Via IMF (Den Internationale Valutafond)

Transcript of October 2020 Middle East and Central Asia Department Press Briefing

October 19, 2020




Director, Middle East and Central Asia Department, IMF


Senior Communications Officer, Communications Department, IMF


MS. AMR: Good morning and good afternoon to everyone joining the press
conference on the Middle East and Central Asia Economic Outlook. I am Wafa
Amr, from the Communications Department. This is Jihad Azour, Director of
the Middle East and Central Asia Department. He will give a few opening
remarks and then we will be taking your questions.

MR. AZOUR: Thank you, Wafa. Good morning and good afternoon everyone and
thank you for joining us.

Our annual meeting marks the second time this year we gather virtually
under the shadow of the global pandemic and economic crisis. Today I would
like to discuss how these historic developments continue to affect the
Middle East and Central Asia region, which is the focus of our regional
economic outlook that we have released this morning.

As I reported in July, countries in the region responded swiftly and
resolutely when COVID-19 hit. And many of the emergency measures from
those, boosting health sectors to policies aimed at assisting households
and businesses, help countries cope with the crisis’s immediate impact.
However, given the uncertainty surrounding the pandemic’s trajectory and
the scale of the challenges it has created, countries in the region
continue to face a difficult economic environment.

For oil exporters in the Middle East, North Africa, Afghanistan, and
Pakistan region, growth is now projected at minus 6.6 percent in
2020—reflecting the combined impact of the decline in oil prices and
production cuts, and the lockdowns. Oil-importing countries that benefit
from lower oil prices are being mostly offset by hampered trade, tourism,
and remittance—with growth in 2020 projected at minus 1 percent. And for
the Caucasus and Central Asia, a contraction of 2.1 percent is expected for
2020, driven by the region’s oil importers. The REO discusses three key
aspects of the crisis that could shape the region’s future for years to
come. And I would like to briefly discuss these now.

First, the pandemic may inflict deeper and more persistent economic
scarring than previous recessions in the region given severe
vulnerabilities entering the crisis and its unprecedented nature. In fact,
it is estimated that the output in the region would return to trend, only
after a decade. Additionally, fiscal revenues in the region have declined
sharply due to the lockdowns and the oil shock. This is occurring of course
at the same time that the variety of fiscal measures have been employed to
save lives and livelihoods. For instance, oil exporters are expected to
experience a $224 billion revenue shortfall this year.

The result? Some countries will incur their highest deficit in 20 years. In
turn, higher deficit will raise their burdens, eroding fiscal space in some
countries. Lastly, the crisis has heightened corporate default risk and
credit risk for banks in the region with potential losses that could amount
to $190,000 billion, or 5 percent of GDP. If unaddressed, these
developments may threaten financial stability and efforts for great
financial inclusion.

Addressing these challenges will be vital for the region. In the REO, we
outline a number of key policy priorities that countries should consider
depending on their available policy space. In the immediate future and for
all countries, containing the health crisis and cushioning income losses to
the extent possible remain top priorities. Additionally, countries with
policy space should consider implementing broader stimulus packages to lift
demand while exiting emergency support gradually to avoid sudden income
losses. Countries with more limited space should focus on reallocating
expenditures toward health, education, and critically needed social
programs while working to cut inefficient spending and increase tax

On the financial front, policy makers should continue to carefully balance
the sustained provision of credit and the preservation of financial
stability during the crisis and its immediate recovery. Fragile and
conflict affected states should be supported including through grants and
possibly temporary suspension of debt payments by official bilateral
creditor. Beyond the recovery, countries will need to attack the legacies
of the crisis, including an evaded debt and eroded external buffers. In
parallel, structural reforms should aim at expanding access to
opportunities by investing in strong and climate-friendly infrastructure,
broadening the reach of digital technology and fighting corruption.

