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30/01/2018 - 21:06hs

Conference sets priorities for Arab development

Organized by the IMF and other organizations, a forum in Marrakech discussed ways of improving economic growth, job creation and inclusion in the region.

São Paulo – A conference held the last two days in Marrakech, Morocco, defined priorities to promote economic growth, job creation and inclusion in the Arab world. The forum was organized by the International Monetary Fund (IMF), the Arab Fund for Economic & Social Development (AFESD), the Arab Monetary Fund (AMF) and the Moroccan government.

Ryan Rayburn/IMF Photo

Lagarde: the state-as-large-employer model is not viable

According to a statement released this Tuesday (30) by the IMF, AFESD and AMF, at the event’s ending ceremony, the region’s governments should undertake reforms that promote transparency, strengthen institutions, challenge corruption and ensure the adoption of inclusive policies.

In addition to this, the countries should encourage competition via the strengthening of the private sector, easier access to credit and the creation of a friendlier business environment, cutting red tape. “The old model where the state is employer of first resort is no longer viable,” said the managing director of the IMF, Christine Lagarde, in a speech during the conference.

The technological development and promotion of trade were also mentioned as crucial. According to the three international organizations, these are areas where new sources for growth and jobs could arise. Lagarde said, for instance, that, since 2009, the number of new Fintechs (financial technology startups) increased seven-fold in countries such as Egypt, Jordan, Lebanon and the United Arab Emirates. She added that the creation of free trade zones in Casablanca and Tangiers, in Morocco, resulted in the creation of 85,000 jobs in the auto industry.

Also priorities are the creation of solid programs of social protection and the inclusion of young people, women, farmers and refugees. “More than 27 million young people in the region will join the workforce over the next five years, a region where youth unemployment is the highest in the world, averaging 25 percent,” said Lagarde.

She added that financial inclusion is an important tool for the strengthening of these groups, plus education and, especially among women. “I have said so often, including women financially and economically is a potential global game-changer,” she said.

The good news, according to her, is that the growth of the world economy reached the highest level in a decade, of 3.7%, in 2017, and the forecast of a boost to 3.9% this year and the next. “Some 120 countries representing three-quarters of global GDP are participating in this cyclical upswing,” said IMF’s managing director.

The Fund forecasts a 3.5% growth of the region’s GDP in 2018 and 2019. Although there’s a recovery, the level is still well bellow the average registered between 2000 to 2008, which was of 5.6%. “Clearly, conflicts and lower commodity prices are taking a toll,” sad Lagarde.

Public policies should aim improvements regarding investments in the social area, a fairer tax system and a fair sharing of the weigh of reforms that involve cost contention and tax hikes. Investment in education and training to prepare workers for a new economy is another action considered of great importance.

According to Lagarde, spending in the social area (social programs, healthcare and education) are lowers than 11% of the regional GDP, against 19% in emerging nations in Europe.

The three organizations plan to guide themselves by these priorities in their relations with the region’s governments. They will provide orientations for the actions that will be suggested to governments, the private sector and civil society. However, the organizations point out that the region needs for foreign funding, especially grants, mainly to aid nations hit by conflicts and people displaced by war.

*Translated by Sérgio Kakitani

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