WASHINGTON Dec 6 (Reuters) - The aftermath of the Arab Spring uprisings is
at a critical juncture and needs to be managed in an orderly way so change
benefits everyone, the head of the International Monetary Fund said on
Tuesday.
IMF Managing Director Christine Lagarde said political change across the
Middle East and North Africa faced headwinds from an economic slowdown
across the oil-importing countries, which was pushing up already-high
unemployment and increasing social tensions.
Popular uprisings across the Middle East and North Africa this year have
toppled veteran rulers in Tunisia, Egypt and Libya, and forced Yemen's
president to sign away his powers. Syria is grappling with an
eight-month-old anti-government protest movement and Bahrain is still
dealing with the fallout from a crackdown on pro-democracy demonstrations in
March.
"This is naturally a risky and uncertain period," Lagarde said in a speech
at the Woodrow Wilson Center think tank in Washington.
"It is a period when hard choices must be made, when post-revolutionary
euphoria must give some way to practical concerns. It also doesn't help that
this is happening at a time of great turmoil in the global economy."
She said while governments tried to head off popular discontent by raising
subsidies, wages and increasing spending, it was time to develop more
lasting fiscal policies and reduce ballooning deficits.
But governments need to use resources "in a very careful and targeted way,
not in a wide-ranging approach," which would free up more spending on such
things as health and education, she added.
The IMF has $35 billion available to lend to countries in the region that
request financing, Lagarde.
An interim government in Egypt that has been lobbying for foreign funds for
its growing budget deficit resigned last month and its new finance minister,
Mumtaz al-Saeed, has said the country is not ready for a decision on IMF
aid.
Lagarde said the IMF was currently providing technical assistance to
countries in the region. It was helping Egypt make its tax system more
equitable, in Libya it was developing a modern system of government
payments, in Tunisia it is helping to improve the financial sector, and in
Jordan it is aiding fuel subsidy reform.
"My door is open, all we need is a request from a country to come in and
help," Lagarde added.
Lagarde said the IMF could overcome its reputation in the region for
imposing unpopular policies through its actions.
"The best way to convince we can be of help is to demonstrate through our
technical assistance program we are not here to interfere, we are not here
to take over, we are not there ... as power holders," she said.
She said governments in the region needed to encourage the private sector to
invest by providing predictable and stable environments where legal and tax
frameworks were clearly spelt out.
"The government must provide an enabling environment. It should put in place
modern and transparent institutions to encourage accountability and good
governance and ensure fair and transparent rules of the game. It should
slay, once and for all, the dragon of corruption"
She said vested interests that benefited just a few of the business elite
needed to be dismantled. "This would be a break from the past when
generalized subsidies were used to appease the population while allowing the
privileged to benefit from unfair practices," she added.
(Reporting by Lesley Wroughton; Editing by James Dalgleish)
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Received on Tue Dec 06 2011 - 16:43:07 EST