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00:00Welcome to our viewers and stay with us in this special coverage for CNBC Arabia,
00:22for the complex spring meetings here in Washington for all of the Central Bank and the two international banks.
00:29Today, of course, we have the most prominent one, which is the issue of the Global Economic Transparency Report,
00:35as well as the economies of the Middle East.
00:38It is noteworthy that a large part of this report talks about the economic impacts of geopolitical tensions,
00:46whether on some economies of the region or on the prices of goods.
00:50We will talk about these details, and we are more than happy to welcome Dr. Jihad Az'our,
00:56Director of the Middle East and Central Asia Administration in the International Monetary Fund.
01:00Dr. Jihad, welcome to CNBC Arabia.
01:04We will not try to start this interview without talking about the geopolitical tensions.
01:09At the end of the year, there were not many expected economic impacts,
01:15because the war in the region was at its beginning, and there were no expectations that it would last for months.
01:22Today, the situation is different.
01:24How has your assessment of geopolitical tensions and their impact on regional economies and the global economy changed?
01:31This is a development that we have seen in the past years.
01:35We saw it in the war between Russia and Ukraine in 2022, and we are currently seeing it in the war in Gaza.
01:43Of course, the economic dimension has become more and more closely linked to political and geopolitical developments.
01:51Some of them are security, and some of them are even political.
01:55We call it a kind of disintegration in terms of economic cooperation.
02:00This dimension has become more important, more prominent, and it is affecting the economies of the world,
02:06the region in particular, and also politics.
02:08Let's move on to talk about some of the economies that we have been watching closely in the region,
02:13and the Egyptian economy, most notably after obtaining a large payment from funds,
02:19which came specifically from the International Monetary Fund,
02:23with the basic requirement that we have a free-float price.
02:28When I look at the free-float in 2016 or 2022, I find that after a while it turned into a managed float.
02:37It turned into a subsidiary, and the Egyptian government intervened to prevent the withdrawal of funds in a larger way,
02:44and to affect the living costs.
02:46Today, there is a difference in tone.
02:48The International Monetary Fund says it is a free-float.
02:51The Egyptian government previously, in the Central Bank statement,
02:55as if it indicated that the government will be ready to intervene at any time if the need arises.
03:01What is your assessment today of the float or this strategy for the Egyptian pound?
03:07And how do you respond to this question and the difference in tone?
03:11In fact, the free-float is a protection for the Egyptian economy from external shocks.
03:17There are successive external shocks.
03:20For this reason, it gives confidence in the economy,
03:24and we have seen how it strengthens investment opportunities and money transfers.
03:29It is necessary to continue with it, and it is necessary to strengthen this trust.
03:34This trust is strengthened not only by the float policy, but also by other economic policies.
03:40The first and second reviews are also based on other policies.
03:44The problem of smoking treatment, which has a great impact on the stability of the economy,
03:49and also a great impact on the social situation, and on how to manage the economy.
03:54The problem treatment, which today must get out of it quickly, which is the weakness of growth.
04:00This weak growth must be worked on to accelerate and increase the size of the economy.
04:05And here there is a great role for the private sector, and there is a responsibility on the public sector.
04:10The responsibility of the public sector is to re-engineer its role to be a supporter, not a competitor.
04:16These are the elements on which the first review and the second review are based.
04:20The next stage is to continue to benefit from this opportunity.
04:24There is an opportunity, due to the support provided by the fund and the support provided by other institutions,
04:29such as the International Bank and the European Union, the UAE,
04:32to accelerate the recovery and to protect the Egyptian economy from any additional shocks.
04:38Especially that the region, and this is your first question,
04:41was at a stage in which there was no ability to oversee the future due to the size of the shocks that the region is experiencing.
04:51As for the Saudi economy, the effects of oil prices, we always know that they are positive effects on the Saudi economy,
04:59they support the interests of the oil sector.
05:03Today we have an increase in oil prices, but OPEC Plus, led by Saudi Arabia, continues to reduce production levels until the end of June.
05:11How did this file reflect your expectations for the Saudi economy this year?
05:16In fact, you are asking me two important and different questions.
05:20The first is what are the developments in the oil and gas sector and its impact on the Saudi economy.
05:26Let me start with the second point.
05:28In the past few years, the Saudi economy has been a non-oil sector.
05:35This is an important element.
05:37It is based on the reforms that have been implemented.
05:40It is also based on measures that have expanded the size of the economy and on investment.
05:44Continuity in this matter is essential and necessary,
05:47because it serves not only the economy as a whole,
05:51but also creates a large number of job opportunities for the Saudi youth.
05:56The second element is the management of the oil sector.
05:59Here, the extension of the OPEC Plus agreement reflected stable prices,
06:04and at times it rose,
06:06but it had an effect that weakened the ability to export,
06:12because the position of the shelves for the export process reduced the income.
