The World Bank offers a recipe to fight inflation in the Middle East and North Africa

With the wave of global inflation reaching record levels during 2022, the World Bank Group’s leading economists prepared an analytical paper on this issue, which has become a concern for several countries in the Middle East and North Africa, especially those suffering from of high inflation due to the repercussions of the Russo-Ukrainian conflict since February 2022.

The document, entitled “The Middle East and North Africa… Four policies that the countries of the region can follow to combat inflation”, initially attempts to provide a simplified definition of the phenomenon, emphasizing that it is “the general increase and continuum of the level of prices in an economy, and the commonly used measure of inflation is a Consumer Price indicator, which measures the prices of a representative basket of goods and services purchased by the average household.

The document, which Hespress reviewed, noted that all countries have become “in dire need of sound policy decisions that facilitate sustainable economic growth and reduce inflation that affects the poor more than the rich, recommending that four policies that address high inflation rates and low inflation rates.” growth rates, in addition to supporting lower income groups.

In the current situation, the World Bank experts recorded what they described as “the dominance of public sector workers’ wages, support systems that are not targeted to specific groups, and the burden of debt service on public spending”. public”, noting that “they all contribute to budget stagnation”.

Although there are “few options for the affected countries in the short term”, the analysis of the experts of the International Finance Corporation recommended the need to improve the quality of their spending by making “public spending more focused on improving performance, while energy is reduced. support systems that are not targeted to specific groups”.

The World Bank recommendations emphasized the start of “reforming infrastructure and state-owned enterprises, and increasing the efficiency of debt management to reduce debt service costs”, citing in this context the example of “reducing dependence of high-cost companies. short term financing.

The World Bank stated that it “assists a number of countries in these efforts through public expenditure reviews, analysis of the impact of taxes and public spending on real income, and advice on infrastructure financing and debt management,” noting that Morocco benefits from accompanying, within this framework, other countries within a group.

In a second recommendation, World Bank experts warned against “contingent liabilities, whether resulting from government guarantees for state-owned enterprises or public sector projects, or implicit guarantees as occurs when a state-owned enterprise borrows on the basis of government support.” received, or other obligations”, pointing to Example of electricity purchase contracts that mortgage debt under “poor cost recovery”.

“Avoid the domination of public finances” was the third recommendation addressed on the subject by the economic experts of the World Banking Corporation to the financial policy makers of the “MENA” region, warning about the consequences of what the document described as “excessive dependence on central banks.”

The same source urged “protecting the poorest and most needy groups”, given that they are the most affected by the current wave of inflation, pointing out in this sense that “high inflation rates are pushing families in the Middle East and North of Africa into poverty. ; Because spending on food makes up a large part of food budgets,” he said, referring to countries where the share of food in their balance sheets exceeds 30 percent, including Morocco.

To overcome this problem, the World Bank experts concluded by recommending “limit comprehensive support programs, while using social protection systems based on cash transfers”.