Can Anyone Ever Trust What The IMF Says...

[sassa]

IMF predicts war will have less impact than feared

‘Main challenge was higher oil prices’

Dania Saadi

Daily star staff

The war on Iraq is unlikely to severely hit the economies of the Middle East due to its short duration and the drop in oil prices from pre-war levels, an International Monetary Fund official said Wednesday,

“The impact is going to be less severe than we feared before the war,” Abdelali Jbili, assistant director of the IMF’s Middle Eastern Department, told Lebanese officials in Beirut.

“The main challenge was higher oil prices, but we have seen some strong declines,”

he said.

Jbili and other senior IMF officials visited Beirut this week in preparation for the meeting of IMF/World Bank governors in Dubai this September.

Dubai is to be the first Arab country to host the annual meeting of senior finance and banking officials from the IMF’s 184 members.

Jbili said the IMF had expected oil prices during the US-led war on Iraq to soar above pre-war levels, but the eventual drop helped mitigate the economic impact of the six week war.

The IMF has projected growth in the Middle East and North Africa region to rise to 4.7 percent in 2003 from 3.7 percent in 2001, despite the uncertainty related to war on Iraq.

The Washington-based organization said in a report released in April, that growth in MENA in 2003 is expected to rebound due to increased oil quotas for the area’s oil producers and favorable rain conditions for the Maghreb states.

The IMF officials said the Lebanese economy probably did not suffer from the war on Iraq as much as Egypt or Jordan, which rely heavily on tourism for hard currency.

“From anecdotal evidence, tourism has started to pick up in Egypt and Jordan,” said Jbili.

“It is difficult to say how reconstruction will help the region,” said Jbili. “In economic terms, neighboring countries will certainly benefit, in the form of increased trade.”

Jbili noted in his presentation on MENA’s economic growth outlook that the area attracts only a third of the foreign direct investment a region of a similar size should receive.

IMF’s economic outlook for MENA covers Iran, Afghanistan, Pakistan, and all Arab countries excluding Iraq. The IMF has yet to compile any figures on Iraq, which has not been visited by an IMF delegation since 1983.

Jbili said the recent “Paris II” donor meeting and the economic accords spun out of it, have helped stabilize Lebanon’s macro-economic outlook.

“Efforts are paying off but the main challenge for Lebanon remains the same,” said Jbili.

“They need to sustain these efforts over the long term on

all fronts, revenues

and expenditure.”

He projected Lebanon’s economic outlook would improve in the next few months, if the tourism season picks up.

The UN’s opinions on the economic impact of the war appear to differ from the IMF and Jbili’s more positive analysis.

Two weeks ago, UN spokeswoman Mervat Tallawy, in Beirut, said the region is expected to lose around $1 trillion in all economic fields, and lose around 6 million to 7 million job opportunities. These appear realistic when compared to the impact of the longer 1991 Gulf War, which “directly damaged the Arab countries by causing losses of around $600 billion in their GDP during the last 10 years and some 4 million to 5 million job opportunities,” she said.