Washington: International Monetary Fund chief Christine Lagarde has said economic growth in the Middle East and North Africa must include all members of society to fulfill the promise of the Arab Spring.
Lagarde, in a speech in Washington yesterday, said the Arab Spring that began a year ago in Tunisia was at a "delicate transition point" as the MENA region seeks to define its future.
"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," she said.
The IMF managing director said that, despite some setbacks in the region, she remained "ever hopeful" that the Arab Spring is still poised to unleash "the potential of a better future for all."
However, the region faces challenges after governments reacted to social pressures by increasing subsidies, wages and other subsidies, which has undermined economic stability.
"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," Lagarde said in a speech at the Woodrow Wilson Centre.
"Macroeconomic stability is essential. But macroeconomic stability and inclusive growth can -- and indeed must – go hand in hand."
Lagarde called on governments across the region to root out corruption and establish institutions to boost accountability and good governance.
"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 labour force and to reduce unemployment over the next decade."
Lagarde said the international community could help promote positive changes in the region by opening up market access to its exports.
Removing non-tariff barriers "doesn't cost much in the short term and can help much," she said. Lagarde noted the IMF stood ready to help and has earmarked USD 35 billion that could be made available for loans in the region.
First Published: Wednesday, December 7, 2011, 08:55