In closing, I would like to note that the IMF commitments to the region are
never stronger than in times of great challenge. So far this year, the Fund
has provided nearly $17 billion in financing to 14 countries in the region
increasing IMF’s credit outstanding by nearly 50 percent relative to 2019.
We will continue working with the authorities to provide policy advice,
technical assistance, and financial support when needed. While we
undoubtedly face many more difficult days, the goal of building inclusive,
prosperous, and resilient economies through the regions remain within reach
in the coming years. And we look forward to working together with countries
in the region to achieve this goal.

Thank you very much, and now I will be happy to answer your questions.

MS. AMR: Thank you, very much, Jihad. Thank you. Could you please send your
questions via Webex? On Webex you can ask the questions in person or send a
message. If you use a chat you can send your question also via chat or
raise your hand via chat.

So, we do have some questions now that were sent online. We are going to
begin with a question from Egypt. We have several questions, Jihad, from

So, we will start with the question from Extra News Egypt, TV
Channel and it is from a Doa’a Gad Elhaq. I will ask the question in
Arabic. In your opinion, and as a partner in the Egyptian Economic Reform
Program, and after you expected growth to reach 2.8 percent at the end of
the year, and 5.6 percent by 2025, are these expectations a testimony to
the solid monetary and fiscal policies in Egypt that allows Egypt to face
the challenges that could lie ahead as a new wave is expected? There will
be more questions on Egypt.

MR. AZOUR: Thank you, Doa’a. Let me clarify, the growth expectations. It’s
3.5 in 2020. The Egyptian Reform Program contributed significantly to
improving the general economic indicators. Before the pandemic, the growth
was 5.5 percent. The deficit declined. There was a great improvement in the
monetary situation with the rise in reserves available to the Central Bank.
The Egyptian government gradually expanded the safety net to include more
people through the Takaful and Karama Program. These improvements allow the
government to stand up to the first wave of the pandemic. The Egyptian
government adopted a number of protective measures—health measure and
economic measures to support the economic activity—particularly since the
Egyptian economy was considerably impacted by the impact of the pandemic,
particularly tourism and exports.

The IMF, as you know, Doa’a, contributed to supporting these efforts by two
basic points. The first was the rapid finance facility of $2.8 billion paid
in April this year. It was formed to support the economic stability and to
boost their monetary stability and support Egypt as it continues its
structural reform program. A $5.2 billion, a total of $8 billion in
assistance. We’ve seen an improvement in the economic indicators, and we
expect growth to be better than expected. The balance will see an initial
surplus. And we’ve seen a major decline in inflation, however, there are
challenges ahead.

The first is to continue to defend against any additional pandemic wave.
Second, boost stability and more importantly to continue to deepen the
structural reforms that contribute to unleashing growth and giving a bigger
role to the private sectors in the future.

MS. AMR: Thank you, Jihad. And from a Hiraan Online Duhat
Abdenmenine. What are the reasons for Egypt’s positive economic outlook for

That’s it.

MR. AZOUR: I think I have answered in Arabic, the same question. Egypt has
in the last three years, introduced a number of reforms that helped Egypt
gradually reduce its final fiscal imbalances improve. Broad economic
situation where in 2019, Egypt was able to reach levels of growth of 5.5
percent and at the same time, strengthened their monetary stability with
high level of reserves at the Central Bank. Of course, this crisis had a
severe impact on the Egyptian economy. It affected several sectors
including tourism, trade, and export industries.

And the government has reacted swiftly be introducing certain number of
measures to protect lives through social and medical measures, in addition
also to protecting livelihoods through various programs. Including an
additional cut in the interest rate by 300 basis points in April followed
by 50 basis point in September. In addition to that, there’s a number of
stimulus programs that were provided to the private sector in order to
reduce the impact of the COVID-19 and the shock that this pandemic had on
the Egyptian economy. Of course, Egypt’s economy also suffered from
slowdown in remittances and a slowdown in global trade activities that went
down by more than 12 percent this year.

Going forward, it’s important to maintain the pace of reforms and to
accelerate the structure reforms to allow private sector to be in the lead
for the next economic recovery phase.

MS. AMR: Thank you. The last question you answered is from a Ms. Yasmine
Selim. What is your assessment of the current monetary policy in Egypt?

