Worldwide Financial Fund (IMF) Director of the Center East and Central Asia Division, Jihad Azour (R), speaks throughout a briefing on the outlook for the Center East and Centra Asia through the IMF-World Financial institution Group spring conferences at IMF headquarters in Washington, DC, on April 18, 2024. (Photograph by Mandel NGAN / AFP)
WASHINGTON, United States — Economies within the Center East and North Africa face a “shadow of uncertainty” from ongoing tensions within the area, a senior IMF official advised AFP on Thursday.
“We’re in a context the place the general outlook is solid into shadows,” the Worldwide Financial Fund’s director for the Center East and Central Asia division, Jihad Azour, stated in an interview in Washington.
“The shadow of uncertainty on the geopolitical aspect is a crucial one,” added Azour, a current candidate to be the following Lebanese president.
Within the face of the continued conflicts in Gaza and Sudan, and a current lower to grease provides by Gulf international locations, the IMF has pared again its progress outlook for the Center East and North Africa (MENA) area as soon as once more.
READ: Center East battle provides new dangers to international financial outlook
The Fund now expects progress in MENA of two.7 p.c this yr — 0.2 share factors beneath its January forecast — earlier than selecting up once more subsequent yr, the IMF stated in its regional financial outlook report revealed Thursday.
Battle threat
The dangers to progress within the MENA area stay heightened, the IMF stated, pointing to the hazard of larger regional spillovers from the continued Israel-Gaza warfare.
The battle began after Hamas launched an unprecedented assault on October 7 that resulted within the deaths of 1,170 individuals in southern Israel, largely civilians, in keeping with an AFP tally of Israeli official figures.
READ: MENA, Central Asia economies present resilience however international headwinds loom -IMF
The militants additionally took about 250 hostages.
Israel’s retaliatory offensive has killed no less than 33,970 individuals in Gaza, largely girls and kids, in keeping with the Hamas-run territory’s well being ministry, and brought on extreme financial harm in each Gaza and the West Financial institution.
“Now we have issues concerning the fast and lasting affect of battle,” Azour stated.
The IMF report stated financial exercise in Gaza has “come to a standstill” and estimates financial output within the West Financial institution and Gaza contracted by six p.c final yr.
The report excludes financial projections for the West Financial institution and Gaza for the following 5 years, “on account of the unusually excessive diploma of uncertainty,” the IMF stated.
The Fund can’t lend to the West Financial institution and Gaza as a result of it isn’t an IMF member nation. Nevertheless, it has offered the Palestinian Authority and the central financial institution with technical help through the present battle, Azour stated.
“Once we transfer into the section of reconstruction, we will likely be a part of the worldwide group help to the area,” he added.
Azour additionally mentioned the state of affairs in Sudan, the place 1000’s have been killed in a civil warfare that has additionally devastated the financial system, inflicting it to contract by virtually 20 p.c final yr, in keeping with the IMF.
“The nation is barely functioning, establishments have been dismantled,” he stated.
“And for an financial system, for a rustic like Sudan, with all this potential, it’s necessary to in a short time the cease the bleeding and transfer to a section of reconstruction,” he added.
Egyptian financial system
The Egyptian financial system has been significantly badly hit by the current Huthi assaults on Pink Sea delivery, which brought on commerce by the Egypt-run Suez Canal to greater than halve — depriving the nation of a key supply of international alternate.
Egypt reached an settlement final month to extend an present IMF mortgage bundle from $3 billion to $8 billion after its central financial institution hiked rates of interest and allowed the pound to plunge by almost 40 p.c.
A key pillar of the present IMF program is the privatization of Egypt’s state-owned enterprises, a lot of that are owned by or linked to the navy.
“This can be a precedence for Egypt,” Azour advised AFP. “As a result of Egypt must have a rising personal sector, and to present house for the personal sector to create extra jobs.”
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“Now we have a possibility to re-engineer the function of the state, to present the state extra accountability as an enabler, and fewer as a competitor,” he stated.