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IMF head says Arab Spring at critical point, needs 'inclusive' growth Lagarde hails the 'extraordinary potential of the Arab people' but says economies need to be carefully managed to bring benefits to all
IMF chief Christine Lagarde has said the Arab Spring is at a critical juncture and economic growth in the Middle East and North Africa needs to be managed in an orderly way to bring benefits to all. Speaking in Washinton on Tuesday, Lagarde said the series of Middle East uprising which began a year ago in Tunisia were at a "delicate transition point" "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 would "unleash the extraordinary potential of the Arab people." But Lagarde said the uprisings had been followed by uncertainty, and said that government actions to increase subsidies and wages after social pressure had undercut 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," she said, during the speech at the Woodrow Wilson Center. "Macroeconomic stability is essential. But macroeconomic stability and inclusive growth can -- and indeed must -- go hand in hand." Corruption also needs to be tackled and new institutions founded to promote accountability and good governance, she said. "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," said Lagarde, adding there was "no other way" to create the 50 to 70 million jobs needed to reduce unemployment over the next decade. The international community could also play a positive role, she added, by opening up market access to its exports and removing non-tariff barriers. Lagarde said the IMF is ready to help and has set aside $35 billion that could be extended as loans to countries in the region.
