São Paulo – The director general at the International Monetary Fund (IMF), Christine Lagarde, said on Friday (8) that the countries of the Middle East and North Africa that are living political turmoil need to put in practice reforms resulting in the attraction of investment, job generation and recovery of the economic situation. In a press statement disclosed by the Fund, Lagarde stated that the conflicts in Syria have increased concerns of the conflict in the region spreading, mainly to Jordan, Morocco, Tunisia, Yemen, Libya and Egypt.
In a press statement, the head of the IMF recognises that there are signs of improvement in tourism, exports and attraction of foreign direct investment. However, most of the countries mentioned in the area face high unemployment, low growth, lower international reserves and a worsening of economic situation. To the executive, it is disheartening that over one million people in the region have lost their jobs. She warns that unemployment among youths is greater and that in Jordan and Tunisia, almost 30% of the young are unemployed.
These problems may be solved, says Lagarde in her commentary, but as private investment in most of these nations is “stalled”, the governments should play a “key role”.
They should, most of all, put into practice structural reforms in their economies to provide for job and investment generation. Not just that. She also recommends that the spending policy be reviewed and turned to “productive public investment” instead of unproductive spending, like the transfer of subsidies which frequently benefit the wealthiest.
“Governments should embark on the economic reforms needed to lay the foundation for lasting growth. This agenda includes ensuring simple, transparent, and even-handed treatment for companies; greater transparency and accountability of public institutions; adequate skill-building and incentives for employment; access to finance to help spur entrepreneurship and private investment; and greater trade integration, both within the region and in the world economy, ” said Lagarde.
In Lagarde’s evaluation, the international community must also aid these countries with “higher levels” of financial help. This is only possible, according to her, if there is true commitment with political reforms and with the fiscal situation.
Lagarde said in the document that the IMF is engaged in the recovery of transition economies and has financial agreements with Jordan, Morocco and Tunisia, is negotiating medium term loans with Yemen, is offering “policy advice” to Libya and may help Egypt through counselling or loans. Before the ousting of former president Mohamed Morsi, in July this year, the IMF and Egypt were negotiating a loan agreement with the Arab country. Conditions imposed by the IMF to disburse funds, however, were rejected by the population. Among them was the reduction of subsidies.
*Translated by Mark Ament