Dubai, UAE–The head of the International Monetary Fund Kristalina Georgieva has stated that public debt in the MENA region is a “concern” and that governments in the region ought to create resilience by way of fiscal policies in order to protect against shocks.
She was speaking at the Arab Fiscal Forum in Dubai, urging authorities to adopt “robust” fiscal frameworks and address climate change.
The IMF cautioned last month that economic growth in MENA could slow to 3.2% this year, before ticking up to 3.5% in 2024.
Inflation may surpass 10% in 2023, according to a full copy of Georgieva’s speech published by the IMF.
“Public debt is a concern, especially in countries that are oil importers and that is an issue we will continue to be working on,” she told the forum, adding that inflation in the region was “far too high still”.
The region needs to boost its average tax-to-GDP ratio to at least 15% from a current 11%, she said.
“We need at least 15% for tax policies to be sustainable. I would argue that we need more… that there is space to double tax revenues,” she said.
The Russia-Ukraine war and climate disasters could worsen food shortages for the most vulnerable. Coupled with persistently high unemployment in the region, especially among young people, this posed significant risk to social stability.
Georgieva said the earthquake that hit Turkey and Syria “brought tremendous tragedy on people but also very significant impact on the Turkish economy”.
“So we have to build more resilience to these shocks.”
She also called for deeper multilateral cooperation to help countries with unsustainable debt and climate change, as temperatures in the region are warming at twice the speed of the rest of the world.
Governments in the region, which have identified multi-year financing needs of over $750 billion for climate action, need to encourage private climate finance through the right policies and financial solutions, she added.