## A Stronger Engine for Middle East and North Africa’s Growth

_IMF News, February 10, 2025_

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**Canonical URL:** [A Stronger Engine for Middle East and North Africa’s Growth](https://www.imf.org/en/news/articles/2025/02/10/sp-021025-md-keynote-speech-ninth-arab-fiscal-forum)

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## Bibliographic details
- Published: February 10, 2025

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### Global outlook and transformations
- Global growth is projected to hold at 3.3 percent this year and the next, and then to slow over the next five years, to just above 3 percent.
- For the Middle East and North Africa, growth is expected to rebound to about 3.6 percent in 2025, driven by a recovery in oil production and an easing of regional conflicts.
- Global public debt is projected to hit 100 percent of global GDP by 2030.
- Many countries in the region face debt levels exceeding 70 percent of GDP, posing the risk of a low-growth, high-debt scenario.
- Trade is no longer a distinct engine of growth: global trade and global GDP are now growing at roughly the same rate.
- The technology revolution—especially AI—is expected to transform the way we live and work, perhaps as early as the next five years.
- Inflation has been largely tamed, but has picked up again in some countries, potentially causing divergence in interest rates and higher borrowing costs for emerging market and developing economies.

### Building adaptable and more resilient economies
Findings:
- Short-term fiscal stimulus often provides a temporary “sugar rush” of growth but can fuel inflation and financial turbulence.
- Productivity growth is essential for stronger long-term growth and economic performance.
- Countries in the region that are more digitalized have substantially higher productivity than less-digitalization ones.
- Digital innovation, with AI technologies, is expected to raise UAE’s GDP significantly by 2030.
- Reducing the state’s footprint and strengthening governance can yield significant benefits (examples cited: Saudi Arabia, UAE, Morocco).
- Encouraging employment—especially private jobs for women and youth—is critical given a growing working-age population.
- Notable labor-market and human capital reforms have been seen in Oman, Qatar, and Bahrain.
- Economic diversification into new sectors and services (e.g., batteries for electric cars, green supply chains, improved connectivity) is a priority opportunity, particularly for oil-exporting countries.
- Regional cooperation (GCC as an example) can yield substantial benefits.

Policy recommendations:
- Prioritize structural changes that increase economic resilience, agility, and long-term growth potential rather than temporary demand stimulus.
- Accelerate digitalization and increase R&D spending to enhance productivity.
- Reduce the state’s footprint where appropriate and strengthen governance to foster private sector investment.
- Promote flexible labor markets, and invest in education and vocational training to boost youth and female employment.
- Reallocate resources toward new economic sectors and services to support diversification.
- Deepen regional cooperation to leverage shared gains from integration.

### Building fiscal buffers and institutions
Key challenges and projections:
- Public finances remain under significant strain after multiple shocks.
- Governments must contain high debt levels while meeting rising spending needs (jobs, social safety nets, climate resilience, national security, post-conflict reconstruction).
- Addressing the impact of more frequent natural disasters will potentially require a cumulative $1 trillion in investment by 2030.

Fiscal strategy recommendations:
- Pursue a prudent fiscal stance to preserve macroeconomic stability and enable private-sector-led growth.
- Decisively use fiscal policy to build fiscal buffers—the capacity to spend when needed to respond to shocks and meet development and climate-related needs.
- Carefully calibrate the size, pace, and composition of fiscal consolidation to avoid unduly hampering growth.
- Tailor budgetary reforms to country circumstances and provide compensatory support for those adversely affected to secure public support.
- Increase tax revenues by strengthening domestic tax systems and expanding tax bases as economies diversify.
- Leverage digitalization and AI to modernize tax administrations.
- Mobilize private domestic and external financing; enable an investment-friendly environment and strengthen the financial sector’s role.

Special country and reconstruction considerations:
- Several countries require special attention for conflict resolution or post-conflict reconstruction (explicit references to Sudan, Yemen, Gaza ceasefire, political changes in Syria and Lebanon).
- International reconstruction efforts present an opportunity to rebuild better and lay foundations for stronger growth.

### IMF role, recent support, and initiatives
- Since early 2020, the IMF has approved about $33 billion in financing for the region, most recently in 2024 to help mitigate the impact of conflict.
- The IMF reformed its surcharge policy, resulting in important savings for some countries.
- The IMF has expanded capacity development and strengthened its regional presence with resident representative offices, technical assistance centers, and a new regional office in Riyadh.
- The IMF is stepping up efforts to support the private sector with the creation of a new IMF Advisory Council on Entrepreneurship and Growth; the region will be represented on it.
- The IMF looks forward to the upcoming Al-Ula conference with emerging market economies to discuss key issues affecting the region.

### Conclusion: priorities for action
- Countries must become more agile, adaptable, and resilient to navigate rapid global transformations.
- The private sector should lead transformation through entrepreneurship, job creation, and innovation.
- Governments should foster the environment for private-sector-led growth by strengthening governance, modernizing public institutions, reducing bureaucracy, encouraging youth and female employment, improving access to capital, and designing people-first policies with stronger social support.
- Collective action: “linabda al-âmal”—let’s start the work together.

*Source: The Managing Director’s Keynote Speech at the Ninth Arab Fiscal Forum, February 10, 2025.*

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## References

- [https://www.imf.org/en/about/senior-officials/bios/kristalina-georgieva](https://www.imf.org/en/about/senior-officials/bios/kristalina-georgieva)
- [United Arab Emirates and the IMF](http://www.imf.org/external/country/ARE/index.htm)
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_Source: https://www.imf.org/en/news/articles/2025/02/10/sp-021025-md-keynote-speech-ninth-arab-fiscal-forum_