RIYADH: Inflation levels in the Gulf countries are lower than in other states, given the structure of the consumer basket, a senior International Monetary Fund official told Al-Arabiya.
Jihad Azur, the fund’s director of the Middle East and Central Asia department, said that with the global rise in inflation, it is necessary to adjust monetary policy to maintain acceptable price levels.
“On the other hand, the policies adopted over recent years in terms of diversifying sources of income are steps in the right direction, and it is necessary to continue and deepen them so that the economy becomes less dependent on energy,” he explained.
Speaking about the rise in interest rates, Azur explained that it is linked to inflation jumps as central banks resort to higher interest rates to stem the rise in prices.
“This is a priority for all countries, including countries in the region. That is why other supplementary measures must be taken,” he said.
Azur added that other supplementary measures should also be taken.
At the social level, the IMF official suggested that measures should be taken to protect the most vulnerable through a targeted support policy. While on the economic level, work needs to be done to reduce the levels of deficit and its impact on the debt.
In countries dependent on foreign issues, he said the high interest rates will reflect the cost of debt, “so it is necessary to hedge this type of risk through economic and financial reforms that contribute to reducing the need for financing.”
Azur noted that although this year has seen several shocks, including the war against Ukraine and the rise in the cost of energy and raw materials, oil exporting countries’ financial conditions will improve.
That’s because there are expected to be surpluses of more than $1 trillion in the next four or five years, he said.
The rest of the countries are divided into countries that depend on financing through financial markets, and that need to hedge the risks of rising interest rates, and others that need to speed up the reform process due to the rise in the dollar.
Speaking of IMF financing, Azur said in the interview that negotiations to obtain new financing are continuing with Egypt and things are progressing according to schedule.
He pointed out that upon reaching an agreement with Lebanon in April, there is a set of measures that the government must take quickly so that this program can be presented to the fund’s management.
Regarding Tunisia, he noted that negotiations had also begun over the past months and were currently ongoing.