DUBAI: Corruption, poor governance and a lack of transparency are the key challenges facing Middle East economies, International Monetary Fund chief Christine Lagarde has warned in a hard-hitting analysis of the region\u2019s economic prospects.<\/p>\n\n\n\n
Speaking ahead of the opening day of the World Government Summit in Dubai, Lagarde also warned of the impact for regional economies if further measures to implement good governance practice and transparency were not put in place. <\/p>\n\n\n\n
The IMF is planning talks with regional policymakers to implement new frameworks to strengthen governance and tackle corruption, \u201cthe great disruptor of fiscal policy,\u201d she added.<\/p>\n\n\n\n
Her hard-hitting analysis of the region\u2019s economic prospects come against the background of a weakening outlook for global economies. The IMF recently downgraded its forecasts for global growth.<\/p>\n\n\n\n
\u201cUnfortunately, the region has yet to fully recover from the global financial crisis and other big economic dislocations over the past decade,\u201d she told regional finance ministers.<\/p>\n\n\n\n
\u201cAmong oil importers, growth has picked up, but it is still below pre-crisis levels. Fiscal deficits remain high, and public debt has risen rapidly\u2014from 64 percent of GDP in 2008 to 85 percent of GDP a decade later. Public debt now exceeds 90 percent of GDP in nearly half of these countries,\u201d Lagarde said.<\/p>\n\n\n\n
She went on: \u201cThe oil exporters have not fully recovered from the dramatic oil price shock of 2014. Modest growth continues, but the outlook is highly uncertain\u2014reflecting in part the need for countries to shift rapidly toward renewable energy over the new few decades, in line with the Paris Agreement.<\/p>\n\n\n\n
\u201cWith revenues down, fiscal deficits are only slowly declining\u2014despite significant reforms on both the spending and revenue sides, including the introduction of VAT and excise taxes. This has led to a sharp increase in public debt\u2014from 13 percent of GDP in 2013 to 33 percent in 2018.\u201d<\/p>\n\n\n\n
The bottom line, the IMF boss said, is that “the economic path ahead for the region is challenging. This makes the task of fiscal policy that much harder, which in turn makes it even more important to build strong foundations to anchor fiscal policy.\u201d<\/p>\n\n\n\n
She said that there was scope to improve fiscal frameworks in the region, to offset the impact of short-termism and lack of fiscal credibility.<\/p>\n\n\n\n
\u201cI am referring to such factors as large amounts of spending kept off-budget and poor risk management. Across the region, it is common for sovereign wealth funds to directly finance projects, bypassing the normal budget process. And state-owned enterprises in some countries have high levels of borrowing\u2014again, outside of the budget,\u201d Lagarde said.<\/p>\n\n\n\n
She commended Saudi Arabia and some other Middle East countries for setting up macro-fiscal units, but added: \u201cPerhaps the oil exporters could follow the example of other resource-rich countries such as Chile and Norway in using fiscal rules to protect key priorities such as social spending from commodity price volatility,\u201d she suggested.<\/p>\n\n\n\n
Without such a framework, corruption – \u201ca social poison\u201d – becomes a greater risk. \u201cWithout trust in the fairness of the tax system, it becomes harder to raise the revenue needed for critical spending on health, education, and social protection. And governments might be tempted to favor white elephant projects instead of investments in people and productive potential. Add this up, and we have a recipe for unsustainable fiscal policy combined with social discord,\u201d Lagarde added.<\/p>\n\n\n\n
She was speaking at the Arab Fiscal Forum that traditionally precedes the World Government Summit, which formally opens Sunday for three days of high-level discussion and debate by world thought leaders from the worlds of public policy, business and entertainment.<\/p>\n\n\n\n
Pakistan’s Prime Minister Imran Khan, actor Harrison Ford and Lebanese Prime Minister Saad Hariri are among 4,000 delegates who will attend the three-day event, along with Estonia\u2019s prime minister J\u00fcri Ratas and President of Rwanda Paul Kagame.<\/p>\n","protected":false},"excerpt":{"rendered":"
DUBAI: Corruption, poor governance and a lack of transparency are the key challenges facing Middle East economies, International Monetary Fund chief Christine Lagarde has warned in a hard-hitting analysis of the region\u2019s economic prospects. Speaking ahead of the opening day of the World Government Summit in Dubai, Lagarde also warned of the impact for regional economies if further measures to… Read more »<\/a><\/p>\n","protected":false},"author":110,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[216],"class_list":["post-3326","post","type-post","status-publish","format-standard","hentry","category-article","tag-www-arabnews-com"],"_links":{"self":[{"href":"https:\/\/baileyonlineclassroom.com\/middleeastandnorthafricablog\/wp-json\/wp\/v2\/posts\/3326","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/baileyonlineclassroom.com\/middleeastandnorthafricablog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/baileyonlineclassroom.com\/middleeastandnorthafricablog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/baileyonlineclassroom.com\/middleeastandnorthafricablog\/wp-json\/wp\/v2\/users\/110"}],"replies":[{"embeddable":true,"href":"https:\/\/baileyonlineclassroom.com\/middleeastandnorthafricablog\/wp-json\/wp\/v2\/comments?post=3326"}],"version-history":[{"count":1,"href":"https:\/\/baileyonlineclassroom.com\/middleeastandnorthafricablog\/wp-json\/wp\/v2\/posts\/3326\/revisions"}],"predecessor-version":[{"id":3327,"href":"https:\/\/baileyonlineclassroom.com\/middleeastandnorthafricablog\/wp-json\/wp\/v2\/posts\/3326\/revisions\/3327"}],"wp:attachment":[{"href":"https:\/\/baileyonlineclassroom.com\/middleeastandnorthafricablog\/wp-json\/wp\/v2\/media?parent=3326"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/baileyonlineclassroom.com\/middleeastandnorthafricablog\/wp-json\/wp\/v2\/categories?post=3326"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/baileyonlineclassroom.com\/middleeastandnorthafricablog\/wp-json\/wp\/v2\/tags?post=3326"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}