Fiscal prudence call

Christine Lagarde, managing director of the International Monetary Fund, has warned that the economies of the Middle East face a challenging time, and that stronger fiscal framework is required to tackle the region’s macro-economic issues. Speaking ahead of the opening day of the World Government Summit in Dubai, Lagarde also warned of the impact for regional economies if further measures to implement good governance practice and transparency were not put in place. 

The IMF is planning talks with regional policymakers to implement new frameworks to strengthen governance and tackle corruption, “the great disruptor of fiscal policy,” she added. Her hard-hitting analysis of the region’s economic prospects come against the background of a weakening outlook for global economies. The IMF recently downgraded its forecasts for global growth. “Unfortunately, the region has yet to fully recover from the global financial crisis and other big economic dislocations over the past decade,” she told regional finance ministers.

“Among oil importers, growth has picked up, but it is still below pre-crisis levels. Fiscal deficits remain high, and public debt has risen rapidly—from 64 percent of GDP in 2008 to 85pc of GDP a decade later. “Public debt now exceeds 90pc of GDP in nearly half of these countries,” Ms. Lagarde said.

She went on: “The oil exporters have not fully recovered from the dramatic oil price shock of 2014. Modest growth continues, but the outlook is highly uncertain—reflecting in part the need for countries to shift rapidly toward renewable energy over the new few decades, in line with the Paris Agreement.