MR. AZOUR: The monetary policy in Egypt has proved its effectiveness and
gradually moved toward inflation targeting that this year we saw a
continuous decline in inflation. The level of reserves at the central banks
are at the record high, and we saw Egypt regaining quickly access to market
with the recent Euro bond transaction, green bond, that was positively
received by the market. Of course, going forward, it’s very important to
stabilize the economic situation especially with the risk of the second
wave, accelerating the recovery that will provide sustainable macroeconomic
sustainability and also help the monetary policy implementation.

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MS. AMR: Thank you, Jihad. We have a question from Abeer Hasala from Al
Hafez newspaper. Do you have the estimates for the MENA region economic
losses as a result of COVID-19? And what are the IMF’s estimates for
refinance needs for the region?

MR. AMR: Thank you, Abeer, for the question. Of course, the losses are
different from one country to another. As you know, Abeer, oil exporting
countries were hit by a double whammy shock in addition to the impact of
COVID-19 and the confinement measures needed in order to protect lives. The
decline in global demand for oil that led to a sudden drop in oil prices,
reaching levels we’ve not seen in the last two decades. That in real terms,
rates that we didn’t see since 1973 had a big impact on the oil exporting.
And therefore, oil exporting countries are expected to have a drop in their
revenues by $224 billion this year because of this combined shock.

For the oil importing countries, the situation changed from one country to
another. Countries where tourism and service industry are important, they
could have a loss in output by on average 5 percent. That also could be the
drop in job opportunities. For countries in conflict or fragile countries
that are dependent on the lifeline of remittances, the drop in revenues
could reach double digits, and therefore, it’s very important for those
countries to keep the policies of protecting the economy from the scars of
the pandemic, but also to start very quickly preparing for the recovery.

MS. AMR: Thank you. We have two questions from Jordan. The question from
Yusef Damra (phonetic), Al-Ghad (phonetic) Newspaper, and then same
question from Raef Sheyab, Petra News Agency. Has the first review been
completed? Bearing in mind, that the talks started almost a month ago—what
are the main recommendations presented to the Jordanian side on the
backdrop of COVID-19 pandemic? What is your assessment of the economic
situation in Jordan? And, lastly, what is the difference between the EFF
and the RFI programs for Jordan?

MR. AZOUR: Thank you, Yusef and Raef for these multiple questions. Let me
start with the first one. We have started the first review of the program
that has been approved by the board of the Fund back in April this year. It
was the first program that was approved post-COVID, and this program was
adjusted to allow Jordan to use the flexibility that is needed to combat
the COVID-19 crisis.

This review has started. And as you know, this is a remote review done
through video conference, and therefore, the process of the review may take
time. Also, we have a new government that we have already started the
discussion with the new economic team. And most important, portfolio’s the
same people that we have worked with in the past.

Let me cover the issue of the difference between an RFI and an EFF. Rapid
finance facility is an instrument that was designed in order to help
countries address the impact of the pandemic. This is fast disbursed and
also agreed on a very short period of time—a few weeks. There is no
reform-based conditions, but there are, I would say, requirements in terms
of transparency to make sure that the utilization of those funds are
dedicated to address healthcare, social issues related to fighting the

The EFF is more to support a reform agenda that the government in Jordan
has designed and presented in 2019, if you recall, in London at the London
conference. This program aims at achieving a certain number of objectives.
The first one is: preserve macroeconomic stability by gradually reducing
the deficit and curbing the debt dynamic, and also strengthen the monetary
stability by strengthening the reserves of the central bank. This is the
first pillar of the program.

The second pillar is to strengthen the economic competitiveness of Jordan
in order for it to create additional jobs, by improving business
environment, increasing the level of attractiveness of Jordan’s various
sectors to investors, and also reduce the cost of production, reducing the
cost of labor, as well as also reducing the cost of energy. And this is why
the reform of NEPCO, and the energy sector was a priority.

