IMF Regional Director Jihad Azour during a meeting on the economic outlook for the Middle East and Central Asia, April 18, 2024 in Washington (AFP/Mandel NGAN)
The economy of the Near and Middle East should slow down this year compared to 2023 but continue to show a certain solidity, said Thursday to AFP the regional director of the IMF, Jihad Azour, who nevertheless points out “the persistent uncertainty “, due to the geopolitical context.
If the attack perpetrated by Hamas in southern Israel on October 7 and the intense Israeli military operations targeting from the Gaza Strip have “caused a little volatility” on the economic level in the region, “this remains limited “, underlined Mr. Azour.
“The continued uncertainty on the geopolitical front is significant. And there are other factors that could have an impact on growth, which is why we are warning of increased risks for this year,” a- he nevertheless added.
Especially since in addition to the war in the Gaza Strip, which the recent Iranian drone and missile attack on Israel could spill over into, the region is also facing two other conflicts, these being civil, in Yemen and Sudan.
A little earlier today, the Managing Director of the International Monetary Fund (IMF), Kristalina Georgieva, described the situation in the two countries as “terrible”.
The Managing Director of the International Monetary Fund (IMF), Kristalina Georgieva, on April 18, 2024 in Washington (AFP/Mandel NGAN)
“When you have wars that attract all the attention, like the one in Ukraine or Gaza, they overshadow the suffering and difficulties that are manifest elsewhere but rest assured that for the Fund, all of our members have the right to our support and attention, no matter how difficult the conditions may be,” she added.
The regional report’s projections anticipate an end to the conflict in Sudan, where the regular army faces a group of militias for control of power, by the end of the year, which would offer the possibility to the country, “which has “such potential”, to return to “a stable and functional macroeconomic situation”, insisted Jihad Azour.
An end to the conflict which, however, remains a wishful thinking as it stands, acknowledged Mr. Azour, adding that “the IMF cannot act on this.”
“In the immediate future, the country is facing inflation of 150%, 60% of the population needs humanitarian aid and the institutions have been almost completely dismantled,” he recalled, adding that “the more conflict persists the more it will add additional suffering” to local populations.
– Egypt tossed by external shocks –
If the situation is not as dramatic in Egypt, a country with the largest IMF aid program in the region, with eight billion dollars, the country nevertheless suffers from the consequences of the war in Gaza and in particular the attacks carried out in retaliation by the Yemeni Houthi rebels against maritime traffic in the Red Sea.
Aerial view of the new extension of the Suez Canal, inaugurated in 2015 in al-Ferdan, north of Ismailia, on March 23, 2024 in northeastern Egypt (AFP/Archives/Khaled DESOUKI)
These attacks have in fact significantly reduced traffic passing through the Suez Canal, one of the main sources of foreign currency for Egypt, already facing rising inflation and an excessively high level of public debt.
Among the reforms that the IMF wishes to see carried out, the privatization of the national economy, still largely owned either by the State or by the army, is one of the priorities.
“Egypt must create space to see its private sector grow. We must rethink the role of the State in the economy, so that it intervenes more as a facilitator and less as a competitor. This goes with more transparency, in order to encourage investments in the country. It is an important pillar” among the reforms to be carried out, insisted Jihad Azour.
In this area, however, progress is particularly slow, which nevertheless did not prevent the IMF from granting a new loan of five billion dollars last month, in addition to the three billion already being disbursed.
In order to benefit from this additional aid from the Fund, the central bank of Egypt announced a sharp increase in its key rate in order to fight against inflation of 35%, at an annual rate, which is affecting the country, with the result a drop in the exchange rate of the Egyptian pound.
An “important” measure for the IMF because “it makes it possible to cope with inflation. And the flexibility of the exchange rate is a way of reducing the risk of transmission of external shocks”, insisted Jihad Azour.
Egypt also received $35 billion from the United Arab Emirates to help it face its current difficulties and prevent the national economy from completely collapsing.
© 2024 AFP
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