DUBAI: The head of the International Monetary Fund said on Sunday that public debt in some Middle East and North Africa countries is of concern and that governments need to build resilience through fiscal policies to protect against shocks.
IMF Managing Director Kristalina Georgieva, addressing an Arab Fiscal Forum in Dubai, said the earthquake that devastated large parts of Syria and Turkey "brought tremendous tragedy on people but also a very significant impact on the Turkish economy".
"So, we have to build more resilience to these shocks," she said.
The IMF forecast last month that economic growth in the MENA region will slow to 3.2 percent this year, before ticking up to 3.5 percent in 2024.
Georgieva said global growth remains weak, but it may be at a turning point. "After expanding by 3.4 percent last year, we see growth slowing to 2.9 percent in 2023 and rebounding slightly to 3.1 percent in 2024."
On the positive, she said in her speech that they see inflation declining from 8.8 percent in 2022 to 6.6 percent this year and 4.3 percent in 2024—although for most countries, it will still be above pre-pandemic levels. "China’s reopening is helping, as well as resilient labor markets and consumer spending in the US and the EU."
While this is encouraging, Georgieva said the balance of risks remains tilted to the downside. "China’s recovery could stall. Inflation could remain higher than expected, requiring even more monetary tightening—which could cause a sudden repricing in financial markets. And Russia’s war in Ukraine could escalate, causing further fragmentation of the global economy," the IMF chief added.
As the global economy slows, she said growth is also expected to drop in the MENA region—from 5.4 percent in 2022 to 3.2 percent this year before ticking up to 3.5 percent in 2024. The IMF chief said the OPEC+ production cuts would reduce overall revenue for the oil exporters. "For oil importers, the challenges would continue. Public debt is a particular concern, with several economies in the region facing elevated debt-to-GDP ratios—some close to 90 percent," she added in her speech.
