News / Africa

    IMF: Arab Spring Nations Face Delayed Economic Recovery

    Masood Ahmed, director of the International Monetary Fund's Middle East and Central Asia department, attends the Capital Markets Conference in Doha, September 18, 2012.
    Masood Ahmed, director of the International Monetary Fund's Middle East and Central Asia department, attends the Capital Markets Conference in Doha, September 18, 2012.
    Reuters
    Arab Spring countries face rising social tensions that could thwart an early economic recovery from over two years of political turmoil that has worsened fiscal pressures and threatens macroeconomic stability, a senior IMF official said on Saturday.

    Masood Ahmed, International Monetary Fund (IMF) director for the Middle East and North Africa, said oil importers Morocco, Tunisia, Egypt and Jordan faced the double shocks of high energy and food import bills and the impact of a global economic downturn along with growing popular disaffection since the wave of Arab revolts over two years ago.

    “The big challenge this year is to manage the expectation of an increasingly impatient population to undertake the measures that will stabilize the economy and would begin to lay the foundations of an economic transformation that would generate more job creating and inclusive growth,” Ahmed said.

    “Those political transitions are turning to be more prolonged and in some cases more contentious and unemployment is higher and social unrest is rising,” Ahmed told Reuters in an interview on the sidelines of a World Economic Forum (WEF) conference on the Middle East and North Africa.

    Ahmed said the plight of these countries hit by protests was worsened by extra spending on food and energy subsidies that forced governments to draw on foreign reserves and expand domestic borrowing at high interest rates that raised public debt.

    Political turmoil was hurting much needed private investments in the meantime, the IMF official said.

    “In a number of these countries, private confidence has not yet taken hold so the recovery such as it was in 2012 was driven by continued government spending rather than a recovery in private activity,” Ahmed added.

    Two years of higher spending on wages and food and fuel subsidies will push budget deficit deficits even higher to an average eight percent in 2013. In Egypt, for example the budget deficit was expected to rise to between 10 to 12 percent of GDP this year, the IMF official said.

    “The cost of that is that budget deficits have begun to rise and in some cases have risen to levels that are progressively unsustainable,” Ahmed said.

    Slumping reserves

    Egypt's foreign exchange reserves have slumped since the revolution that toppled president Hosni Mubarak in 2011 due to falling revenues from tourism and foreign investment. Jordan's foreign reserves had also fallen sharply but have since recovered this year with an infusion of Gulf Arab capital.

    Growth levels that are forecast to average around three percent this year for oil importing countries were insufficient to absorb more job entrants in a region with traditionally high unemployment that has increased since the wave of unrest that swept the region since 2011.

    “Already young people are suffering unemployment levels of close to 30 percent and in last two years there have been further increase in some countries,” the IMF official added.

    Governments had to grapple sooner than later with the politically sensitive subsidies that topped $240 billion in 2011 for the Middle East North Africa (MENA) region and accounted for about one half of global energy subsidies.

    This was equivalent to about 8.5 percent of regional GDP, IMF figures show.

    Universal energy subsidies were benefiting the top 30 percent income bracket among consumers and although Morocco, Jordan and Tunisia had begun to move towards targeted subsidies, more was needed to help reduce hefty subsidies that diverted much needed funds to spur growth.

    “In the middle of political and social transition, it is even more difficult to undertake necessary reforms to reduce budget imbalances or try to take action to protect your reserves but the option of postponing these actions much longer really is not there for many countries,” the IMF official said.

    “The margin for maneuver is much more limited and today their cushions have been used up a lot and today they find they have the ability to borrow more from domestic markets constrained and their reserves positions are such they really cannot afford to let reserves run down much further,” Ahmed said.

    Lifting fuel subsidies had triggered civil unrest in Jordan last November and some analysts say the government's move to raise prices of heavily subsidized electricity in June under an IMF standby deal was fraught with risks.

    You May Like

    New EU Asylum Rules Could Boost Rightists

    New regulations will seek to correct EU failures in dealing with migrant crisis, most notably inability to get member states to absorb a total of 160,000 refugees

    More Political Turmoil Likely in Iraq as Iran Waits in the Wings

    Analysts warn that Tehran, even though it may not be engineering the Sadrist protests in Baghdad, is seeking to leverage its influence on its neighbor

    Forced Anal Testing Case to Appear Before Kenya Court

    Men challenge use of anal examinations to ‘prove homosexuality’; practice accomplishes nothing except to humiliate those subjected to them, according to Human Rights Watch

    By the Numbers

    Featured Videos

    Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
    Tensions Rising Ahead of South China Sea Rulingi
    X
    May 03, 2016 5:16 PM
    As the Philippines awaits an international arbitration ruling on a challenge to China's claims to nearly all of the South China Sea, it is already becoming clear that regardless of which way the decision goes, the dispute is intensifying. VOA’s Bill Ide has more from Beijing.
    Video

