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.
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

Video Russia’s Syrian Escalation Tests Obama’s Crisis Response

Critics once again question whether president has been slow to act on Syrian conflict, thus creating opening for powers like Russia More

Ancient African DNA Shows Mass Migration Back Into Africa

First genetic analysis of ancient human remains in Africa suggests massive migration from north around time of Egyptian empire More

NASA: Pluto Has Blue Sky

New photos also reveal the presence of water ice More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Hungary Criticized for Handling of Refugeesi
Henry Ridgwell
October 08, 2015 8:02 PM
Amnesty International has accused Hungary of breaking multiple international and European human rights laws in its handling of the refugee crisis. As Henry Ridgwell reports, thousands of migrants and refugees continue to travel through the Balkans to Hungary every day.

Video Hungary Criticized for Handling of Refugees

Amnesty International has accused Hungary of breaking multiple international and European human rights laws in its handling of the refugee crisis. As Henry Ridgwell reports, thousands of migrants and refugees continue to travel through the Balkans to Hungary every day.

Video Iraqi-Kurdish Teachers Vow to Continue Protest

Sixteen people were injured when police used tear gas and rubber bullets to disperse teachers and other public employees who took to the streets in Iraq’s Kurdish north, demanding their salaries from the Kurdish Regional Government (KRG). VOA’s Dilshad Anwar, in Sulaimaniya, caught up with protesting teachers who say they have not been paid for three months. Parke Brewer narrates his report.

Video Syrian Village Community Faces Double Displacement in Lebanon

Driven by war from their village in southwestern Syria, a group of families found shelter in Lebanon, resettling en masse in a half-built university to form one of the biggest settlements of its kind in Lebanon. Three years later, however, they now face being kicked out and dispersed in a country where finding shelter as a refugee can be especially tough. John Owens has more for VOA from the city of Saida, also known as Sidon.

Video Bat Colony: Unusual Tourist Attraction in Texas

The action hero Batman might be everyone’s favorite but real bats hardly get that kind of adoration. Put more than a million of these creatures of the night together and it only evokes images of horror. Sarah Zaman visited the largest urban bat colony in North America to see just how well bat and human get along with each other.

Video Device Shows Promise of Stopping Motion Sickness

It’s a sickening feeling — the dizziness, nausea and vomiting that comes with motion sickness. But a device now being developed could stop motion sickness by suppressing certain signals in the brain. VOA’s Deborah Block reports.

Video Making a Mint

While apples, corn, and cranberries top the list of fall produce in the US, it’s also the time to harvest gum, candy, and toothpaste—or at least the oil that makes them minty fresh. Erika Celeste reports from South Bend, Indiana on the mint harvest.

Video Activists Decry Lagos Slum Demolition

Acting on a court order, authorities in Nigeria demolished a slum last month in the commercial capital, Lagos. But human rights activists say the order was illegal, and the community was razed to make way for a government housing project. Chris Stein has more from Lagos.

Video TPP Agreed, But Faces Stiff Opposition

President Barack Obama promoted the Trans-Pacific Partnership on Tuesday, one day after 12 Pacific Rim nations reached the free trade deal in Atlanta. The controversial pact that would involve about 40 percent of global trade still needs approval by lawmakers in respective countries. Zlatica Hoke reports Obama is facing strong opposition to the deal, including from members of his own party.

Video Ukranian Artist Portrays Putin in an Unusual Way

As Russian President Vladimir Putin was addressing the United Nations in New York last month, he was also being featured in an art exhibition in Washington. It’s not a flattering exhibit. It’s done by a Ukrainian artist in a unique medium. And its creator says it’s not only a work of art - it’s a political statement. VOA’s Tetiana Kharchenko has more.

Video Nano-tech Filter Cleans Dirty Water

Access to clean water is a problem for hundreds of millions of people around the world. Now, a scientist and chemical engineer in Tanzania (in East Africa) is working to change that by creating an innovative water filter that makes dirty water safe. VOA’s Deborah Block has the story.

Video Demand Rising for Organic Produce in Cambodia

In Cambodia, where rice has long been the main cash crop, farmers are being encouraged to turn to vegetables to satisfy the growing demand for locally produced organic farm products. Daniel de Carteret has more from Phnom Penh.

Video Botanists Grow Furniture, with Pruning Shears

For something a bit out of the ordinary to furnish your home, why not consider wooden chairs, crafted by nature, with a little help from some British botanists with an eye for design. VOA’s Jessica Berman reports.

VOA Blogs