Third pillar is the social pillar: to strengthen and widen the social
coverage in order for it to provide additional social protection, and also
to improve labor protection and labor markets.

MS. AMR: Thank you. We go to Tunisia now. We have a question from Amira
Mohammed from Mosaique Radio. What are your expectations for Tunisia at the
end of the year, and could Tunisia in 2021 achieve a positive growth? What
is the fate of the negotiations between the central bank and the IMF? And
what is the reason for the delay and how we can address it?

MR. AZOUR: As far as the expectations for Tunisia this year, it will be
impacted by the COVID-19 pandemic which has hit several countries hard,
including Tunisia because of the need for protective measures to stand up
to this pandemic. Countries in the region, in general, effectively managed
and confronted this pandemic. The fatalities in the region were far less
than more advanced countries, but there was an economic cost to these
measures. The Tunisian economy will see a negative growth, 7 percent this
year. Next year it is expected to reach 4 percent positive.

There’s no doubt that the Tunisian government adopted measures to alleviate
the burdens of the pandemic on the economy, economic and social measures
through a set of programs, financial programs, completed with central bank
measures to increase liquidity in the banking sector, and secure financing
programs for the private sector. As you know, the IMF contributed to
providing support, rapid support, $750 million. Tunisia was the first
country in the Middle East to receive 100 percent of its quota in the IMF
through this program.

Tourism and service industries and sectors, such as exports were hard hit
by the pandemic, particularly exports to Europe and other countries.
Therefore, it’s important to continue on two tracks. First, to maintain the
protective measures that save lives, and to maintain the economy through
the measures adopted by the government.

In regards to the consultations, there’s continuous consultation with the
government. I had a meeting last week with the minister of finance and the
central bank governor where we discussed the economic developments. Weeks
before the government is expected to submit its 2021 budget, the IMF will
conduct Article IV consultations with Tunisia in the next weeks. The
relationship with Tunisia continues. So far, there has not been a request
from Tunisia for a new program and if there is such a request by the
Tunisian authorities, the response will be positive by the IMF.

MS. AMR: Matthew Lee from City Press has two questions, but we’ll start
with a question on Yemen. What is the status of the use of the new DL bank
notes printed by the central bank in Yemen? And any actions taken by the

MR. AZOUR: The IMF has been over the last few years—given the difficulties
faced by Yemen and the Yemeni people—providing extensive technical
assistance and support in order to protect and preserve institutions and
preserve the institutions that are in charge of the economic management,
the central bank, and ministry of finance.

Recently, the Fund has provided grants because Yemen, as you know, is not
eligible yet for borrowing, and therefore, the Fund in the context of what
the Fund has developed post-COVID as support to low income and fragile
states, provided Yemen with grants, as well as also with postponement of
debt services. Of course, the challenge of Yemen has been compounded by the
decline in remittances that constitutes an important lifeline for Yemen,
and also is an important element of the provision of foreign currencies
that is badly needed for Yemen.

MS. AMR: Thank you. We’ll move to Lebanon. We have a question from Lea
Fayyad, LBC. Do you believe that the IMF program is the only solution for
Lebanon to get out of its crisis? And is it required from the next
government to present to the IMF a detailed program?

MR. AZOUR: Thank you, Lea. The first step is for the Lebanese government to
present a comprehensive and credible reform program that helps address the
economic, financial, and social challenges that Lebanon is facing due to
the multiple shocks that Lebanon went through, and the last one was the
explosion in last August. This program has to be credible and implemented
with support of all the parties. It has to aim at restoring confidence, as
well as also restoring macroeconomic stability.

The program also needs to address the losses that exist in the financial
system, and repair the financial and the bank inconsistencies to, again, be
able to finance the economy. The third priority is to allow through the
reform agenda the economy to restart and create jobs that are badly needed
for the young Lebanese population.

In addition to that, to more important priorities: one is to address the
loss‑making entities or the losses that are incurred in the public sector,
in particular, in the energy sector as well as also in other areas.

