中東和北非的部分地區(qū)正處于債務(wù)危機的邊緣 Parts of the Middle East and North Africa stand at the brink of a debt crisis

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DEBTCLOUDSOVERTHEMIDDLEEAST

AdnanMazarei

PartsoftheMiddleEastandNorthAfricastand

atthebrinkofadebtcrisis

T

hereisadebtstormbrewinginpartsofthe MiddleEastandNorthAfrica(MENA). Debtacrosstheregionhasbeenclimbing, reachingveryhighlevelsinseveralcoun- tries(Chart1).Egypt,Jordan,andTunisiaareinaprecarioussituation,theireconomicstabil-ityteeteringastheygrapplewiththeprospectsofadebtcrisis.Lebanon,alreadyreelingfromoneoftheworsteconomiccrisesintheworld,isacau-tionarytale.Itsplungeintodefaulthasthrownaharshspotlightonthesecountries’acutedebt-re-latedchallengesandtheirbroaderramifications. Therisingtideofdebt,coupledwithtoughglobaleconomicprospects,isstirringupaperfectstorm(Chart2).Thiscrisishasbeenfueledbyscarcerlow-interestfinancingandtheaffluentMENAoilproducers’reluctancetocontinuetheunconditional

financialsupportofthepast.Exacerbatingthiscom-

plexequationarethedifficultsocialconditionsthese

countriesface,leavinglittleroomforsignificantfis-

calconsolidation.Consequently,maintainingdebt

sustainabilityisacolossalchallengeforthesecoun-

tries,anditisgrowingevermoredaunting.

Atriskarenotjusttheprospectsforeconomic

growthbutalsothesociopoliticalstabilityofthese

countries.Thestakesarehigh.Amidthesegrim

realitiesliesanarrowpathtosalvation—butthat

pathrequiresbold,proactivemeasurestoaddress

thedebtcrisishead-on.

Crisisorigins

TheMENAregion’sballooningdebtproblemsare

deeplyrootedinablendofmisfortuneandpoorpol-

icydecisions.Eachnation—Egypt,Jordan,Lebanon,

ALICHEHADE/ALAMYSTOCKPHOTO

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andTunisia-facesauniquesetofproblems,markedbydifferingpoliticalandeconomiclandscapes,aswellasdisparityinthecompositionoftheirout-standingdebt.Yetthereisacommonthreadintheirpredicaments.

Thesenationshavebeenhamstrungbyper-sistentstructuralissuesrelatedtogovernanceandregulatoryframeworks,state-controlledecono-mies,bloatedpublicsectorsthatstifleprivatesec-torgrowth,lowdomesticrevenuemobilization,andpoorlytargetedsubsidies.Theseproblemsarelong-standing,mainlybecauseofinadequatereforms.Theirrelianceonfixedexchangeratesanddebtfinancingalsocontributestoacrisisinthemaking.Thesituationhasbeenexacerbatedbyglobaleconomicfluctuationsandrecentshocks-suchasthepandemicandthespill-oversfromRussia'sinvasionofUkraine-andbyhigherfoodprices,whichcontributetosoaring

debtlevels.Societalchallengesanddistrustingovernmentthatthwarttheequitabledistribu-tionofeconomicadjustmentburdenshavecom-poundedtheproblem.Asaresult,publicdebthasbeenexploitedasatemporarystop-gapsolutiontodelaydealingwitheconomicproblems-butwithoutdurablesolutions.

Letusconsiderthespecifics:

Egypthasenduredyearsofeconomicstagna-tion,attributableinparttothemilitary'spervasivecontrolovertheeconomy.Thepandemic'stollontourism,alongwithsurgingfoodimportcostsinthewakeofRussia'swarinUkraine,haveaddedtoEgypt'swoes.Persistentbudgetdeficitsandupholdingafixedexchangeratehaveresultedinsubstantialfinancingneeds,metpartlythroughshort-termcapitalinflows.AsnotedintheIMF'sApril2023FiscalMonitor,Egypt'sgrossfinancingneedsin2023amounttoastaggering35percentof

38SEPTEMBER2023

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SEPTEMBER202339

BanqueduLiban,

sbank

itsGDP,leavingithighlysusceptibletointerestratehikesandrolloverrisks.

