News / Middle East

IMF Chief Draws Cautious Response from Arab Countries in Call to End Subsidies

Christine Lagarde (C), International Monetary Fund Managing Director, speaks to a Syrian refugee student at Alimate school in Mafraq, Jordan, May 11, 2014.
Christine Lagarde (C), International Monetary Fund Managing Director, speaks to a Syrian refugee student at Alimate school in Mafraq, Jordan, May 11, 2014.
Reuters
IMF chief Christine Lagarde urged Arab countries going through democratic change to phase out costly subsidy systems on Monday, but drew a cautious response from regional finance ministers wary of the social impact of such steps.
 
The International Monetary Fund chief said Arab countries pursuing democracy should keep up structural reforms and phase out subsidies systems that the Fund estimates cost $237 billion annually across the region.
 
She also said average economic growth rates of around 3 percent in the Arab world were not enough to meet the needs of a growing workforce in a region where rural poverty rates are high.
 
“The growth that we are seeing on average in the region at about 3 percent would have to significantly increase in order to respond to the demands of the young population that is waiting to join the job market,” Lagarde told participants at an IMF-sponsored conference in Amman.
 
“So my message is please pursue the discipline and continue this momentum of structural reform in order to capitalize on the stabilization you have obtained in order to .. generate the growth that is needed to create the jobs needed,” Lagarde said
 
Finance ministers from around the region agreed that reform of subsidies that take up a big chunk of their budgets' current spending was crucial.
 
But they also said the social costs were a major factor preventing faster reform of their subsidy systems.
 
Austere policies implemented by governments pursuing IMF-guided liberal reforms have been blamed for increasing social divisions and fuelling street protests in countries across the region.
 
A clean bill of health from the IMF has long been crucial for aid-dependent, energy-importing Arab governments such as Tunisia, Jordan and Yemen that rely on Western donor support to held cover their budget deficits.
 
Jordan's Prime Minister Abdullah Ensour said his country, which faced street unrest after 2011 and had to tackle burgeoning state spending by ending costly fuel prices, leading to civil unrest, had been forced to call on the IMF as a “doctor who gave the right prescription.”
 
Other officials and bankers said the IMF was only now drawing the lessons of the last few years, and rather than just cajoling aid-dependent Arab countries to meet tight fiscal targets without regard to the social costs, it was becoming more sensitive to their domestic challenges.
 
Lagarde said that in Jordan's case, the IMF had relaxed its fiscal targets in a $2 billion standby agreement struck in 2012 to help the kingdom shore up its economy and mitigate the impact of a massive refugee spillover from conflict-torn Syria.
 
The conference, called “Building The Future”, was the first of its kind since the Arab revolts, bringing together not just ministers but also civic groups and critics of IMF policies, which they blame for some of the past unrest in their countries.
 
Lagarde said there were signs that the economies of countries such as Morocco, Tunisia, Jordan and Egypt were stabilizing after more than three years of unrest and political upheaval, but that more work needed to be done.
 
“This stabilization is fragile and needs to be consolidated by continued discipline and that momentum of reform that has already been underway without receding,” Lagarde said.

You May Like

Myanmar Fighting Poses Dilemma for China

To gain some insight into conflict, VOA’s Steve Herman spoke with Min Zaw Oo, director of ceasefire negotiation and implementation at Myanmar Peace Center More

Australia Concerned Over Islamic State 'Brides'

Canberra believes there are between 30 and 40 Australian women who have taken part in terror attacks or are supporting the Islamic State terror network More

Recreational Marijuana Use Now Legal in Washington, DC

Law allows adults 21 and over to privately possess and smoke 0.05 kilogram of pot, and to grow small amounts of the plant More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
US Supreme Court Hears Hijab Discrimination Casei
X
Katherine Gypson
February 25, 2015 11:30 PM
The U.S. Supreme Court has heard opening arguments in a workplace religious discrimination case that examines whether a clothing store can refuse to hire a young woman for wearing the headscarf she says is a symbol of her Muslim faith. Katherine Gypson reports from the Supreme Court.
Video

