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IMF chief urges Arab states to slash spending

AFP  |  Dubai 

IMF today urged Arab countries to slash public wages and subsidies in order to rein in spending, achieve sustainable growth and create jobs. Speaking at the one-day Arab Fiscal Forum in Dubai, welcomed "promising" reforms adopted by some Arab countries, but insisted much more was needed to overcome daunting economic and social problems. prices are weighing on the finances of Arab exporters, while importers are battling with rising debt, unemployment, conflicts, terrorism and refugee inflows, the International Monetary Fund's said. Almost all Arab countries have posted budget deficits over the past few years and Arab economies grew at just 1.9 per cent last year, half the global rate, according to the (AMF), which co-organised the event with the IMF. Yet Arab public spending remains very high, especially in oil-rich Gulf states, where government expenditures exceed 55 per cent of gross domestic product, said. She said many Arab governments had taken steps to contain spending, but the measures have often been temporary. Public spending reforms should focus on cutting costly subsidies and public wage bills whilst boosting efficiency in areas like health, education and public investment, she said. "There is really no excuse for the continued use of energy subsidies," said. "They are extremely costly -- averaging 4.5 per cent of GDP among exporters and three per cent of GDP among importers." All six members of the and many other Arab countries have reduced in recent years, but their cost is still high. AMF said the value of Arab dropped from $117 billion in 2015 to $98 billion last year, according to a study by his organisation. warned that higher growth and stringent reforms were needed to create jobs for young Arabs. "Youth unemployment is the highest in the world -- averaging 25 per cent, and exceeding 30 per cent in nine countries," she said. "Moreover, over 27 million hopeful young people will join the workplace over the next five years." Hamidy said Arab economies must grow at 5-6 per cent annually to create the necessary jobs, adding that half of the Arab world's estimated 400 million population is under 25 years old.

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Sat, February 10 2018. 16:35 IST
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