06:17For this reason, the economic expectations of the Gulf countries for this year were reviewed.
06:23This is due to the extension of the OPEC Plus agreement.
06:27Today, if we look at the oil market,
06:30there is a kind of balance between supply and demand,
06:33in addition to existing safeguards,
06:36which is important if there are shocks.
06:39There is an increase in the levels of risks that are affecting the prices,
06:43but the scope of the oil and gas market has not changed,
06:47and there are still risks.
06:49The expansion of the conflict in the region,
06:52its impact on the sources of oil transport,
06:55may have a negative impact.
06:58For this reason, what are the recommendations?
07:00The first recommendation is to continue relying more and more on the non-oil sector,
07:04which creates job opportunities and stable models.
07:07Second, a marine management,
07:10while preserving the savings and safeguards.
07:14Third, to continue the process of smelting and maintaining it at a low level.
07:19Indeed, for the Saudi private sector,
07:22we had a greater participation in the performance of the Saudi economy.
07:27In your opinion, when we start to see a decrease in interest rates
07:32by SAMA in conjunction with the federal low,
07:35regardless of when it will happen and what its size is this year,
07:39do you think that this will contribute to the support of the private sector
07:43to gradually reduce the cost of importation?
07:47Between the member states and the other countries,
07:51the import of oil.
07:53As for the member states,
07:55of course, the level of smelting is low,
07:58and this is a good element,
08:00but the type of spending policy
08:02connects the financial procedures with the federal safeguards procedures.
08:07There is a good liquidity list,
08:10and there is a large investment volume.
08:15Any process of smelting markets
08:18will have an impact on development,
08:20not only financing, but also the market of bonds
08:24and investment reserves in stocks,
08:28and the development of the non-financial financial sector,
08:31and this is an important element,
08:33which is witnessing a greater deepening in the markets.
08:36As for the emerging markets,
08:38the income of the middle class is different.
08:40The increase in interests had a negative impact
08:43because it raises the service of debt
08:45and weakens the ability of these countries to invest and spend on other things.
08:50And here it is necessary to continue with the conservative financial policies
08:54to maintain low levels of smelting,
08:58which does not put pressure on interest rates,
09:02and also to speed up the financial reform process
09:05to reduce the debt on the economy.
09:08Some countries need to speed up these procedures
09:11because the level of debt is high.
09:14When the prices of Brent are above the level of 90 dollars per barrel,
09:18does Saudi Arabia still need to borrow in your opinion?
09:22Let me say that the financial management of economies is diverse,
09:26in the management of assets and the management of debts or commitments.
09:32This is what we call an active asset liability management.
09:37This is a natural thing.
09:39All countries have savings and investments,
09:42and also to make money from the markets.
09:44All have an importance and a goal.
09:46What is the biggest threat to the economies of the region this year?
09:49The state of uncertainty, first of all,
09:52which is creating a state of anxiety,
09:55which is delaying investment
09:57and may make it difficult to see the future.
10:00Second, of course, the risks of expanding the security situation,
10:07which is costly.
10:09Third, delaying the treatment of strategic issues,
10:12i.e. climate change is a strategic issue,
10:15which needs to be accelerated.
10:17Technology also speeds up the process of change,
10:20which needs to be continued and deepened.
10:23In some countries, the treatment of the problem of debt,
10:26which also has a high cost.
10:28Finally, but not finally,
10:30the past crises, from the corona crisis to now,
10:33had a negative impact on what we call inclusion,
10:37social and economic integration.
10:40This is an important element,
10:42given the increase in unemployment rates,
10:45especially among young people,
10:47and the decline in women's participation in the economy.
10:50Two important elements that should be worked on this year.
10:53How are the negotiations with Lebanon today
10:56regarding the loan of the IMF,
10:58which was agreed upon by the public two years ago?
11:01As you know, the agreement was reached two years ago,
11:06in April 2022.
11:08There are a number of measures that must be accelerated by the government
11:13to put this agreement into effect.
11:18There is no doubt that today,
11:20and in the last phase,
11:22difficulties have deepened in Lebanon.
11:24Lebanese citizens are suffering under the economic,
11:27financial and social crisis,
11:29but also the problem of war in Gaza
11:31also has implications for Lebanon.
11:33There is immigration of more than 100,000 citizens.
11:36There is a large economic cost on the tourism and agriculture sectors.
11:40There are also money flows that may be delayed for Lebanon.
11:45For this reason,
11:47there must be more acceleration than ever before
11:51in these measures to support Lebanon and protect its economy.
11:56I thank you for being with us, Dr. Jihad,
11:58on the CNBC Arabic screen, Dr. Jihad Az'our,
12:00Director of the Middle East and Middle Asia Administration
12:03in the IMF.
12:04Thank you very much.
12:05Thank you for having me.
12:06And with this, we have reached the end of this special interview.
12:10Goodbye.
12:17For more information, visit www.cnbc.org