IMF managing director Kristalina Georgieva said yesterday she is confident about the economic outlook despite uncertainties around war and geopolitics as the global economy has remained resilient.
In a speech at the World Governments Summit in Dubai, Georgieva said the IMF would publish a paper today that shows phasing out explicit energy subsidies could save US$336 billion in the Middle East, equivalent to the economies of Iraq and Libya combined.
She added that in addition to savings, eliminating regressive energy subsidies “discourages pollution, and helps improve social spending,” in a copy of the speech published on the IMF Web site.
In its latest regional economic update published last month, the IMF revised its GDP growth forecast for the Middle East and North Africa region downwards to 2.9 percent this year, due in part to short-term oil production cuts.
“While uncertainties are still high, we can be a bit more confident about the economic outlook, because the global economy has been surprisingly resilient,” she said in the speech.
Speaking about the conflict in Gaza, Georgieva warned of widening consequences.
“This exceptionally uncertain moment compounds the challenges of economies that are still recovering from previous shocks. And further widening of the conflict would aggravate the economic harm,” she said.
Separately, Ukraine is considering a plan — including expanded domestic bond sales, tax hikes and spending cuts — to plug a hole in its budget in a bid to secure money from the IMF if crucial US aid remains blocked.
Ukrainian officials intend to propose the plan to the IMF during a staff visit to Kyiv next week, according to people familiar with the matter. The measures are needed to assure the IMF that Ukraine can service its debts in case allies fail to provide aid, a condition for its US$15.6 billion loan program.
The IMF staff, led by the fund’s Ukraine mission chief Gavin Gray, is to visit Kyiv for three days starting today, prior to official talks on Ukraine in neighboring Poland, the people said. The visit comes ahead of the IMF’s review of the loan program, which is to start later this month and would unlock a US$900 million tranche of aid.
Additional reporting by Bloomberg
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