Jordan,too,hasbeengrapplingwithlowgrowth,resultinginpartfromanovervaluedfixedexchangerate,alongwithgeopoliticalandeconomicdis-ruptions.ThelargeinfluxofSyrianrefugeesandtradedisturbancesfollowingtheSyriancivilwarhavefurtherstraineditseconomy.Meanwhile,Jordanhasbeenwrestlingwithcontrolofitspub-licfinances,burdenedbyheftysubsidies,publicenterprisetransfers,andsecurityexpenditures-largelybecauseofgeopoliticalfactors-allwhiledependingheavilyonofficialaid.Fortunately,Jor-danhasamoreeffectivepolicymakingframeworkthantheotherthreecountriesandisperformingwellunderitscurrentIMFprogram.Nevertheless,itshighdebtmakesitveryvulnerabletoadversedevelopments.

Lebanon'sdebtcrisiswasdrivenbyanunsus-

CHART2

Perfectstorm

Risingdebt,compoundedbytoughglobalconditions,iscreatingacolossaldebtsustainabllitychallengeforsomecountries.

(government-debt-to-GDPratio,selectedeconomies,percent)

SOURCE:WF,WorldEconomicOutiook,April2023.

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“Eachhigh-debnationmusttaurgentstepstcircumventdedistressandpotentialcrise

Thenewdebtreality

Recentyearshaveseensignificantadvance-mentsintheglobaldebtarchitecture,mostnota-blytheintroductionofcollectiveactionclausesinsovereignbondcontracts.ThesechangeshavehasteneddebtrestructuringofsovereignEuro-bonds,astepintherightdirection.However,onthewhole,newdevelopmentshavecomplicatedsovereigndebtrestructuring—andthiscomplex-ityisaccentuatedbyflawsintheglobalfinan-cialarchitecture.TherestructuringordealinSriLankastandsasatestamenttothelengthydelaysandpotentialtraumaassociatedwithsuchpro-ceedingstoday.

Restructuringisnowmoredifficultthaninthepastforseveralreasons.First,theascentofChinaandothernon–ParisClubcreditorsmeansthattheofficialcreditorbaseismorefragmented.AlthoughChina’sclaimsonhigh-debtMENAcountriesarenotsubstantial,itsemergenceasaleadingglobal

t

ke

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bt

”

s.

creditorhasrenderedtherestructuringprocessingeneralmorepolitical,slower,andmorechallenging.Second,privatecreditorshaveexhibitedreluctanceandtardinessinprovidingdebtrelief.Third,asignificantnumberofMENAcountries—Egyptisaprominentexample—haveconsiderabledomesticdebtoutstand-ing.Creditorsmayinthefuturerequestanexpandedrestructuringperimetertoincludesuchdebt.However,mostofthisdomesticdebtisheldbylocalbanksandpensions,makingitsinclusionparticu-

larlyproblematic.

Finally,theGroupofTwentyCommonFrame-workappliesonlytolow-incomecountriesandthereforeisnotapplicabletomostMENAcoun-tries,whicharemiddle-income.Theexcep-tionsareSudan,whichisfinallyaddressingitslong-standingdebtissuesundertheHeavilyIndebtedPoorCountriesInitiative(butmayhavetroubleproceedingbecauseofitsdomesticcon-flict),andYemen,acountrystillgrapplingwithconflict,whichwilllikelyneedtimetoresolveitsdebtproblems.ThisnewdebtrealitymeansthataddressingtheburgeoningMENAdebtissuesisasteeplyuphilltask.

Whatnext?

Thespecterofunsustainabledebtandprotracted,distressingrestructuringloomsoverhigh-debtMENAcountries.Theseriskscouldbemitigatedthroughacombinationofgrowth-boostingpol-icies,newfinancing,andsomedegreeoffiscalconsolidation.However,theprospectsfornowappeargrim.

tainablesystembuiltonfixedexchangeratesand

weakpublicfinances,whichrequiredhighinter-

estratestodrawforeigninflows—aclassicPonzi

scheme.Thisflawedsystem,alongwithpersistent

politicaldeadlockandthebankingsector’sundue

influenceonpolicymaking,hasprecipitatedamul-

tifacetedeconomicandsocialcrisis,leadingto

defaultondomesticandexternalsovereigndebt.

