International Monetary Fund (IMF) chief Christine Lagarde on Saturday (February 10th) urged Arab countries to reduce public wage bills and subsidies in order to rein in spending, achieve sustainable growth and create jobs, AFP reported.
Speaking at the one-day Arab Fiscal Forum in Dubai, Lagarde welcomed "promising" reforms adopted by some Arab countries, but insisted much more was needed to overcome daunting economic and social problems.
Low oil prices are weighing on the finances of Arab oil exporters, while importers are battling with rising debt, unemployment, conflicts, terrorism and refugee inflows, the IMF’s managing director said.
Almost all Arab countries have posted budget deficits over the past few years and Arab economies grew at just 1.9% last year, half the global rate, according to the Arab Monetary Fund (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% of gross domestic product (GDP), Lagarde 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.
