RIYADH: The Arab region’s role in developing the global economy is rapidly increasing as the world witnesses significant changes, said the head of the International Monetary Fund.
Speaking at the 8th annual Arab Fiscal Forum in Dubai, Kristalina Georgieva, managing director of the fund, highlighted that leaders from the region, including Saudi Finance Minister Mohammed Al-Jadaan, will play a crucial role in steering the direction of the World Bank and IMF.
Georgieva said: “For the observable future, ministers from the region will steer the direction of the World Bank and IMF — with Minister Al-Hussaini as the chair of the Development Committee and Minister Al-Jadaan as the Chair of the IMFC (International Monetary and Financial Committee).”
She highlighted that the gross domestic product in the Middle East and North Africa region is expected to reach 2.9 percent this year.
The IMF chief expressed confidence in the global economic outlook, despite uncertainties arising from wars and geopolitical headwinds.
“While uncertainties are still high, we can be a bit more confident about the economic outlook because the global economy has been surprisingly resilient. Growth exceeded expectations in 2023, and global headline inflation is expected to fall in 2024. But we cannot declare victory prematurely,” she said.
“Medium-term growth prospects remain anemic at around 3 percent, compared to the historical average of about 3.8 percent,” added Georgieva.
She also warned that the widening of the conflict in Gaza could harm the global economy in the coming months.
“Across the region and beyond, the impact is felt through rising freight costs and reduced Red Sea transit volumes — down by nearly 50 percent this year in our PortWatch data. This exceptionally uncertain moment compounds the challenges of economies that are still recovering from previous shocks. And further widening of the conflict would aggravate the economic harm,” she noted.
According to Georgieva, the Arab world has a crucial role to play in these challenging times.
She added that the Arab region can “plant the seed of a better and more stable future in these challenging conditions.”
Georgieva revealed that the IMF has provided $64 billion in liquidity and reserves to the MENA region since the pandemic began, including $8 billion in 2023.
She added that the fund will publish a paper on Feb. 12 showing that phasing out explicit energy subsidies could save $336 billion in the Middle East, equivalent to the combined economies of Iraq and Libya.
The IMF head further pointed out that eliminating regressive energy subsidies will discourage pollution and help improve social spending.