Almost one year ago, countries in the Middle East region embarked upon a historical transformation. Today, the state of play remains uncertain, with the setbacks and intensity of disruptions larger than expected. Here, I am thinking especially of the deplorable loss of life in places like Libya, Syria, and Yemen. And we are now moving into the most difficult, risky, and uncertain period of all.
As I mentioned in a speech today hosted by the Safadi Foundation at the Wilson Center in Washington D.C., we are in the middle of a delicate transition between "rejecting the past" and "defining the future." It is a period when hard choices must be made, when post-revolutionary euphoria must give some way to practical concerns. It also does not help that this is happening at a time of great turmoil in the global economy. But I remain hopeful. The final destination is clear: the Arab Spring is still poised to unleash the potential of the Arab people.
It will be important to manage this difficult transition in an orderly way.
And here, I want to pay tribute especially to the people of Tunisia, who are going through a smooth and inclusive process of transition. Just as Tunisia provided the first spark of the Arab Spring, so now can it light the path forward for other countries in the region.
Economic challenges
We all learned some important lessons from the Arab Spring. While the top-line economic numbers -- on growth, for example -- often looked good, too many people were being left out.
And, speaking for the IMF, while we certainly warned about the ticking time bomb of high youth unemployment in the region, we did not fully anticipate the consequences of unequal access to opportunities. Let me be frank: we were not paying enough attention to how the fruits of economic growth were being shared.
It is now much clearer that more equal societies are associated with greater economic stability and more sustained growth.
While each country in the region must find its own path to change, the over-arching economic goals of the Arab Spring remain clear -- higher growth, growth that creates more jobs, and growth that is shared equitably among all strands of society.
To that end, let me emphasize a very important point: macroeconomic and financial stability remain absolutely essential, core building blocks of any new society. Without this secure foundation, any efforts to respond to people's aspirations can simply not be realized.
Working in harmony
To date, governments have responded to social pressures by increasing subsidies, wages, and other spending, to help lessen the hardship faced by ordinary people. This was needed for social cohesion in the short term. But it does not come without cost. Fiscal deficits have widened, which raises concerns about sustainability. It pushes up interest rates, which makes it harder for the private sector to get credit to set up or expand businesses and start hiring people. So across the region, governments need to move towards better and sustainable fiscal policies.
In particular, more targeted social protection systems would help free up funds for spending on areas like infrastructure, education, and health while laying the foundations for inclusive growth. 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. So, macroeconomic stability and inclusive growth can -- and indeed must -- go hand in hand.
What is more, the government and the private sector must work in harmony. The private sector, including small and medium-sized enterprises, must take on a leading role, to boost investment, productivity, competitiveness -- and create jobs.
Enabling environment
But for this to happen, 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. The government must also lay the foundations of a modern and competitive economy by breaking down the vested interests and cozy networks of privilege that prevent the region from reaching its true economic potential. There is simply no other way to create the 50-70 million jobs needed for the people joining the labor force and to reduce unemployment over the next decade.
Of course, the region's destiny lies with itself, but the international community also has a responsibility to help. It must listen to the hopeful voices and provide support -- including financing, technical assistance, and market access.
The IMF too stands ready to help. We are working closely with our members in the region, and we are willing to walk the path with them. We are offering the best policy advice possible. We will provide financial help if requested.
And with our technical assistance, we are helping countries build better institutions for a better world. Some examples: We are helping Egypt make its tax system more equitable. We are helping Libya develop a modern system of government payments. We are helping Tunisia improve its financial sector. And we are helping Jordan with fuel subsidy reform.
Amidst a darkening economic outlook and waning confidence, the Arab Spring still shines as a bright light and a beacon of hope, a symbol of what can be accomplished. The region, together with its international partners, must make sure that this light is never extinguished.
From iMFdirect blog and Economic Window ( النافذة الاقتصادية )
Eric X. Li: Globalization 2.0: A Century for Sale, Any Taker?
http://www.whirledbank.org/imf.html
Read Naomi Klein The Shock Doctrine. World Bank and IMF are financial leeches. They suck countries dry.
President Obama espouses freedom and democracy, yet imprisons people without charge or trial. Obama has personally ordered the assasination of two American citizens without charge, arrest or trial.
America has some perverse idea that we can fix the world with money off of the backs of the American taxpayer. Perhaps instead of sacrificing our children and billions of American taxpayer's money, we can ask the drug lords of Afghanistan who produce over 90% of the world's heroin, or maybe the few that have made billions from the Iraqi blackmarket oil scam to help out their fellow Muslims. While President Obama is so concerned with not offending the Muslim sector, his Secretary of State Hillary Clinton proclaims to the United Nations that the abomination of homosexuality before Allah is a human right!! Further, that this ungodly administration is prepared to withhold foreign aid and assistance to anyone that disagrees with them. The American voters have an opportunity to rid ourselves of this immoral administration in 2012. American Muslims do not have the convenience of picking and choosing which part of Islam they will follow. It's all or nothing, they must decide. With 9% unemployment America better take care of our own backyard before breaking the backs of taxpayers for generations to come.
forgets that some things are sacred.
I was programmed to only attack the GOP, and bear the consequences otherwise.
I would be worried about any such "technical assistance" from IMF. Just look at what their assistance has done around the world. IMF is just a tool of world banksters.
I'm shocked, shocked! that the IMF wasn't paying enough attention to how fairly the fruits of economic growth were being shared!
"It is now much clearer that more equal societies are associated with greater economic stability and more sustained growth."
Coming from a Democrat, that would be called Marxist propaganda & class warfare.
Be respectful. Period. These people know how to create their own democracy, it is not up to us to "help" them, but to stand back and let them show us what they are capable of...they gave us the Library at Alexandria which the West burned down, the numeric system, so much in science, and even, I would argue, a more ethical way of looking at interest charged )or not)...don't think we can simply help them, we have a LOT to learn from these parts of the world!!!
And here is where all of your assumptions are fundamentally flawed. As a strict adherent of the neoliberalism that's derived from neoclassical economic ideology, you can't answer why the Eurozone is collapsing today--but I can: we have now turned the corner, from here on out growth is not just unlikely, it's impossible. Any economic prescriptions that ignore that fundamental and indisputable fact will fail and cause tremendous harm in the process of failing.
At present, I do not see much cause for optimism.
Breathlessly waiting for them to fail - so that YOU can say that WE are better than THEM - is a little unseemly.
They haven't even finished counting the votes in Egypt and already the vultures are sitting on the fence.
What planet does Christine Lagarde come from? The moderates were absolutely, undeniable routed in Egypt's recent elections and those were the results from the more metropolitan areas of the country, where liberals are most prevalent. Wait until the results come in from the more rural areas.