REGIONAL REPORT
“ The pandemic has exacerbated many economic challenges in the region and further exposed how much work remains to be done to protect the most vulnerable , create jobs , provide equal opportunities for women and young people , and reduce poverty . One particular concern , going forward , is rising government debt and growing financing pressures that have worsened in the last year . And this will constrain further policy actions . This is particularly important , considering the risk of a rapid rise in U . S . bond yields , which could lead to tighter financial conditions , renewed capital outflow and higher sovereign spreads ,” continued Azour .
“ Addressing these and other challenges will help shape the region ’ s future , which is why countries must consider 2021 the year of policymaking to help exit the crisis , accelerate the recovery while preserving debt sustainability and build forward better towards more inclusive , resilient and green
Doha , Qatar . economies ,” he added .
Emerging from the pandemic
Which policies are needed for the MENA region to emerge from the crisis towards a better future ? Azour highlighted , firstly , the need to exit the crisis , securing access to vaccines and supporting health systems as the most urgent tasks . Accelerating vaccinations could boost GDP growth , he said , by one per cent by 2022 . Regional and international cooperation will be critical to ensuring that low-income countries are not left behind . Secondly , to help accelerate the recovery , it will be important to take policy support flexibly , where targeted , and in place until recovery is wellentrenched .
“ For the many countries without policy space , further support should be calibrated to safeguard debt sustainability . Developing medium-term fiscal frameworks and debt management strategy will help to reduce elevated debt burdens , while providing maximum support to growth . Support should target viable firms , especially small ones . Preparing workers for the post-pandemic world will also be vital , especially for the region ’ s large youth population ,” he explained .
“ Finally , to build forward better , countries will need to start addressing deep-seated transformation challenges such as persistent unemployment , inequality and climate change . Capitalising on lessons learned during the pandemic and leveraging digitalisation will help prepare the economies for the future and improve the efficiency of social safety nets , health and education which are so critical to reducing poverty and inequality . Improving governance and reforming the large public sector enterprises should also be prioritised , as well as policies that adapt and invest in climate resilient infrastructure ,” added Azour .
Morocco and Egypt
Morocco was one of the countries that was the most affected last year . It had to face two shocks : the COVID-19 crisis as well as a drought , which affected the Moroccan economy and produced a contraction . This year , thanks to health and fiscal / monetary measures , Morocco was able to find the path to recovery .
Growth prospects of 4.7 per cent for this year and 4.9 per cent for next year were addressed with Azour during the IMF ’ s MENA Economic Update in April this year .
“ Morocco is one of the most advanced countries in the region for
Preparing workers for the post-pandemic world will also be vital , especially for the region ’ s large youth population
Oran , Algeria ( Shutterstock . com ).
vaccination , if you exclude oil-producing countries from the Gulf ,” said Azour . “ Morocco also took heed of two lessons from this crisis . The first lesson is the significance of the social aspect of the crisis . That is why its government launched a significant programme to increase social protection and developed several mechanisms to protect the most vulnerable . At the same time , management of monetary policy and change policy by its central bank made it possible to strengthen stability . Morocco was therefore able to reinforce its reserves .”
Egypt , he told the audience , has ‘ done well in terms of containing the economic fallout of the COVID-19 virus . It is one of the few countries which has not seen a negative contraction in its GDP last year ’. “ This year , our projection for growth in Egypt is 2.5 per cent . Our revisions reflect downside risks to domestic demand because we have seen some softness recently . Tourism has also been recovering . But the receipts are still lower than before , and this is an important factor for growth . That said , we see that the economy will rebound next year . This will be supported by the vaccination rollout and public investment by the government ,” he continued .
He also stressed the importance of accelerating the structural reform agenda in Egypt and the drive to help the private sector become the gateway to growth and job creation in the country .
“ I think it is very important to improve governance and the business environment , as well as remove trade barriers and continue to enhance the transparency of state-owned enterprises whilst gradually reducing the state footprint and providing equal opportunities to all agents ,” he concluded .
United Arab Emirates
The IMF has revised the UAE ’ s GDP growth projection for 2021 from 1.3 per cent in October 2020 to 3.1 per cent .
“ The main reason for this big shift is the improvement in the oil sector . In addition to that , UAE was one of the most advanced regions for [ COVID-19 ] vaccinations , and part of the league of early inoculators worldwide , which allowed the UAE economy to adjust to the second wave . This will , of course , help the economy in its recovery . That is expected to be progressive , and we expect that exports will provide an additional boost to the non-oil sector ,” said Azour .
He added that the move towards developing sectors that rely on technology , and benefiting from experience in this field , would contribute to growth in the medium term . Firstly , he explained , in diversifying the economy and , secondly , by gradually accelerating the pace of recovery and growth in the United Arab Emirates .
The UAE launched several initiatives to combat COVID-19 such as surveillance / contact tracing ; containment ; mental health support ; mass testing / treatment ; economic support and a vaccination programme . n
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