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International Monetary Fund. Middle East and Central Asia Dept.

Abstract

A year into the coronavirus (COVID-19) pandemic, the race between vaccine and virus entered a new phase in the Middle East and Central Asia, and the path to recovery in 2021 is expected to be long and divergent. The outlook will vary significantly across countries, depending on the pandemic’s path, vaccine rollouts, underlying fragilities, exposure to tourism and contact-intensive sectors, and policy space and actions. 2021 will be the year of policies that continue saving lives and livelihoods and promote recovery, while balancing the need for debt sustainability and financial resilience. At the same time, policymakers must not lose sight of the transformational challenges to build forward better and accelerate the creation of more inclusive, resilient, sustainable, and green economies. Regional and international cooperation will be key complements to strong domestic policies.

International Monetary Fund. Middle East and Central Asia Dept.

Abstract

Countries of the Middle East and Central Asia region have been hit by two large and reinforcing shocks, resulting in significantly weaker growth projections in 2020. In addition to the devastating toll on human health, the COVID-19 pandemic and the plunge in oil prices are causing economic turmoil in the region, with fragile and conflict affected states particularlyhard-hit given already large humanitarian and refugee challenges and weak health infrastructures. The immediate priority for policies is to save lives with needed health spending, regardless of fiscal space, while preserving engines of growth with targeted support to households and hard-hit sectors. In this context, the IMF has been providing emergency assistance to help countries in the region during these challenging times. Further ahead, economic recoveries should be supported with broad fiscal and monetary measures where policy space is available, and by seeking external assistance where space is limited.

International Monetary Fund. Middle East and Central Asia Dept.

Abstract

Countries of the Middle East and Central Asia region have been hit by two large and reinforcing shocks, resulting in significantly weaker growth projections in 2020. In addition to the devastating toll on human health, the COVID-19 pandemic and the plunge in oil prices are causing economic turmoil in the region, with fragile and conflict affected states particularlyhard-hit given already large humanitarian and refugee challenges and weak health infrastructures. The immediate priority for policies is to save lives with needed health spending, regardless of fiscal space, while preserving engines of growth with targeted support to households and hard-hit sectors. In this context, the IMF has been providing emergency assistance to help countries in the region during these challenging times. Further ahead, economic recoveries should be supported with broad fiscal and monetary measures where policy space is available, and by seeking external assistance where space is limited.

International Monetary Fund. Middle East and Central Asia Dept.

Abstract

Countries of the Middle East and Central Asia region have been hit by two large and reinforcing shocks, resulting in significantly weaker growth projections in 2020. In addition to the devastating toll on human health, the COVID-19 pandemic and the plunge in oil prices are causing economic turmoil in the region, with fragile and conflict affected states particularlyhard-hit given already large humanitarian and refugee challenges and weak health infrastructures. The immediate priority for policies is to save lives with needed health spending, regardless of fiscal space, while preserving engines of growth with targeted support to households and hard-hit sectors. In this context, the IMF has been providing emergency assistance to help countries in the region during these challenging times. Further ahead, economic recoveries should be supported with broad fiscal and monetary measures where policy space is available, and by seeking external assistance where space is limited.

International Monetary Fund. Middle East and Central Asia Dept.

Abstract

Growth in the near term remains subdued for oil exporters in the Middle East, North Africa, Afghanistan, and Pakistan (MENAP) region, amid volatile oil prices, precarious global growth, elevated fiscal vulnerabilities, and heightened geopolitical tensions. In addition, declining productivity is dampening medium-term growth prospects. To reduce dependence on oil prices and pave the way for more sustainable growth, fiscal consolidation needs to resume, underpinned by improved medium-term fiscal frameworks. In parallel, structural reforms and further financial sector development would boost foreign direct investment (FDI) and domestic private investment and foster diversification, thus contributing to improved productivity and potential growth.

International Monetary Fund. Middle East and Central Asia Dept.

