Abu Dhabi: Global demand and regional political instability remain the two main factors that will affect the performance of Arab economies in the coming two years, Dr Jasem Al Mannai, Director General and Chairman of the Board of Arab Monetary Fund (AMF), told Gulf News in an interview, noting that the financial assistance provided till date to Arab countries by the AMF and the Arab Trade Financing Programme amounts to more than $17 billion (Dh62.3 billion).
Al Mannai points out that the AMF will continue to support the Arab war-torn countries as per the available reserves and in accordance with lending policies.
What are the main challenges the AMF faces when dealing with countries?
During the past few years, regional and international factors have adversely affected Arab economies in varying degrees. The global financial crisis and the sovereign debt crisis in the Eurozone had a negative impact on the Arab countries’ exports, tourism revenues and incoming financial transfers. Furthermore, the deep political transition witnessed by some Arab countries calling for social justice have caused severe economic difficulties, which were reflected in deteriorating internal and external balances.
The economic challenges resulting from these developments prompted the AMF to undertake measures aimed at helping its member countries to address such challenges. It developed a new countercyclical credit facility and reviewed its lending policies and procedures by providing more flexible terms on existing facilities, in addition to speeding up and simplifying procedures required for granting loans. It also developed joint initiatives in partnership with international financial institutions to provide technical assistance to member countries, in particular, in the financial sector in view of its importance in promoting growth and in enhancing resilience to external shocks.
Your strategy for 2013 includes loans to countries. Do you give loans to non-Arab countries?
By virtue of its Articles of Agreement, membership in the AMF is confined to Arab countries and, as such, loans can only be extended to member countries based on the AMF’s lending policies and procedures. In 2013, the AMF will continue pursuing a proactive strategy for extending credit to its member countries to the extent permitted by its available resources through its various lending facilities, as well as providing support through its subsidiary the Arab Trade Financing Programme to exporters and importers in Arab countries. It should be noted that assistance of the AMF to its member countries is not confined to loans as it provides training programmes to enhance human and institutional capacities of these countries.
What plans do you have for the war-torn countries including Syria, Egypt, Yemen and Libya? Do you plan to offer any kind of assistance to these countries?
The AMF has taken into account the adverse economic effects of the political transition in these countries, particularly the deterioration of the external sector, that is, balance of payments deficits and depletion of foreign reserves. It extended two loans to Egypt in 2011, one an automatic loan valued at 43.7 million Arab Accounting Dinars (AAD) and the other worth AAD58.3 million extended under the Structural Adjustment Facility in the public finance sector.
These two loans totalled around $470 million. In 2012, the AMF extended two loans to Yemen and three loans to Tunisia. The loans extended to Yemen amounted to AAD45 million, roughly equivalent to $207 million, one an ordinary loan valued at AAD21 million and the other a compensatory loan worth AAD24 million. The loans granted to Tunisia totalled AAD38.2 million, equivalent to around $176 million, which comprise an automatic loan valued at AAD9.6 million, an ordinary loan amounting to AAD12.8 million, and a loan extended under the Structural Adjustment Facility in the financial and banking sector worth AAD15.9 million.
The AMF will continue to support these countries as well as other member countries to the extent permitted by its available reserves and in accordance with its lending policies and procedures, as well as through various initiatives mentioned above.
What will the AMF focus on in the coming years with regards to the International Monetary Fund and world financial institutions?
The AMF will continue its close coordination and cooperation with regional and international monetary and financial institutions in various areas of common interest. Such cooperation involves joint technical assistance initiatives to member countries such as the Arab Credit Reporting Initiative, the Arab Debt Market Reporting Initiative and the Development of Secured Lending Initiative. These initiatives, which aim at developing the Arab financial and banking sectors, are over and above the AMF’s own technical assistance extended to member countries in different fields covering economic and financial policies.
Additionally, the AMF will continue to enhance institutional and human capacity building of its member countries through cooperation with these institutions in organising training programmes, seminars and workshops.
What is the amount of loans extended by AMF so far, and to which countries? What is the breakdown of investments of these loans in such countries?
The cumulative amount of loans extended by the AMF to its member countries up to the end of 2012 reached AAD1.55 billion, equivalent to around $7.13 billion. The countries benefiting from these loans over the period 1978-2012 are Jordan, Tunisia, Algeria, Sudan, Syria, Somalia, Iraq, Lebanon, Egypt, Morocco, Mauritania, Yemen, Djibouti and Comoros. It should be noted that the AMF grants loans to assist countries facing deficits in their balance of payments, and to support the implementation of economic reforms in these countries.
In addition, the Arab Trade Financing Programme, has provided, since its inception some $10 billion to exporters and importers in Arab countries. The financial assistance provided to date to Arab countries by the AMF and the Arab Trade Financing Programme amounts to more than $17 billion.
How do you view the economic development ratios in the Arab countries in the coming two years?
Global demand and regional political instability remain the two main factors that will affect the performance of Arab economies in the coming two years. Global demand is expected to improve in 2014 leading to higher demand for hydrocarbons, which will enhance growth potential for the Arab oil exporting countries. Hopefully, the return of political stability in the region, particularly in countries that are undergoing political transition, will be achieved, so as to regain investor’s confidence and restore macroeconomic stability. Such conditions would contribute to higher growth prospects for most Arab countries in the foreseeable future.