Christine Lagarde, managing director of the IMF, right, talks with a Syrian refugee woman during her visit to the Zaatari refugee camp in Mafraq, Jordan, on Sunday, May 11, 2014. (AP Photo/Ali Jarekji, Pool)
Written by : Mina Al-Oraibi
Amman, Asharq Al-Awsat—Arab countries currently transitioning to democracy need to issue long-term economic policies if they are to bypass this transitional stage, IMF chief Christine Lagarde said on Monday.
Speaking to Asharq Al-Awsat on the sidelines of an IMF-sponsored conference in Amman, Jordan, Lagarde said: “The transitional phase cannot last forever. [Arab] countries must build for a long-term future.”
Lagarde also called on Arab governments to enact major structural economic reforms—especially for energy and food subsidies, which cost Arab governments 237 billion US dollars annually according to IMF figures—and to open the way for greater private sector involvement in their economies. “When the private sector’s confidence in investment increases, the likelihood of job creation increases,” she said.
Lagarde also stressed the need for Arab Spring countries—or what her organization calls “Arab Countries in Transition,” namely Egypt, Tunisia, Morocco, Libya and Yemen, to strengthen the middle class, as well as boost small- and medium-sized enterprises (SMEs).
During another conference, held in Morocco on May 8, Lagarde called SMEs the “middle in the economy,” which, alongside the “middle in society”—the middle class—needed support from Arab governments in order for these countries to meet the “challenges and fulfil the promises of transition.”
Lagarde had previously said Arab countries needed to be aiming for growth rates nearing 6 percent in order to benefit from any tangible development, again reiterating this at the conference on Monday. “In an ideal situation, the Arab countries in transition would be doubling their current growth rates from 3 to 6 percent,” she said. “The process will be gradual, but I hope that this will be the direction and that it reaches 6 percent, which is the growth rate needed to create jobs in the region.”
The current growth rates of Egypt, Morocco and Tunisia stand at 1, 2.5 and negative 0.3 percent, respectively.
Arab Spring countries that have managed to depose longtime rulers—Tunisia, Egypt, Libya and Yemen—have struggled economically since 2011. Previous regional tourist magnets Tunisia and Egypt have seen growth dwindle since their uprisings, with unemployment, inflation and debt all at dangerous levels. In a recent interview with Asharq Al-Awsat, Egypt’s trade, industry and investment Minister, Mounir Fakhry Abdel Nour, said his country’s total debt had now reached above 100 percent of GDP.