Internati-onal Monetary Fund chief Christine Lagarde on Tuesday said economic growth in the Middle East and North Africa must include all members of society to fulfil the promise of the Arab Spring. Lagarde, in a speech in Washington, 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 Center. "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. Lagarde said the international community could help promote positive changes in the region by opening up market access to its exports.
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