Oil-importing countries in the Middle East are experiencing heightened risks as their budgets and external balances deteriorate, the International Monetary Fund said.
Countries such as Egypt, which are dependent on fuel imports, are struggling to recover after the crisis in Europe sapped export markets, energy prices rise, and the government spends to meet social demands stimulated by last year’s unrest, the fund said in a report today.
It forecast growth of 2.1 percent in the oil-importing group of countries this year, rising to 3.3 percent next year, and warned that the rate may slip below that if the global environment continues to deteriorate. The IMF predicted an expansion of 2 percent in Egypt this year, accelerating to 3 percent next year -- still only about half the average rate in the five years before the 2011 uprising.
Current-account imbalances pose challenges as capital inflows weaken and declines in official international reserves make countries vulnerable to external shocks, the IMF said.
“Large adverse terms-of-trade shocks arising from high and rising food and fuel prices in recent years call for greater exchange rate flexibility to restore and maintain competitiveness,” the IMF says.
The fund is currently negotiating with Egypt, which has requested a $4.8 billion loan after reserves plunged. Egyptian officials insist they won’t devalue the currency as part of an agreement.
The IMF lists Afghanistan, Djibouti, Egypt, Jordan, Lebanon, Mauritania, Morocco, Pakistan, Sudan, Syria and Tunisia as oil-importing countries in the region.
For the region’s oil exporters, the IMF predicted growth of 6.6 percent this year, slowing to 3.8 percent in 2013.