As world leaders head to New York this week for the United Nations General Assembly, there is still no end to the heart-breaking images of war-torn cities in the Middle East and North Africa, and of a massive exodus of people looking for sanctuary and opportunities to sustain a livelihood.
By Masood Ahmed
(version in عربي)
The International Monetary Fund released today a new paper entitled “Toward New Horizons—Arab Economic Transformation amid Political Transitions.”
The paper makes the case for the urgency of launching economic policy reforms, beyond short-term macroeconomic management, to support economic stability and stronger, job-creating economic growth in the Arab Countries in Transition—Egypt, Jordan, Libya, Morocco, Tunisia, and Yemen.
These countries face the risk of stagnation if reforms are delayed further.Economic conditions have deteriorated from transition-related disruptions, regional conflict, an unclear political outlook, eroding competitiveness, and a challenging external economic environment.
As economic realities fall behind peoples’ expectations, there is a risk of increased discontent. This could further complicate the political transitions, impairing governments’ mandates and planning horizons and, consequently, their ability to implement the policies necessary to catalyze the much-needed economic improvements.
If there is one fact I think sums up the problems of the Middle East and North Africa, it is that the non-oil exports of the whole region, are $365 billion, about the same as the exports of Belgium, a country of 11 million people, compared with the 400 million people who make up the Arab world. This is a crucial indicator of the nature and size of the structural adjustment problem the Arab countries in transition face.
The IMF’s assistance varies across the region, given that each country faces its own economic challenges, and the instruments to tackle those challenges must be tailored to address those unique circumstances. I am pleased to say that a few days ago, in response to the authorities’ request, the IMF Board approved two loans in support of the economic reform agendas of Arab countries in transition: one for Jordan under a Standby Arrangement in the amount of $2.05 billion, and another for Morocco in the amount of $6.2 billion under our Precautionary and Liquidity Line (PLL). This follows on our earlier concessional loan to Yemen under the Rapid Credit Facility.
We know that social exclusion and unemployment, especially among young people, are very painful and that the challenges ahead are formidable. We should not let the hopes and aspirations of the people who took to the street go unfulfilled. We must strive to ensure that the people of the Arab countries in transition have the opportunity for a fairer and more prosperous future.
Young people were innocent bystanders in the global financial crisis, but they may well end up paying the heaviest price for the policy mistakes that have led us to where we are today. Young people will have to pay the taxes to service the debts accumulated in recent years.
I leave the Middle East and North Africa region with a sense of hope and resolve to return to the region again soon. I believe that with determination, the goals of the Arab reform agenda are within reach. Putting such reforms in place will help countries in the region both meet people’s aspirations and help them contribute even more to the rest of the world.
Tunisia is going through an inclusive process of transition, but faces some extraordinary challenges. I have heard from its leaders how Tunisia was the model that paved the way for the Arab Spring, and their firm belief that it remains capable of lighting the path forward for other countries going through historic changes in the region.
It is a period when hard choices must be made, when post-revolutionary euphoria must give some way to practical concerns. It also does not help that this is happening at a time of great turmoil in the global economy. But I remain hopeful. The final destination is clear: the Arab Spring is still poised to unleash the potential of the Arab people.
The informal economy is large and pervasive—and, often, ignored; however, the experience of those who work in the informal sector came under the media spotlight when Tunisian street vendor Mohamed Bouazizi set himself on fire that fateful day in December last year, sparking the Arab Spring protests.