IMF sees $160bn in Middle East financing needs

WASHINGTON: External financing needs of oil-importing countries in the Middle East and North Africa will exceed $160 billion over the next three years and donor countries must step in to help, the International Monetary Fund said on Thursday.

In a report to the Group of Eight meeting in Deauville, France, the IMF urged G8 industrial nations and rich Arab partners to develop an action plan that lays out elements of help they could provide to countries in need.

Countries such as Egypt and Tunisia are facing economic pressures following mass protests that toppled their rulers. Uprisings have also roiled Yemen, Jordan, Morocco and Syria, and left the government of Libya fighting to stay in power.

"In the immediate future, there is a need to restore confidence in the oil-importing countries, which face surging global commodity prices and domestic pressures associated with the initial transition shocks," the IMF said.

The fund also said it was able to provide about $35 billion to try to stabilize countries' economies.

Over the next 18 months the bulk of the financing needs will need to come from the international community, the IMF said, because markets were uncertain about the political and economic transitions in countries.

In addition, countries such as Egypt, Jordan, Lebanon, Morocco, Tunisia and Syria are facing inflationary pressures due to a surge in global food and energy prices, it added.

IMF staff projected that Egypt lost about $15 billion in foreign exchange reserves over a four-month period until the end of April. Staff also put the country's external and fiscal financing gap at about $9 billion to $12 billion for fiscal year 2011/12.

"Pressures on the balance of payments will ease only gradually with continued net capital outflows, and weak tax revenues and higher food and fuel subsidy costs will weigh on the budget," the IMF said.

For Tunisia, IMF staff forecast budgetary financing needs of about $3.7 billion in 2011, or 8 percent of gross domestic product. External financing needs, after foreign direct investment and short-term capital flows, are likely to be $4.4 billion this year, or about 9.5 percent of GDP.

Copyright Reuters, 2011