And last, but not the least, widening and deepening the social protection
framework in order to provide social assistance to those who are currently
in deep need of it, especially with the increase in the level of poverty,
as well as also with the jump in inflation.

When it comes to the relationship between the Fund and the Lebanese
authorities, the previous ‑‑ the current government that is in caretaking
mode has presented ‑‑ back in April ‑‑ a plan that was approved in the
Council of Minister and based on as requested the Fund assistance.

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The Fund always will provide support to Lebanon, as our managing director
stated recently. And we look forward to working with the next government
based on the Lebanese program, the Lebanese reform agenda, in order to
engage the discussion. And, ultimately, if Lebanon wants a program from the
Fund, the Fund will provide that.

But also, it is important that Lebanon get support from the international
community, especially after the dramatic explosion back in August. And this
support should be in form of grants, as well as also in terms of financing.

MS. AMR: Thank you. We will stay on Lebanon. We have a question from Lamea
Abil Alsharq Alawsat. Please go ahead and ask your question, Lamea.


MR. AZOUR: Lamea, we are listening to you.

MS. AMR: Go ahead, please.

QUESTIONER: I have two questions. And the first question is about Lebanon.
In your report, you are adding Lebanon to sovereign countries. How will
you, as the IMF help Lebanon to go through all of these problems?

And the other question about Gulf countries, your estimation for the
economic activity in the Gulf area were quite pessimistic for the coming
year. So how do you estimate the economic activity after the pandemic in
the Gulf countries and your expectations for the growth rates in the Gulf
areas? Thank you.

MR. AZOUR: Thank you for your question. I think I have already answered the
first one on Lebanon. The IMF stands ready to help Lebanon. We are looking
forward for the next government and for a comprehensive reform program. And
if the Lebanese authorities are interested in engaging in discussion with
the Fund for Fund support, the Fund stands ready for that.

Your second question is on the Gulf countries. As you know, this crisis was
a double whammy crisis for all exporting countries, in particular, in the
GCC. In addition to the pandemic and the needed measures in order to
protect lives and the populations that has led to gradual slow down and
shutdown of the economy, the decline in oil demand globally and the drop in
oil prices has affected deeply the economies of the oil exporting and also
the GCC economies.

We project for this year that growth will be negative by six percent with
rebound expected in 2021. And this drop in growth is because expectations
for oil price for this year will be on average between $42 to $45, with a
potential increase gradually after 2021.

However, with the extension of OPEC Plus Agreement, oil production also has
been limited. In addition, certain number of non‑oil sectors, like,
tourism, airline logistics, were affected by the impact of the pandemic.

Of course, this outlook is subject to change, especially as we live in an
uncertain moment. And it will depend on a risk of a second wave, a
potential faster recovery in the advanced economies that could bring
additional demand for oil; and, hence, increase the price of oil.

MS. AMR: Thank you. So, we have a question from Halgard Abraham, Forbes and
Davide Barbuscia from Reuters on Saudi Arabia. So, we’re moving to Saudi
Arabia before we move to the Caucuses and Central Asia.

The question from Halgard: Saudi Minister of Finance has challenged the IMF
that the economy will perform better than the Fund’s expectation in 2020.
Do you insist on your expectations for Saudi, for the Saudi economic

MR. AZOUR: Well, Halgard, as you know, 2020 was a year like no other.
Nobody was expecting the severity of the first and the second shock that
have affected deeply the economy of the world, as well as also the
economies of the region. Saudi is the largest oil producer. And, therefore,
the various developments had an impact on the Saudi economy.

We have revised upward our revisions in October, compared to July. And we
expect that gross will be negative this year by 5.4 percent for Saudi, with
a recovery in next year, where we expect gross to be ‑‑ in 2021 ‑‑ at 3.1
percent. Of course, this outlook will depend on the evolution of oil price,
oil demand, and the potential extension of the OPEC Plus Agreement.