Video US Supreme Court Hears Hijab Discrimination Case

The U.S. Supreme Court has heard opening arguments in a workplace religious discrimination case that examines whether a clothing store can refuse to hire a young woman for wearing the headscarf she says is a symbol of her Muslim faith. Katherine Gypson reports from the Supreme Court.
Video

Video Falling Gas Prices Hurt Nascent Illinois Hydraulic Fracturing Industry

Falling oil prices are helping consumers purchase cheaper petroleum at the pump. But that’s made hydraulic fracturing or “fracking” less economically viable for the companies in the United States invested in the process. VOA’s Kane Farabaugh reports on one Midwestern town that was hoping to change its fortunes by cashing in on the next big U.S. oil boom.
Video

Video Fighting in Sudan's South Kordofan Fuels Mass Displacement

Heavy fighting in Sudan's South Kordofan state is causing hundreds of thousands to flee into uncertain conditions. Local aid organizations estimate as many as 400,000 civilians have been internally displaced since the conflict began more than three years ago, while another 250,000 have fled across the border to refugee camps in South Sudan. VOA's Adam Bailes reports.
Video

Video Lao Dam Project Runs Into Opposition

A Lao dam project on a section of the Mekong River is drawing opposition from local fishermen, international environmental groups and neighboring countries. VOA's Say Mony visited the region to investigate the concerns. Colin Lovett narrates.
Video

Video A Filmmaker Discovers Her Biracial Identity in "Little White Lie

Lacey Schwartz grew up in an upper middle-class Jewish family, in a town in upstate New York where almost everyone she knew was white. She assumed that she was, as well. Her recent documentary, Little White Lie, tells the story of how she uncovered the secret of her true racial background. VOA’s Carolyn Weaver has more on the film.
Video

Video Deep Under Antarctic Ice Sheet, Life!

With the end of summer in the Southern hemisphere, the Antarctic research season is over. Scientists from Northern Illinois University are back in their laboratory after a 3-month expedition on the Ross Ice Shelf, the world’s largest floating ice sheet. As VOA’s Rosanne Skirble reports, they hope to find clues to explain the dynamics of the rapidly melting ice and its impact on sea level rise.
Video

Video US-Cuba Normalization Talks Resume Friday

Negotiations aimed at normalizing diplomatic relations between the U.S. and Cuba resume Friday. On the table: lifting a half-century trade embargo and easing banking and travel restrictions. There's opposition in Congress, but some analysts say there may be sufficient political and economic incentives in both nations for a potential breakthrough this year. VOA's Mil Arcega reports.
Video

Video Pakistan's Deadline For SIM Registration Has Cellphone Users Scrambling

Pakistani cell phone users have until midnight Thursday to register their SIM cards, or their service will be cut off. While some privacy experts worry about government intrusion, many Pakistanis are just worried about keeping their phone lines open. VOA Deewa reporter Arshad Muhmand has more from Peshawar.
Video

Video Myanmar Warns Factory Workers to End Strikes

Outside Myanmar's main city Yangon, thousands of workers walked off their jobs earlier this month demanding a doubling of their wages, pay raises after a year and input from labor unions on industrial regulations. Since Friday, the standoff has grown more tense as police moved in to disrupt the sit-ins, resulting in clashes that injured people from both sides. VOA correspondent Steve Herman visited industrial zones which have become a focus of Myanmar's fledgling workers rights movement.
Video

Video Oscar Winners Do More Than Thank the Academy

The Academy Awards presentation is Hollywood’s night to reward the best movies from the previous year. It’s typically a lot of glitter, a lot of thank you’s, a lot of speeches. But many of this year’s speeches carried messages beyond the thank you's. VOA’s Carolyn Presutti takes a look.

All About America

Circumventing Censorship

An Internet Primer for Healthy Web Habits

As surveillance and censoring technologies advance, so, too, do new tools for your computer or mobile device that help protect your privacy and break through Internet censorship.
More