The International Monetary Fund warns of the risks of debt in the Middle East and Central Asia

Washington (ST):  The International Monetary Fund has called on the countries of the Middle East and Central Asia to reduce their need for financing, warning of the growing government debt, which was exacerbated by the Corona pandemic.

Reuters quoted the director of the Middle East and Central Asia Department at the Fund, Jihad Azour  as saying that the recovery has begun, but it is mixed and there is a blur,”, adding,  that the blurry outlook stems from the persistence of the pre-pandemic legacy, especially in high-debt countries.

Azour  went on to say that the first countries to vaccinate, which include the oil-rich Gulf countries, Kazakhstan and Morocco, will reach the levels of GDP for the year 2019 next year, while the recovery to those levels will take another year in other countries. According to the Fund’s latest regional and economic forecasts, “high financing requirements could restrict the policy space needed to support the recovery after the crisis prompted many countries to borrow, taking advantage of the abundance of the financial liquidity in global markets to increase spending to mitigate the consequences of the pandemic.”

He added that financing needs are likely to increase by an estimated $ 1.1 trillion over the next two years, which poses a threat to financial stability and may lead to a slowdown in the economic recovery.

K.Q.