But I think what is important to mention here is all GCC countries have
already introduced certain number of measures to mitigate the impact of the
shock. And this also has led to provide the support to the non‑oil sector.
Saudi was one of those who have provided social, economic, and financial
support, social support to employees using the labor insurance system in
order to provide direct transfers to employees, as well as also forbearance
of some of the fees, in addition to the liquidity measures that were

MS. AMR: Thank you. And we’ll go to a Reuters question, Davide, on Saudi
Arabia as well. Saudi Arabia transferred $40 billion and deserves from the
Central Bank to its sovereign fund this year. What is the IMF’s assessment
of this move, in light of eroding buffers, due to the pandemic and lower
oil prices?

Should Saudi Arabia keep foreign reserves as much as possible untouched to
defend its currency peg? In addition to tripling the VAT, what else can
Saudi Arabia do to boost then oil revenue going forward? Should then income
tax be considered in the medium‑term?

MR. AZOUR: Davide, on your first question, is a technical question that
it’s only a transfer with the creation of the WIF between the Central Bank
this summer that usually in the past was in charge of managing some of the
reserves. And it’s a technical issue.

Your question on what are the additional measures needed? As you know, in
our report for 2019, we have recommended that for the medium‑term for
sustainability, and in the context of the medium‑term framework,
diversifying revenues outside oil and based on the success of the various
reforms that were introduced in the last four to five years, we recommended
that gradually the value‑added tax could be ‑‑ in terms of freight increase
and other type of non‑oil revenues ‑‑ could be developed.

Those recommendations are still valid as part of a medium‑term trend, part
of a fiscal framework that allow gradually reduced dependence on revenues
from oil and allow government to have more flexibility on the fiscal side.

When it comes to the last question, which was on?

MS. AMR: It’s on the non‑oil growth.

MR. AZOUR: On the non‑oil growth, of course, the non‑oil growth for Saudi
was also hit by the various measures that were introduced to protect lives
from the expansion of the pandemic, reduced tourism, as well as also other
type of activities had to be gradually reduced to protect the healthcare
and social situation in the country.

We start seeing, starting third quarter, a regain in activity with a
gradual reduction in the stringency of measures, and also, we start seeing
flow of people coming back to Saudi.

MS. AMR: Thank you. We move to the CCA. We have a question from Olzhas
Auyezov (Reuters) of Thompon Reuters. Has Kyrgyz Republic’s new government
reached out to the Fund? And how does the Fund plan to work with it against
the backdrop of the worst recession in 20 years?

We also have a question from Inner City Matthew Lee, also on Kyrgyz. What
is the IMF’s assessment of the turmoil in Kyrgyz Republic? Can or will the
IMF do anything to assist including a continued COVID‑19 response, as well
as debt to China, its impact?

MR. AZOUR: Well, as you know, the Fund has been responding to Kyrgyz’s
needs in a very rapid way. The first country that benefitted from the rapid
fund facility for combatting COVID was Kyrgyz Republic. And we had
augmented our support later in the year in order to provide the needed
resources for Kyrgyz to fight the COVID‑19 pandemic.

Of course, the Kyrgyz economy is an open economy and depends, like other
economies in the region, both in Central Asia and Caucuses, on remittances
and the drop of remittances because of the aftermath of the COVID-19 shock
had a severe impact on Kyrgyz economy and led to a negative growth of 12
percent this year expected for Kyrgyz Republic.

Of course, the support that the Fund has provided to Kyrgyz allowed also
authorities to get access to other type of international assistance from
multilateral institutions. And the Fund stands ready to help the Kyrgyz
economy and the Kyrgyz people address one of the most challenging crises
that the economy is going through.

We are in continuous dialogue with the authorities with the Central Bank,
as well as also with the government. And we will keep through the dialogue
possibility to provide additional support to Kyrgyz Republic.

MS. AMR: Thank you. I will go to Kazakhstan from Astana Tengri News. What
measures would you recommend to Kazakhstan to successfully implement
economic structure of transformation?

MR. AZOUR: Well, thank you for this question. Let me say first that
Kazakhstan has been successful in managing the double whammy shock of the
COVID‑19, as well as also the drop in oil price being an important player
in the oil and gas scene internationally.

