International Monetary Fund (IMF) has described Oman and the GCC’s response to the COVID-19 pandemic as ‘exemplary’.
Kristalina Georgieva, managing director of IMF, commended the strong public health systems in the region, which she said “has kept fatality rates in the GCC among the lowest in the world”, while also lauding the fiscal response to support the local economies and livelihood of millions of nationals as well as expatriates.
“I want to stress where you have been really exemplary in this region – rising to the challenge with swift policy responses,” Kristalina said during a meeting of the ministers of finance and central bank governors of the GCC on Sunday.
“You have enhanced already strong public health systems, and that has kept fatality rates in the GCC among the lowest in the world. And that is precious because this crisis is above all a human tragedy. You have taken as good care as possible of your people. Bahrain and the UAE rapidly deployed some of the largest per capita testing and contact tracing regimes in the world. And I cannot stress enough how important having those in place is for people and for the economy.”
Talking of economic packages and support, she said, “Fiscal packages and liquidity support have protected incomes and livelihoods, and the financial sector.”
“Timely and innovative measures included tax exemptions and deferrals, cash transfers, and subsidies to small and medium-sized enterprises,” Kristalina said.
She added that the GCC countries should continue doing what they know works. “Keep investing in health systems. Maintain supportive fiscal and monetary policies until we are out of the woods of the health crisis. And increasingly target households and businesses most in need. Then start shifting support away to firms that are likely to succeed and to individuals most in need.”
The next priority she said should be to accelerate reforms.
“What are the priorities? Diversifying government revenue, something that you have already started; and making spending more efficient.” Creating opportunities, especially for young people and women, is the need of the hour, according to IMF’s managing director.
“In the fiscal area, in recent years, Saudi Arabia has diversified revenues by establishing excises and a value added tax (VAT). And it has reallocated spending to focus on the pandemic. Oman is likewise cutting some spending and starting a VAT. The UAE and Bahrain have introduced VATs as well. And the Emirates, Qatar and other GCC members are cutting inefficient fuel subsidies. All of this is very positive, and it needs to continue, besides strengthening social safety nets, improving the management of government assets and liabilities, particularly given the increase in debt. And most importantly, putting in place robust medium-term fiscal frameworks so we can anchor expectations for stability.”
Following that, she said, would be the turn of diversifying and greening GCC economies.
“You are already doing a lot of this. I want to praise you for what you have done on the digital front. Full standalone 5G wireless in this region will enable remote work, education, telemedicine and e-governance, and you can pursue with even more imagination the application of technologies to be even more competitive in areas where the digital revolution clearly is accelerating.
“You have such a wonderful chance to go green. The sun is as abundant – more abundant than oil. And you can continue what you have been doing, making sure that nature, something that you so much value, is vibrant and resilient.”