities have tapped markets successfully with sovereign bond issuances.\n  - IMF keeps dialogue open with Bahraini authorities.\n- Iran:\n  - Iranian economy recovered in 2016 mainly from oil sector; ability to raise oil production and exports aided growth in 2016.\n  - 2017 growth expected to come from the non-oil sector, conditional on speed of structural reforms, financial sector reform, fiscal management, and improvements to the business environment to increase foreign investor access.\n- Tunisia:\n  - Recent IMF mission finished with a satisfactory outcome.\n  - Emphasis on key reforms to address public finance (high deficit) and the growing trade deficit.\n  - IMF is not recommending outright floating of the Dinar; instead recommends managing the currency in a way to address deficits and preserve stability.\n  - Monetary and fiscal measures are presented as complementary instruments; objective is stabilization and recovery, with focus on enabling growth and job creation.\n  - Communication strategy is noted as the authorities’ responsibility, not the IMF’s.\n- Lebanon:\n  - IMF mission in Beirut reviewed measures to reduce deficit and addressed refugee impacts on fiscal and economic fronts.\n  - IMF encourages accelerated deficit reduction to achieve primary surpluses sufficient to stabilize and reduce debt-to-GDP.\n  - Recommendation includes using prudential monetary policy tools, including gradual interest rate increases if necessary, given rising global interest rates and dollar appreciation risks.\n- Jordan:\n  - Refugee burden is a major economic challenge; limited benefit from trade with neighbors compounds difficulties.\n  - IMF-supported program focuses on revenue base expansion and fiscal reforms while protecting vulnerable groups.\n  - Recommendations include gradually eliminating tax exemptions to broaden tax base (with attention to protecting basic food subsidies and vulnerable populations).\n  - Emphasis on enabling private sector-led growth and support for small and medium enterprises to create jobs and boost inclusive growth."
    },
    {
      "heading": "Risks and external factors",
      "content": "- Global risks identified:\n  - Potential U.S. tax reform and appreciation of the dollar could pose risks to CCA countries with dollar-denominated debt.\n  - Ongoing rebalancing of the Chinese economy could lower demand for raw materials and metals, weighing on exports of commodity-dependent countries.\n- Policy response emphasis:\n  - Use improved global conditions in 2017 to accelerate reforms: structural reforms, financial-sector repair, fiscal consolidation, and economic diversification.\n  - Leverage initiatives such as One Belt One Road and increased Chinese activity where possible to benefit regional growth.\n\nTranscript of Middle East and Central Asia Press Briefing — Washington, D.C., April 21, 2017\n\n---\n\n\n References\n\n- PRESS CENTER\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2017/04/21/tr0417-middle-east-and-central-asia-press-briefing"
    }
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    "Published: April 21, 2017",
    "A more favorable global environment—including higher expected growth and some firming of commodity prices—is providing some breathing space for the MENAP region.",
    "Non-oil growth for the MENAP oil exporters:",
    "MENAP oil importers:",
    "Medium-term growth projections are described as too low to create enough jobs or improve living standards.",
    "Major regional social and humanitarian context:",
    "Fiscal deficits and debt levels:",
    "Policy imperatives for both oil exporters and importers:",
    "Noted policy measures already adopted in some countries:",
    "Structural reform objectives:",
    "Country-specific implementation focus:",
    "Tunisia and Jordan: emphasis on stabilization plus recovery through reforms that improve business environment, financial sector reform, and support for small and medium enterprises to boost inclusive growth.",
    "Growth forecast:",
    "Key vulnerabilities:",
    "IMF financial support and program activity in the region:",
    "Advisory and technical assistance highlights:",
    "Programs tailored for conflict-affected countries:",
    "Egypt:",
    "Bahrain:",
    "Iran:",
    "Tunisia:",
    "Lebanon:",
    "Jordan:",
    "Global risks identified:",
    "Policy response emphasis:",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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