By Satish Kanady
DOHA: Qatar, among other hydrocarbon-exporting countries in the region, needs to adjust its policies in response to a possible lower global demand and decline in commodity prices. Ample buffers will help sustain high public spending of these countries to support non-oil GDP growth if oil prices drop sharply.
Representing 12 countries, including Qatar, UAE, Bahrain, Oman and Kuwait at International Monetary and Financial Committee meeting at Washington DC yesterday, Sultan N Al Suwaidi, Governor of UAE Central Bank, said high oil prices have positively impacted the performance of oil exporters. However, the growth performances across the Middle East region are mixed with considerable risks to the outlook from continued regional tensions and difficulties in the global economy. He said inflation is expected to remain subdued in the Middle East.
Addressing the 27th meeting of the committee, Al Suwaidi said several oil-importing countries are already undertaking adjustments measures to help rebuild policy buffers. The challenge removing subsidies or restraining wage growth during a period of high social unrest should not be underestimated. For the countries affected by political unrest, the burden of rising debt and debt service obligations, and limited access to financing, has increased the urgency of public finance reform.
However, due to pressing social expenditure priorities countries may need to rely on short-term reversible measures during the transition. The primary challenge remains to secure economic and social stability and to restore investor confidence, he said.
He said IMF support is needed to help many countries in the region avoid he medium-term challenges of high unemployment and sluggish growth.
“We welcome recent efforts to strengthen the analytical underpinnings of its advice, including on the social impact of subsidy and tax reforms. We encourage increasing the breadth and depth of this work. Fund-supported programmes should demonstrate better understanding of the political economy constraints facing countries and pay due regard to domestic priorities. Adequate programme access levels should also support the goal of restoring growth”.
Al Suwaidi called for an early US approval of the 2010 reforms including the 14th General Review of Quotas, which would restore fund reliance on quotas instead of bilateral borrowing agreements. It would also allow moving forward with the review of the quota formula and the 15th general review of quotas, he said.
His statemebnt was also on behalf of Egypt, Iraq, Jordan, Lebanon, Libya, Maldives, Syria and Yemen at the meet.
The Peninsula
