Arab Monetary Fund warns of the dangers of debt and shock affect markets
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Abdul Rahman Al-Humaidi, Director General of the Arab Monetary Fund (AMF), said that increasing risks to the global financial system are linked to the potential impact of high public and private debt rates and the potential for loss of growth momentum in some developing countries and emerging market economies.
He also warned against the risks posed by the accumulation of financial fragility in these markets. The current year witnessed a widening range of tensions resulting from restrictions on international trade by major economies.
Speaking at the opening of the 2018 Arab Banking Conference held in Beirut yesterday, Al-Humaidi said: "The public and private debt has witnessed a remarkable increase over the past years, which is now one of the most prominent features of the global economy. Affect global economic recovery and financial stability as public and private debt levels reach record levels compared with the pre-global financial crisis."
"The ratio of non-financial institutions' debt to GDP in developing countries and emerging market economies rose from 139 percent in 2010 to about 200 percent in 2017, especially in China, where the non-financial sector debt rose from 180 to more than 250 percent of GDP."
"Developing countries and emerging market economies face risks from a number of external and internal factors that, in the event of any shock, could affect markets, weaken investor confidence levels and significantly affect the performance of these markets," Al-Humaidi said.
He pointed out that «the previous period, which was characterized by low interest rates, the accumulation of public and private debt in a number of these countries, and with the return to the traditional tracks of monetary policy and successive lift tours in the United States, it is estimated that some of them face major challenges, Weak economic growth rates, rising internal and external deficits and limited fiscal space, which could affect interest rates and exchange rates."
Al-Humaidi stressed the need to "raise the Arab countries growth rates to levels close to 5 percent to achieve a significant reduction in unemployment rates rising, which amounted to 15 percent in 2017, more than double the global average of 5.7%, and unemployment of young Arab 27.3 percent, is the highest in the world ».
He stressed the importance of "continuing structural and institutional reforms aimed at enhancing the productivity and competitiveness of Arab countries, creating an enabling environment for the growth of private sector activities to reduce transaction costs, simplifying procedures for initiating and facilitating projects, protecting property rights, enforcing contracts and protecting competition."
He called on «to continue efforts to support the SME sector, as well as to promote the employment of modern financial technologies, thus contributing to the development of services and products of financial institutions and banking sector oriented».
Al-Humaidi received the "Leadership Vision 2018" award for the Union of Arab Banks at a special ceremony in the presence of Lebanese Prime Minister Saad Al-Hariri and Chairman of the Council of Arab Banks Union Sheikh Mohammed Al-Jarrah Al-Sabah in appreciation of his achievements and his role in enhancing coordination and cooperation between the economic, financial and monetary authorities in the Arab countries.