By Satish Kanady
DOHA: Qatar, together with its 13-member Group countries including four GCC nations, has expressed serious concerns at the International Monetary Fund (IMF) meeting over the potential for disruptive capital flows and exchange rate volatility in Emerging Market Economies (EMEs).
They urged the Fund to continue its analysis on the implications of the normalising of monetary policies in the Advanced Economies (AEs). The country and the group members were looking forward to the low-income countries’ planned work on financial sectors surveillance, the review of debt limits and their financial deepening efforts.
Addressing the 29th meeting of International Monetary and Financial Committee (IMFC) on behalf of 13 countries, including Qatar, UAE, Bahrain, Oman and Kuwait, in Washington on Saturday, Obaid Humaid Al Tayer, Minister of State for Financial Affairs, UAE urged IMF to maintain caution before any premature withdrawal of accommodative monetary policies. “It is encouraging that consolidations in the AEs have helped support long-term growth. Further consolidation efforts in Europe, however, will need to support long-term growth,” he said. He also stressed the need for structural reforms in the labour, product and financial markets.
Al Tayer said the Middle East economies are expected to pick up growth in 2014 and 2015. “While some oil exporters were subject to declines in oil production, the effect on growth was somewhat offset by public spending. Most economies have substantial buffers to withstand lower oil prices….The GCC countries have actively pursued policies to diversify their economies, including through high quality spending and labour market reforms.”
Al Tayer said the Fund could play a bigger role in efforts to mobilise external financing to the Arab Transition Countries (ACTs). The ACTs are currently confronting rising public aspirations for improved economic and social conditions following regime changes. In some ACTs, there is a limited fiscal space to improve infrastructure, health and education, and to provide an adequate social safety net.
The Group countries said they are encouraged by the signs of a growing momentum in the global recovery. Although the recovery remains uneven in AEs, the more favourable business confidence is reassuring. Growth in EMEs and LICs is projected to remain moderate, with a further slowdown in growth expected in China. Nonetheless, the global outlook is subject to significant downside risks. These include the possibility of protracted low growth in the AE, which could be exacerbated by geopolitical tensions and by exceedingly low inflation.
On the issue of the much-delayed implementation of IMF’s ownership structure and governance, Al Tayer said : “We remain opposed to an increase in the weight of GDP in the formula as this would further erode the representation of the majority of emerging markets and developing countries and the smallest LICs. We support retaining openness and variability; however their measurement should be improved. We also support retaining reserves in the quota formula.”
The other countries in the Group included Egypt, Iraq, Jordan, Lebanon, Libya, Maldives, Syria and Yemen.