Study shows limitations of subsidy cuts post-Arab Spring

By on 13/04/2014

A study by the Arab NGO Network for Development shows the limited success of IMF recommendations in safeguarding the economies of transitioning Arab countries.

The report was produced in collaboration with the Egyptian Center for Economic and Social Rights and the New America’s Middle East Task Force. It suggests that, post-Arab Spring, subsidy cuts in the Middle East have hampered economic wellbeing in the region.

In countries such as Egypt, Tunisia and Morocco the study found similar patterns occurring, where subsidies on basic items like food were cut in an effort to reduce fiscal deficits and deal with budgetary difficulties.

Many Arabic countries have historically used subsidies to keep the prices of staple items down, thereby ensuring they are available to the poorest members of society. By removing such subsidies, the study suggests many of the most vulnerable people have been made worse off.

One result of this situation is an elevated risk of social unrest and real starvation among populations. To counter this, the study says that social security and social safety nets need to be overhauled so that the most deserving are properly cared for.

In conclusion, the report’s authors argue that the IMF needs to take a more flexible approach to its fiscal recommendations, based on country-specific situations. It also needs to shift the emphasis from short-term efficiencies into schemes to make nations more productive, with considerably more robust mechanisms in place to collect data and administer welfare payments.

The study also wants the IMF to work with governments to find short-term alternatives to subsidy reform. Areas to study include debt relief, progressive taxation and a reduction in the military budget. Such short-term benefits, it avers, would give the breathing space for more comprehensive and longer-lasting reforms and social protection policies.

About Kevin Sorkin

Pendragon International Media publish www.globalgovernmentforum.com, a community of senior government officials around the world. Global Government Forum is an important international network focusing on impartial, government news, analysis and best practice. The content addresses the real issues facing senior leaders in public service policy and administration today and aims to support them in developing public services for the future. Our aim is to help all organisations engage with this important community by improving understanding and strengthening relationships. I am the founder of the Civil Service Awards and Civil Service Live, which are now established industry leading brands and extremely important events for government. I also launched and published Civil Service World, civilserviceworld.com and Civil Service World Research and Information bringing together the civil service community to enable communication, sharing of best practice, inspire and motivate the civil service community. Over the years I have established relationships with the most senior officials in government and the private sector and have built a very strong and positive reputation across the industry.

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