    Video Tensions Rising Ahead of South China Sea Ruling

    As the Philippines awaits an international arbitration ruling on a challenge to China's claims to nearly all of the South China Sea, it is already becoming clear that regardless of which way the decision goes, the dispute is intensifying. VOA’s Bill Ide has more from Beijing.
    Video

    Video Painting Captures President Lincoln Assassination Aftermath

    A newly restored painting captures the moments following President Abraham Lincoln’s assassination in 1865. It was recently unveiled at Ford’s Theatre in Washington, where America’s 16th president was shot. It is the only known painting by an eyewitness that captures the horror of that fateful night. VOA’s Julie Taboh tells us more about the painting and what it took to restore it to its original condition.
    Video

    Video Elephant Summit Results in $5M in Pledges, Presidential Support

    Attended and supported by three African presidents, a three-day anti-poaching summit has concluded in Kenya, resulting in $5 million in pledges and a united message to the world that elephants are worth more alive than dead. The summit culminated at the Nairobi National Park with the largest ivory burn in history. VOA’s Jill Craig attended the summit and has this report about the outcomes.
    Video

    Video Displaced By War, Syrian Artist Finds Inspiration Abroad

    Saudi-born Syrian painter Mohammad Zaza is among the millions who fled their home for an uncertain future after Syria's civil war broke out. Since fleeing Syria, Zaza has lived in Lebanon, Egypt, Jordan and now Turkey where his latest exhibition, “Earth is Blue like an Orange,” opened in Istanbul. He spoke with VOA about how being displaced by the Syrian civil war has affected the country's artists.
    Video

    Video Ethiopia’s Drought Takes Toll on Children

    Ethiopia is dealing with its worst drought in decades, thanks to El Nino weather patterns. An estimated 10 million people urgently need food aid. Six million of them are children, whose development may be compromised without sufficient help, Marthe van der Wolf reports for VOA from the Metahara district.
    Video

    Video Little Havana - a Slice of Cuban Culture in Florida

    Hispanic culture permeates everything in Miami’s Little Havana area: elderly men playing dominoes as they discuss politics, cigar rollers deep at work, or Cuban exiles talking with presidential candidates at a Cuban coffee window. With the recent rapprochement between Cuba and United States, one can only expect stronger ties between South Florida and Cuba.
    Video

    Video California Republicans Weigh Presidential Choices Amid Protests

    Republican presidential candidates have been wooing local party leaders in California, a state that could be decisive in selecting the party's nominee for U.S. president. VOA's Mike O’Sullivan reports delegates to the California party convention have been evaluating choices, while front-runner Donald Trump drew hundreds of raucous protesters Friday.
    Video

    Video Kurdish Football Team Helps War-Torn City Cope

    With the conflict still raging across much of Turkey’s predominantly Kurdish southeast, between the rebel PKK and the Turkish state, many Kurds are trying to escape the turmoil by focusing on the success of their football team Amedspor in Diyarbakir. The club is increasingly becoming a symbol for Kurds, not only in Diyarbakir but beyond. Dorian Jones reports from southeast Turkey.
    Video

    Video ‘The Lights of Africa’ - Through the Eyes of 54 Artists

    An exhibition bringing together the work of 54 African artists, one from each country, is touring the continent after debuting at COP21 in Paris. Called "Lumières d'Afrique," the show centers on access to electricity and, more figuratively, ideas that enlighten. Emilie Iob reports from Abidjan, the exhibition's first stop.
    Video

    Video Florida’s Weeki Wachee ‘Mermaids’ Make a Splash

    Since 1947, ‘mermaids’ have fascinated tourists at central Florida’s Weeki Wachee Springs State Park with their fluid movements and synchronized ballet. Performing underwater has its challenges, including cold temperatures and a steady current, as VOA’s Lin Yang and Joseph Mok report.
    Video

    Video Somali, African Union Forces Face Resurgent Al-Shabab

    The Islamic State terror group claimed its first attack in Somalia earlier this week, though the claim has not been verified by forces on the ground. Meanwhile, al-Shabab militants have stepped up their attacks as Somalia prepares for elections later this year. Henry Ridgwell reports there are growing frustrations among Somalia’s Western backers over the country’s slow progress in forming its own armed forces to establish security after 25 years of chaos.
    Video

    Video Nigerians Feel Bite of Buhari Economic Policy

    Despite the global drop in the price of oil, Nigerian President Muhammadu Buhari has refused to allow the country's currency to devalue, leading to a shortage of foreign exchange. Chris Stein reports from Lagos businessmen and consumers are feeling the impact as the country deals with a severe fuel shortage.

    Special Report

    Adrift The Invisible African Diaspora