The head of the International Monetary Fund (IMF), Kristalina Georgieva, has expressed concern over public debt levels in several countries in the Middle East and North Africa (MENA) region. In her recent speech at the Arab Fiscal Forum in Dubai, Georgieva stated that public debt, particularly in oil-importing nations, is a concern that the IMF will continue to address. She emphasized the need for MENA governments to adopt robust fiscal frameworks and to increase their tax-to-GDP ratios in order to build resilience against uncertain times and potential shocks.
Ms. Georgieva pointed out that the region requires a tax-to-GDP ratio of at least 15% and that there is room for tax revenues to be doubled. She also highlighted the persistent high unemployment in the region, particularly among young people, as a significant risk to social stability, which can be exacerbated by the impacts of climate disasters and the ongoing conflict in Russia-Ukraine.
In her speech, Georgieva called for deeper multilateral cooperation to help countries deal with unsustainable debt and the effects of climate change. She stated that the region needs over $750 billion in multi-year financing for climate action and that governments should encourage private climate finance through the right policies and financial solutions.
IMF’s recent forecast predicts that the economic growth in MENA will slow down to 3.2% this year and will rise to 3.5% in 2024. The forecast also projects that inflation in the region will surpass 10% in 2023, which Georgieva called “far too high still.”
In conclusion, Kristalina Georgieva emphasized the need for fiscal policies that can help build resilience in the MENA region, especially in light of the challenges posed by public debt, inflation, unemployment, and the impacts of climate change.