The Managing Director of the International Monetary Fund (IMF), Kristalina Georgieva has advised the Gulf Cooperation Council (GCC) economies to diversify government revenue and make spending more efficient.
The IMF boss stated this during a meeting of the ministers of finance and central bank governors of the GCC on October 25.
She urged the economies within the GCC to accelerate reforms with key emphasis on diversifying and greening their economies, and creating opportunities, especially for young people and women.
“Diversifying government revenue, something that you have already started; and making spending more efficient”.
She first and foremost urged the countries to continue doing what they know work best for them. The Managing Director admonished these economies to keep investing in health systems and maintain supportive fiscal and monetary policies until the world is out of the woods of the health crisis.
She noted that GCC economies should increasingly target households and businesses most in need, and then start shifting support away to firms that are likely to succeed and to individuals most in need.
The IMF boss expressed optimism about economic recovery shortly when a cure is found for the virus.
“Hopefully, we will have vaccines and accelerated delivery everywhere. But we also know that there is a possibility for reopening and robust economic revival if we are determined to apply measures we currently have, such as testing, contact tracing, self-isolation, quarantines, masks, and social distancing.
“What do we see for the GCC? We see a six percent GDP contraction in 2020, followed by growth of 2.3 percent in 2021. We also, as you very well know, recognize that you face large fiscal and external deficits. These projections reflect the combined impact of oil price declines, oil production cuts, and of course, as everywhere else, lockdowns. And they assume continued progress in fighting the virus.
“It is very important to recognize that the region is likely to see, in the medium term, economic scars: unemployed workers, reduced business investment, students who have been out of school—which takes away from productivity in the future by harming the human capital of the region. As you know, we also have to brace for possibly prolonged low oil prices and prepare for advancement toward alternative sources of energy”.
The IMF boss praised the GCC economies on what they have done on digital. According to her, full standalone 5G wireless in this region will enable remote work, education, telemedicine, and e-government. She further stated that GCC economies can pursue with even more imagination the application of technologies to be even more competitive in areas where the digital revolution is accelerating.
“And if I may say, you have such a wonderful chance to go green. The sun is as abundant—more abundant than oil. I want to praise the UAE for building the world’s largest solar power plant. And you can continue what you have been doing, making sure that nature, something that you so much value, is vibrant and resilient.
“Next, I want to praise the Saudi G20 presidency for the focus on access to opportunity, especially for youths and women. You have 2.5 million young GCC nationals entering the workforce by 2025. Just imagine what can be done if they all have enhanced access to opportunity.
“And I want to recognize that Qatar has introduced a minimum wage for expatriates, and made it easier for them to change jobs. And Saudi Arabia has opened up the labor market more to women”.
She assured the GCC central bank governors of the IMF’s support during these difficult times. “Working together in this very difficult environment can help us find the way up this mountain we are climbing in this crisis”.
