## Press Briefing Transcript: Middle East and Central Asia Department

_IMF News, October 20, 2025_

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## Bibliographic details
- Published: October 20, 2025

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### Regional outlook and projections
- MENA (Middle East and North Africa), Pakistan, and Caucasus and Central Asia showed resilience in 2025 despite trade tensions and regional conflict.
- MENA and Pakistan:
  - Projected growth of 3.2 percent in 2025, up from 2.1 percent in 2024 and higher than the April forecast.
  - Growth expected to rise to 3.7 percent in 2026.
  - Inflation expected to remain moderate, helped by lower food and energy prices and tight monetary policies.
  - Upgrade of the 2025 outlook by 0.6 percent compared to April projections (regional aggregate context).
- Caucasus and Central Asia (CCA):
  - Average growth of 5.6 percent in 2025.
  - Growth expected to ease gradually to about 4 percent over the medium term as hydrocarbon production stabilizes and fiscal consolidations take hold.
  - Inflation is mixed: easing in most MENA economies and Pakistan, but accelerating and still elevated in many CCA countries due to robust demand and price pressures.

### Drivers of 2025 performance
- Global factors:
  - Output growth held steady; inflation moderate or eased in most regions.
  - Temporary global supports: front loading ahead of tariff increases, inventory and supply-chain adjustments, and significant investment in new AI technologies.
  - As temporary factors fade, global demand may soften, affecting regions via trade, finance, and commodity channels.
- Regional drivers:
  - Oil exporters: benefited from higher oil output after faster unwinding of OPEC+ cuts.
  - Oil importers and Pakistan: benefited from low energy prices, strong remittances, and a vibrant tourism sector supporting domestic demand.
  - Caucasus and Central Asia: growth driven by strong consumption, credit expansion, and steady hydrocarbon exports.

### Key risks and scenarios
- Downside risks:
  - Significant recent shocks and elevated global uncertainty could undermine demand, induce global slowdown, or tighten global financial conditions.
  - Persistent inflation and fiscal sustainability concerns in advanced economies could raise borrowing costs, affecting countries with large financing needs.
  - Continued exposure to geopolitical tensions and climate-related shocks could disrupt activity.
- Upside scenario:
  - Faster progress toward peace and reforms could yield stronger and more inclusive growth.

### Policy priorities and recommendations
- Fiscal policy:
  - Rebuild fiscal and external buffers, especially where reserves and fiscal space are limited.
  - Enhance fiscal frameworks to ensure long-term sustainability; adopt medium-term fiscal frameworks to anchor debt.
- Monetary policy:
  - Reinforce monetary policy credibility to anchor inflation expectations.
- Structural reforms:
  - Accelerate reforms to diversify economies, empower the private sector, and attract investment that creates jobs.
  - In conflict-affected countries, prioritize rapid macroeconomic stabilization, rebuilding institutions, and securing external support for recovery.
  - Advance reforms that promote good governance, regional integration, and equal opportunity, especially for youth and women.
- Debt and liability management:
  - Strengthen institutions and debt-management practices; use international market access as asset-liability management when conditions are favorable.
  - Remain vigilant to indirect trade impacts from protectionism and shifting trade routes; use opportunities from AI and other investments to accelerate diversification.

### Country-specific highlights and issues
- GCC and tariffs:
  - Recent tariff measures had limited direct impact on the region due to limited trade volumes with the U.S. and tariff rates between 10 to 15 percent; oil and gas exports largely excluded.
  - Indirect trade-route effects warrant vigilance and active diversification.
  - Market access improved in 2025; regional sovereign issuance has exceeded last year’s level. Example cited: Kuwait issued at 11.5 percent.
- Egypt:
  - Tangible improvements since program implementation: inflation declined; expected to reach 11.8 percent next year (explicit IMF expectation).
  - Growth: 4.3 percent for financial year 2024-2025; 4.5 percent for 2025-2026.
  - Debt levels improving gradually.
  - Program pillars: support growth and job creation by empowering the private sector, improve business environment, clarify state role, transform public institutions, and target public expenditure to protect the most vulnerable.
  - IMF position: extension of program duration not deemed necessary; focus on accelerating private-sector role and protecting social systems.
- Gaza and Palestine-related reconstruction:
  - IMF supports international coordination and contributes within mandate (policy advice, technical assistance, part of Ad Hoc Liaison Committee).
  - Reconstruction sequence: assess damage and emergency needs (World Bank and UN agencies leading damage and needs assessments); IMF awaits those assessments for further inputs.
  - IMF participation in donor conferences contingent on invitations and coordination with other institutions.
- Lebanon:
  - Lebanon requested a program in March (year of transcript) and negotiations resumed based on the interim 2022 agreement.
  - Core negotiation topics: sequencing of obligations; protection of deposits and most vulnerable; hierarchy of claims; fiscal reform for debt sustainability; financial sector sustainability; structural reforms and social safety nets.
  - Restoring trust requires addressing debt sustainability, financial sector stability, and anti-money laundering/combating illicit finance to reactivate banking and reduce cash-economy reliance.
  - IMF emphasizes medium-term fiscal frameworks, revenue broadening, and protecting low-income households from regressive inflation impacts.
- CCA and Central Asia specifics:
  - Strong resilience in 2025 with average growth of 5.6 percent; upward revision of 0.7 percent from spring projections.
  - Inflation acceleration in many CCA countries due to demand pressures and pass-through from Russia; electricity tariff reforms contributed to inflation in some cases.
  - Infrastructure projects (rail, electricity) improve connectivity and trade but require careful liability management to ensure debt sustainability.
  - Kyrgyzstan: IMF encourages vigilance on rising domestic debt associated with public projects; long-term projects should strengthen assets while liabilities remain sustainable.
- Tunisia, Morocco, Jordan:
  - Tunisia: IMF continues to stand by Tunisia; Article IV consultations are member commitments but Tunisia did not set a timetable for recent Article IVs; prior interim program request was not endorsed.
  - Morocco: Growth raised to 4.5 percent in 2025 with lower inflation; continued need for transformation, job creation, and strengthened safety nets.
  - Jordan: Withstood shocks, maintained stability, and registered slight growth improvements following recent revisions.

### IMF support, financing, and capacity development
- Financial assistance:
  - Since early 2020, the IMF has approved nearly $56 billion in financing for countries across MENOP (MENA and Pakistan) and CCA.
- Capacity development:
  - Delivered more than 385 capacity-development projects across 31 countries totaling $36.8 million in fiscal year 2024 and 2025.
- Instruments and roles:
  - Policy advice, financing, and capacity development; technical assistance and participation in international coordination frameworks.

### Communication and engagement
- Upcoming Regional Economic Outlook launches:
  - Dubai on October 21.
  - Almaty, Kazakhstan on October 30.
  - Both events open to in-person or online participation.

*Source: Press Briefing Transcript: Middle East and Central Asia Department (October 20, 2025), IMF Communications Department.*

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