|09 February, 2019

Trust required between citizens and institutions of Arab countries: IMF

Countries in region need to intensify fiscal consolidation efforts to rebuild buffers

A participant stands near a logo of IMF at the International Monetary Fund - World Bank Annual Meeting 2018 in Nusa Dua, Bali, Indonesia, October 12, 2018.

A participant stands near a logo of IMF at the International Monetary Fund - World Bank Annual Meeting 2018 in Nusa Dua, Bali, Indonesia, October 12, 2018.

REUTERS/Johannes P. Christo

Arab countries need to strengthen trust between citizens and institutions through improved quality of services and embracing new technologies, a senior official of the International Monetary Fund (IMF) said on Saturday.

"Countries in the region also need to rebuild trust between citizens and institutions by improving quality of services and adopting new technologies and digital solutions," said Jihad Azour, director for the Middle East and Central Asia at the IMF.

He noted that amidst the current situation, countries in the region need to intensify fiscal consolidation efforts to rebuild buffers, reduce debt, strengthen near-term resilience, and ensure composition of fiscal policy is geared to ensure growth-friendly outcomes by protecting capital and social spending while streamlining public wage bills, completing energy subsidy reforms and making revenue collection more equitable by lowering exemptions and broadening the tax base.

Azour was speaking at the fourth Arab Fiscal Forum, which is part of the World Government Summit, taking place in Dubai from February 10 to 12, under the theme "Laying the foundations of good fiscal management in the Arab countries".

Azour said that pressure from weaker global growth, along with higher oil price volatility and tighter global financial conditions have exposed external balance sheet weaknesses, and increased risks to highly indebted countries. During the session entitled 'Macroeconomic Developments and Prospects', Azour said that despite fiscal consolidation efforts, vulnerabilities persist including weak balance sheets and high debt. He also said that fiscal policies have not delivered the outcomes of higher and more inclusive growth.

Furthermore, he noted that strengthening fiscal institutions requires the bolstering of public investment management frameworks to ensure the quality of public investment. It also requires governments to take advantage of digitalisation and improve governance to raise revenue apart from adopting fiscal rules to enhance fiscal sustainability and macroeconomic stability.

Azour noted that the changing global economic conditions marked by weakening growth prospects should serve as an alert for countries in the region.

 

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