The Middle East and North Africa economies (MENA) have challenging work ahead especially in an increasingly complicated global economy, Niveen Wahish reports "Money and policies" are some of the key words reiterated when it comes to discussions on the needs of the MENA region. Amat Al-Alim Alsoswa, regional director of the United Nations Development Programme Regional Bureau for Arab States, told Al-Ahram Weekly that financial assistance is direly needed by the countries undergoing the transition. "Many pledges have been made, yet only some came through and many others have not." She is hopeful that recent promises that disbursement will be facilitated will be kept so that the governments can meet the growing social and political needs. Alsoswa emphasised that the region must get more than just political support because it needs to provide many economic needs. "We need the finances so this [the revolutions] can succeed. People cannot live on goodwill political promises as they need to find food on the table as well as basic health and education," she said. Alsoswa hopes that the global economic conditions will not affect those pledges and that the money has already been put aside. "If the money does not come through, the situation will not be good," she said. Furthermore, it is not only foreign assistance flows that could be affected. The region's countries will have to put up with higher food and fuel prices, said Masood Ahmed, International Monetary Fund (IMF) Middle East and Central Asia Department director, speaking during a press briefing. Also, the growing risk aversion in financial markets has raised their cost of finance and they are suffering slow growth in their traditional [export] markets, particularly Europe. Moreover, these countries are also being affected by the spillover from conflict countries such as Syria, Libya and Yemen. "These economies are contracting; that had not been anticipated and is having an effect on the region," Ahmed said. The region's growth will be affected by domestic reasons as well. Continued social demand for spending will put the fiscal situation under strain, especially in the oil importing countries. And, says Ahmed, these pressures will continue during the course of the year, particularly in countries going through political transition. "The pace of transition will define how quickly this is alleviated." To make the transition shorter, experts from the region have made several suggestions. Tunisian Minister of Finance Jalloul Ayed said countries in the transition process need a strong government which can apply the rule of law and a strong civil society to keep an eye on the government. Ayed was addressing a seminar titled "Beyond the Arab Spring: Restoring Economic Confidence, Meeting Social Needs," held in Washington on the sidelines of the IMF annual meetings. Ahmed Galal, managing director of the Economic Research Forum, addressing the same panel, said the region must work on improving governance. "Through governance, you get policies that serve the interest of the majority of the population and make sure that the government makes credible commitments." Speaking specifically about Egypt, he told the Weekly that the solution of the country's economic problems in the short run lies primarily in the hands of politicians, not economists. "When confidence is lacking, it takes politically determined measures to restore security and build trust in the future to convince investors, domestic and foreign, tourists and trading partners to be active again in Egypt." To him, what is needed to begin with is security on the street and a clear map setting out what lies ahead, including elections of all kinds, to restore a post-revolution governance structure. "If observers see that you have a plan and you are sticking to it and delivering on your promises, this ought to win over local as well as foreign investor confidence." On the economic front, also in the short run, managing the transition prudently, finding fresh resources to finance the deficit and paving the way for future reform down the road is the best course of action. In fact, several members of the panel did agree on the need for targeted subsides. Shaukat Tarin, advisor to the chairman of the board of Silkbank Ltd. in Pakistan, speaking with reference to Pakistan, advised that subsides should only be targeted to households which fall below the poverty line. "Untargeted subsidies were eating away at the resources," he said.