Authorities have introduced a certain number of measures to protect lives
through social distancing, through testing and tracking. In addition, the
authorities have introduced a certain number of fiscal measures and support
to the economy through liquidity measures from the central bank. And they
have resorted to greater flexibility in the exchange rate in order to
protect the economy from the external and exogenous shocks.

Recently, the president of Kazakhstan has outlined the agenda for
structural reforms for the coming years. And this agenda goes in the right
direction in promoting through structural reforms, the capacity for
Kazakhstan to attract additional investment, to provide support to
small-and-medium-sized enterprises. And also, to promote fast-growing
sectors like technology, like other sectors that can boost growth going
forward. Recently, Kazakhstan has also improved the quality of the
financial system. And this has showed its, I would say, value during this

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MS. AMR: Thank you. Before moving back to the Gulf countries, questions on
the Gulf, we have Matthew Lee from Inner City also with us just to see if
he has any updates or to follow up on his questions. Matthew.

QUESTIONER: Oh sure, thanks, thanks a lot. You answered the question on
Kyrgyzstan, so I was really happy about that. I know you mentioned the
Caucasus, so does the IMF have any view of the situation in Azerbaijan and
its impact on regional economies. If you could do that, it would be great.
But either way, thanks a lot for answering the Kyrgyz Republic question.

MR. AZOUR: Matthew, thank you very much for your question. As you know, we
like others called for an immediate cease fire and negotiated a settlement
of this conflict. Of course, we have an excellent relationship with all
countries in the region. And we have, as you know, Matthew, provided for
several countries in the region, assistance in the context of the COVID and
before that to promote reforms as well as also to support countries who are
going through adjustment. And hopefully, our new technical assistance
center that will be created next year will be a platform to allow those
countries accelerate the pace of reform to improve their resilience and to
strengthen their economic growth.

MS. AMR: Thank you. So, we’re going to go back to questions and one
question on the UAE and Arabic and the other one in English from the
question from Abeer Shammala from Alkhaleej newspaper. What are the reasons
for reducing the expectations of growth so sharply for United Arab Emirates
and economies of the GCC compared to April? And what are the main reforms
that are needed in the region in order to recover and make growth after
COVID. When do you expect the region to recovery completely from the
repercussions of the COVID and the crisis?

MR. AZOUR: Thank you, Abeer, for this question. As a matter of fact, this
type of crisis which is unprecedented and witnessed by the global economy
and the economy of the region has led especially for oil exporting
countries to face challenges that are very big to the rate of growth
because they have been affected by the decline of oil prices. And, the
reduction that has been done with regards to the levels of production
exports of gas and oil.

And also, the government of the United Arab Emirates was one of the most
serious governments and effective in facing COVID-19. And it has worked in
a fast manner in order to take some measures to protect the citizens and to
secure a high level of procedures and measures to lessen and mitigate the
pandemic and its effects.

The United Arab Emirates has developed a number of mechanisms to work with,
which are unprecedented. Not only at the level of the region but also at
the level of the world. It created mechanisms for protection and also
mechanisms for follow up. But no doubt that in the United Arab Emirates and
its economy it is the most diversified at the level of the region and the
most open in the world.

It has been affected because of the deterioration in the oil sector and
also in trades and the global economic movement. It has been affected in
terms of tourism and transportation whether air or sea transportation, this
has affected the United Arab Emirates.

And also, due to the high level of reserves that are kept by the United
Arab Emirates, this country has managed in addition to protecting lives. It
also managed to secure a number of programs, related to financing through
the central bank which have contributed to lessening and mitigating the
effects of this crisis on the citizens and also on the economic sectors.
Because the central bank has lessened the level of interest and has raised
finance, accelerated finance and provided liquidity in the banking sector
this has led to mitigating the repercussions of this pandemic.

In the coming periods, no doubt this crisis is a transformational one and
this has been clear through the crisis. And it seems that there are many
points that we can build on. Technology has proved effective in helping to
face this pandemic. And also, it has proven to be able to adapt to the
economy that will be created after the pandemic.

