Economic Outlook for the MENA Region: A Conversation with the IMF's Dr. Jihad Azour

Countries of the Middle East and North Africa (MENA) continue to face the challenge of generating inclusive and long-lasting growth in the environment of low oil prices, ongoing conflicts, and concerns regarding regional security. For the region’s oil exporters, the challenges are particularly acute, as fiscal consolidation plans must be calibrated and structural reforms designed to diversify away from oil and promote private investment.

Jihad Azour is the Director of the Middle East and Central Asia Department at the IMF. Previously, he served as Lebanon's Finance Minister (2005-2008) and held numerous positions in the private sector, including senior executive advisor at Booz & Company (2009-13) and as a managing partner at the investment firm Inventis Partners. Mr. Azour holds a PhD in international finance and a post-graduate degree in international economics and finance from the Institut d'Etudes Politiques, Paris.

This event is being presented as part of the Lebanon Ideas Forum, a partnership between the Middle East Program at the Wilson Center and Safadi Foundation USA. 

Key Quotes:

Jihad Azour:

“We tend to focus a little more than we should on politics and security questions and not take into consideration that economic and financial issues are intertwined [with] political and social stability.”

“When you look at the situation in the region and you take a photo of the current situation, you see that the economic side improved… The level of growth improved a bit, especially in the non-oil countries. But if you look beyond the short term and then you try to project yourself to the medium, you see that this relative improvement in the short term is in fact not enough for the region to address some of the medium- and long-term structural issues.”

“The country that has the largest volume of technical assistance [from the IMF] in my department is Somalia. It’s not Saudi [Arabia], it’s not Morocco, it’s not Jordan.… it’s Somalia. We’re trying to help them on things that are basic, which is to stabilize and to create institutions, to preserve a central bank, to create a central bank."

“Decision-makers in oil-producing countries, they will tell you, especially those managing finance, ‘I don’t want to see the oil prices going up fast, because all the reforms we are currently designing and implementing, we will have great difficulty convincing our society to [make] those efforts.’ [However], financially speaking, the drop in oil prices had a negative impact in [oil-producing] GCC countries. For the oil-importing countries, the drop in oil prices so far was positive.”

 Event Summary 

On July 20, the Wilson Center's Middle East Program and the Safadi Foundation USA convened an event hosted by the Lebanon Ideas Forum, “A Conversation with Dr. Jihad Azour.” Dr. Azour is the Director of the Middle East and Central Asia Department at the IMF, and previously served as Lebanon's Finance Minister (2005-2008). Henri Barkey, the Bernard L. and Bertha F. Cohen Professor at Lehigh University and former Director of the Middle East Program, and moderated the event. Aaron David Miller, Vice President for New Initiatives at the Wilson Center, and Lara Alameh, President of the Safadi Foundation USA, gave introductory remarks.

Barkey first asked Azour what he believed to be the region’s most pressing economic problem. Azour answered by noting that the international community tends to over-focus on geopolitical issues rather than economics. He emphasized that although economic conditions have improved in recent years, relative short-term improvement does not sufficiently address underlying structural issues. These issues include the migration of refugees and displaced peoples, growth, and youth unemployment, as well as the repercussions of other regional shocks from the last six years—all of which need to be addressed immediately. The concurrent geopolitical tension in the region and the normalization of monetary policy in the international market, he said, only complicate matters. According to Azour, the IMF focuses on how countries can address these issues and seize the opportunities at hand. The Fund wants to capitalize on the region’s human potential to help achieve stability, promote prosperity, and ensure that this prosperity reaches the individual citizens of those countries.

As the conversation shifted to how to end the region’s economic dependency, Azour stressed the importance of a granular focus on each of its three economic groups. The first of these groups, the oil-producing countries, must stabilize in order to achieve fiscal sustainability, manage their foreign currency relationships to protect their savings and reserves, and diversify their economy so that oil becomes an economic pillar rather than the sole anchor. The IMF works to operationalize diversification plans in Gulf Cooperation Council (GCC) nations and to take advantage of the large potential of non-GCC nations to diversify. The second group, the middle-income “countries in transition,” find it difficult to address unemployment and other issues due to low levels of growth. The IMF helps them build credibility to encourage foreign investment and to create the fiscal space to pursue long-term structural growth. Azour indicated that the Fund helps the final group, conflict-related countries, to stabilize, preserve institutions, and create a macro-framework that sheds light on these countries in the international assistance sphere.

In response to Barkey’s question regarding the impact of falling oil prices, Azour explained that the prices had a negative financial impact on GCC countries, but also encouraged the introduction of tax changes and other reforms. As for the oil-importing countries in transition, the price drop reduced their energy bill, but also decreased the level of remittances from ex-pats employed in the GCC.

Azour identified women as a key demographic to long-term economic sustainability in the Middle East. He encouraged a shift from the paradigm of men and women competing for jobs to the capability of job creation: women can lessen burdens on companies and even create more jobs. The most important steps to achieve this goal, he continued, are to create social infrastructure that allow women to work, and to change financial barriers that prevent women from participating. Azour concluded by accentuating the importance of financial stability, government function, and economic infrastructure to regional growth. He also called upon regional actors to find creative approaches to accelerate development and to integrate the region into the international economy.

An audience member inquired how the blockade of Qatar impacts uninvolved countries. Azour responded that it is too early to tell, but that the impact on oil, liquidity, and risk finance was very limited. The primary issue that he identified is the extent and duration of the crisis. When asked to expound upon the current state of Iraq, Azour replied that the IMF is aiding by creating macroeconomic stability and strengthening institutions rather than rebuilding, and is working to ensure that the Iraqi government resourcefully manages its reserves and introduces new social programs.

By Bennett Caplin and Chelsea Burris, Middle East Program

  Speakers Introductory RemarksLara AlamehPresident, Safadi Foundation USA RemarksDr. Jihad AzourDirector, Middle East and Central Asia Department, International Monetary Fund