Countries in the Middle East and North Africa are vulnerable to rising fiscal risks from a series of factors including volatile growth and reliance on both hydrocarbon revenue and food subsidies. A region branded “MENAPEG” – Middle East, North Africa, Pakistan, excluding Gulf states, is especially vulnerable, the International Monetary Fund (IMF) said. Contingent liabilities may arise from public private partnerships, for example, when a private partner has to be compensated if projects fall short of projections, the IMF said. Natural and climate disasters such as floods in Pakistan in 2022, extreme drought in North Africa or social conflict and instability can also disrupt economic activities, destroy infrastructure and create additional spending needs. Given uncertainties, fiscal risks cannot be fully avoided, IMF said, adding: “However, better risk awareness and stronger fiscal risk management will reduce budgetary surprises and provide firm ground for long-term development policies.”(Reporting by Imogen Lillywhite; editing by Seban Scaria )imogen.lillywhite@lseg.com

Source: The North Africa Journal June 13, 2023 06:28 UTC