Therefore, it is necessary to invest in all the mechanisms of remote
education and technology which will help remote working because the region
is still weak compared to the other regions of the world. And also
important is investment in other technological sectors that are environment

In addition to that, we should attach great importance to deepening through
financial inclusion at the international level to support SME’s and also
startups due to the large number of youth—educated youth in the region and
in the GCC, they can be the hope for the future.

The countries of the GCC and oil exporters, if they take these measures,
will be able within a reasonable period of time to accelerate growth and
they can recover and create growth. This is especially important as the
expectations of oil prices are not very promising and because there is not
going to be a high increase in prices. It will be less by about 20 to 25
percent as compared to before the pandemic. Thank you.

MS. AMR: On the UAE from the Gulf Today. How do you see the impact
of second wave of the pandemic on the country’s economy?

MR. AZOUR: Well, of course, Wahid, everybody is feeling the risk of a
second wave. What one could say is countries have already learned from
their previous experience and have improved the measures of the detecting,
testing, tracing and treating COVID-19. And countries in the region have
already increased the investment in their medical infrastructure for that.

In addition, we have already seen several programs that have been put in
place that can be scaled up. Of course, second wave will have a negative
impact on the overall economic activity. And this is why we are
recommending to countries to maintain for the time being the various
programs that have been introduced in order to elevate the pressure on the
livelihood or people and provide a floor to the economy. But, of course,
the level of uncertainty that we are all living today is casting a shadow
on the capacity to recover and recover fast in 2021.

MS. AMR: Thank you. We move to Georgia from Forbes. Can you speak about the
government’s debt in Georgia and what the purposefulness of the financial
assistance Georgia is getting from the IMF?

MR. AZOUR: Well, Georgia has been one of the countries in the region that
has implemented over the years important reforms that allowed Georgia to
improve its macroeconomic stability. And that was very useful during the
pandemic shock that hit the Georgian economy hard because it’s an open
economy where tourism, trade and integration into the global value chain is
relatively high.

And therefore, with all what has been improved over the years, Georgia was
able to address the wave of the pandemic shock with successful measures. In
addition to that, as you know, the government has introduced a certain
number of measures on the public finance side in order to provide
additional support.

And also, there were a certain number of measures that the central bank
provided in terms of liquidity and support through the banks in terms of
reserves requirement. And at the same time, the central bank used all of
the macroeconomic policy tools including the exchange rate in order to
protect the Georgian economy from the exogenous shock that Georgia was

All these reforms will, of course, need to be continued going forward in
order to deepen what has been already developed in terms of increasing the
competitiveness of the Georgian economy. Furthermore, it will be important
to address some of the risks of scars that some of the sectors are facing
like tourism, for example, as all sectors that are connected to trade
partners were affected by the crisis. And also, by helping new sectors to
grow, especially in the technology side. And we saw during the crisis, some
silver linings that show Georgia’s potential for fast growing the economy
going forward.

MS. AMR: We have one last question on Qatar from news agency. How do you
see the economic indicators in Qatar in light of COVID-19?

MR. AZOUR: The situation in Qatar to a great extent is similar to what we
see in other countries. Qatar has done directly, has worked directly in
order to face the pandemic with a number of protective measures and health
measures as well. In addition, it has taken certain measures to support the
situation of the citizens and to safeguard a number of programs that would
contribute mitigating the repercussions of this pandemic on the economy of

The decline of oil prices and gas has had its impact on the economy,
especially the investments made by Qatar currently in order to prepare for
the World Cup 2022. So, overall, it is expected that the economy of Qatar
will decline in terms of growth, which will be positive 4 to 5 percent this
year and it will be expected to recover next year with positive growth. And
also, we expect that the World Cup in 2022 will lead to improvements
gradually to the economy of Qatar.

MS. AMR: This ends the press conference for the Middle East and Central
Asia economic outlook. Thank you all for joining us.

IMF Communications Department


Phone: +1 202 623-7100Email: