IMF urges GCC, Arab states to balance reopening economy, keeping Covid cases down
The GCC and other Arab countries must have a right balance between opening up their economies and keeping coronavirus cases down over the next six months in order to ensure sustainable recovery, say economists and political analysts.
While addressing a webinar on Thursday hosted by the International Monetary Fund, they stressed that the Arab governments will have to move away from job providers and shift this responsibility to the private sector and also do away with the patronage system.
Monica Malik, chief economist of Abu Dhabi Commercial Bank, said getting the balance right between opening up economy and keeping Covid-19 cases down and protecting the businesses that are still there are key for the recovery of economies.
“Most important is to come up with a plan on how to broaden and deepen the economy and the sectors because they are not going to provide the same growth and drivers going forward. At the same time, bringing in foreign capital is going to be very, very important, so creating a framework to bring that in will also be very important. It is a mixture of near-term and forward-looking measures to be implemented as soon as possible.”
Jihad Azour, chief economist for the Mena region at the IMF, said that regional governments should keep an eye on the pandemic because the risk is not over and with reopening there is still an increased number of cases.
“We should not relax and this still priority No.1 – to protect lives. This crisis taught us that you can do the undoable and think the unthinkable. I don’t think that we should keep that same old attitude towards reforms and we should not be afraid of change and tackling issues. This is time to work on multi-level of policymaking,” Azour said.
Marwan Muasher, vice-president for studies at the Carnegie Endowment for International Peace and a former deputy prime minister and foreign minister of Jordan, said inclusion is key for the revival of economies.
“If there is one policy recommendation I would give, it is that from now on, you are not going to be able to achieve any objective from public no matter how efficient the economic solution is unless you bring in inclusion, unless citizens have voice in decision-making. Not all economic challenges have pure economic solutions,” Muasher said.
More integration, less patronage
He stressed that Arab countries need to be more integrated economically – whether it is a currency union, labour movement or trade. “This region is not trading within itself. Only 7 per cent of all trade happens within and the rest outside. Integration is the way forward. It requires some political decision as well,” he added.
Muasher noted that Arab countries need to move from welfare state model which has been possible because of oil.
“Now the Arab economic system needs to move away where state is principal provider of jobs in both oil-importing and oil-exporting countries to a model where the private sector needs to pick up that responsibility. For the private sector to do that, we need better education and legislative systems that encourage job creations and support SMEs.”
Source: Khaleej Times