Abstract

As in other regions in the world, countries in MENAP and CCA regions are exposed to tightening in global financing conditions and ongoing global trade tensions. The former has already begun to impact several emerging market economies in MENAP and could have more severe implications should financial market sentiment suddenly deteriorate. Escalating global trade tensions will have a limited direct and immediate impact on these regions but could impart significant strains over time through negative effects on trading partners and through market confidence effects.

International Monetary Fund. Middle East and Central Asia Dept.

Abstract

Oil exporters in the Middle East and North Africa, Afghanistan, and Pakistan region (MENAP) are continuing to adjust to lower oil prices, which have dampened growth and contributed to large fiscal and external deficits.

International Monetary Fund. Middle East and Central Asia Dept.
This paper discusses Pakistan’s Seventh Review Under the Extended Arrangement and Modification of Performance Criteria (PCs). All end-March 2015 quantitative PCs were achieved, as well as the indicative target (IT) on cash transfers under the Benazir Income Support program. The IT on federal tax revenue was missed by a small margin, reflecting legal challenges to some of the tax measures and the negative impact of lower global commodity prices. The authorities have taken action to improve revenue and remain on track to meet the end-June 2015 fiscal deficit target. The IMF staff supports the authorities’ request for modifications of the end-June net international reserves PC, and completion of the seventh review under the arrangement.
Mr. David Coady, Ian W.H. Parry, Louis Sears, and Baoping Shang
This paper provides a comprehensive, updated picture of energy subsidies at the global and regional levels. It focuses on the broad notion of post-tax energy subsidies, which arise when consumer prices are below supply costs plus a tax to reflect environmental damage and an additional tax applied to all consumption goods to raise government revenues. Post-tax energy subsidies are dramatically higher than previously estimated, and are projected to remain high. These subsidies primarily reflect under-pricing from a domestic (rather than global) perspective, so even unilateral price reform is in countries’ own interests. The potential fiscal, environmental and welfare impacts of energy subsidy reform are substantial.
International Monetary Fund. Middle East and Central Asia Dept.
EXECUTIVE SUMMARY Extended Arrangement under the Extended Fund Facility (EFF): A 36 month, SDR 4,393 million (425 percent of quota) Extended Arrangement under the EFF was approved by the Executive Board on September 4, 2013 and the fourth and fifth reviews were completed on December 17, 2014, for a total disbursement of SDR 2,160 million. The sixth tranche amounting to SDR 360 million will be available upon the completion of this review. Status of the program: All end-December 2014 quantitative performance criteria (PCs) were observed, as well as the indicative target on cash transfers under the Benazir Income Support program (BISP). Although the indicative target on federal tax revenues was missed, the authorities have taken actions to address the shortfall and are on track to meet the end-March 2015 indicative target. The end-December 2014 structural benchmark (SB) on amendments to the relevant tax laws and submission of the Anti- Money Laundering Act (AMLA) was met, as were the end-February SBs on enhancing internal operations and risk management of the State Bank of Pakistan (SBP) and improving monetary policy operations. Adjustments to the end-March PCs on NIR and NDA are proposed to reflect higher reserves accumulation by the SBP and new end- June PCs and four new SBs are proposed. Key issues: Discussions focused on: (i) saving the windfall from falling oil prices to strengthen buffers?including foreign exchange reserves and the fiscal stance?against adverse shocks; (ii) preventing a further loss of export competitiveness; (iii) reducing electricity subsidies; (iv) introducing compensatory measures to cover the revenue shortfall; (v) steps to broaden the tax base and improve tax administration; (vi) progress on safeguarding financial stability and expanding credit growth; (vii) enhancing structural reforms in the energy sector, central bank independence, anti-money laundering framework, public debt management, trade, and the business climate to unlock Pakistan’s long-term growth potential. The mission retained its growth projection at 4.3 percent, but lowered inflation forecast to 5.5 percent for FY2014/15. Risks are balanced with downside risks due to political uncertainties and security challenges, and upside risks from further falls in oil prices. Outreach activities included a press release, press conference (held in Dubai) and bilateral interviews with journalists.