IMF Christine Lagarde launches alarm at the Arab Tax Forum in Dubai. In 10 years, the public debt among the oil importing nations rose from 64% to 85% of GDP. In some countries today it is over 90%. Among the exporting countries, the figure is 33%. Thus far reforms have been insufficient.
Dubai (AsiaNews / Agencies) Public debt has rapidly increased in many Arab countries since the 2008 global financial crisis, due to persistently high budget deficits, the International Monetary Fund has warned.
"Unfortunately, the region has yet to fully recover from the global financial crisis and other big economic dislocations over the past decade," IMF Managing Director Christine Lagarde said."Among oil importers, (economic) growth has picked up, but it is still below pre-crisis levels," she told the Arab Fiscal Forum in Dubai.
According to Lagarde, in the last decade the public debt among the oil-importing nations of the Arab world has grown from 64% to 85% of the Gross Domestic Product (GDP). About half of these nations, she added, now have a public debt of over 90% of GDP.
The public debt among the oil-exporting countries of the region – which include the six States that make up the Gulf Cooperation Council - has increased from 13% of GDP to the current 33%. Among the reasons for growth, explains Lagarde, the collapse in oil prices five years ago.
"The oil exporters have not fully recovered from the dramatic oil price shock of 2014," she said. "Modest growth continues, but the outlook is highly uncertain." Lagarde added that oil-producing countries should pay more attention to renewable energies in the coming decades, in line with the dictates of the Paris climate agreement that sanction a reduction in greenhouse gas emissions.
Last month, the International Monetary Fund lowered growth estimates for Saudi Arabia - the largest oil exporter in the world - and for the Middle East and North Africa in general due to a new fall in oil prices. Added to this is a low production and the numerous geopolitical tensions that characterize the area.
According to Lagarde some attempts at reform are to be appreciated, including a cut in spending and a different management of revenue; significant introduction of VAT (value added tax) and excise duty by Saudi Arabia and the United Arab Emirates (UAE). However, further reforms must be added to these measures, especially in terms of transparency and the fight against corruption. "The economic path ahead for the region is challenging," she concluded.