TunisiastandsoutastheonlyArabSpring

nationthatappearedtotakestepstowardenhanced

democracyandgovernance.However,theincreas-

ingroleofthegovernmentasanemploymentand

subsidyprovider,coupledwiththeCOVID-19

shock—whichassailedtheeconomyandbudget

(MazareiandLoungani2023)—haveputTunisia

onshakyground.Theauthoritiesinsistedonmain-

tainingexchangeratestabilityevenwhenitwas

unaffordable.Thisledtodependenceonexternal

inflows,primarilyfromofficialcreditorswhosup-

portedTunisia’sdemocratictransition.Butrecent

politicalupheavalsthathaveunderminedTuni-

sia’sdemocraticprogress,coupledwitharefusalto

implementnecessaryreforms,haveerodedTuni-

sia’sdebtrepaymentcapabilities,leadingthecoun-

tryinexorablytowarddebtdistress.

Previousdebtcrises

TheMENAregion’strystwithdebtcrisesisnota

recentphenomenon.Theregionwitnessedepi-

sodesofdebtdistressduringthe1980sand1990s,

spurredbyinternalandinternationalconflictsand

unfavorableglobalconditions,includingadverse

shiftsincommodityprices.Poormanagement

offiscalandexternalimbalancesledtomultiple

instancesofrestructuringofdebtthatwasprimarily

publicandpubliclyguaranteed(seetable).

ThemaincreditorstotheMENAcountries

duringthesecrisesweretheParisClubandregional

bilateralcreditors,commercialbanks,andmulti-

lateralagencies.Thedebtcrisesofthe1980swere

managedthroughagreementswithintheParis

Clubandprivatebanks(knownas“Bradydeals”),

requiringstructuraladjustmentprograms.

Anotherseriesofdebtreschedulingeffortstook

placeduringthe1990sandearly2000stoaddress

debtdistresscausedinpartbyfalloutfromregional

conflicts,notablythefirstGulfWar.Thesedebt

reschedulingefforts,particularlyforEgypt,Iraq,

andJordan,werecarriedoutwithsubstantialsup-

portfromtheinternationalcommunityandinter-

nationalfinancialinstitutions.

Despitethesehistoricaldebtrestructuringepi-

sodes,todaytheroadtofurtherrestructuringisrid-

dledwithchallenges.Giventhecurrenteconomic

climate,itislikelytobesignificantlymorecomplex

anddifficult.

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Borrowingburdens

PoormanagementoffiscalandinternalimbalancesledtomultlpledebtrestructuringsInthe1980sand1990s.

CountryReschedulings

Algerla1994,1995

Egypt1987.1991

Jordan1989,1992,1994,1997,1999,2002

Morocco1983,1985,1987,1988,1990,1992

Sudan1979,1982,1983,1984,2021(HIPC)

SOURCE:ParisClubwebsite.

WOTEHIPC=HeavilyIndebtedPoorCountriesInitiative.

First,theworldeconomyfacesaweakfore-cast-growthprospectsarecontinuallybeingdowngradedamidpersistentlyhighinflation.

Second,securingexternalfinancingwillposeasignificantchallengeand,ifprocured,willcarryhighinterestrates.TheGulfCooperationCoun-cil'soil-richnations,whichhavetraditionallypro-videdsubstantialfinancing,haverevampedtheiraidstrategy.Theynowinsistontheborrowers'con-crete,crediblecommitmenttostructuralreforms,includingthoseaimedatmakingtheireconomiesmoreinvitingforforeigndirectinvestment.

Third,althoughfiscalconsolidationcouldbebeneficial,itisnotguaranteedtoreducedebt,asnotedintheIMF'sApril2023WorldEconomicOut-look.Moreover,giventhetensesocialandpoliti-calclimateinhigh-debtMENAcountries,publicacceptanceofexpenditurecuts,especiallytosub-sidies,willlikelybedifficult.

Itmaybetemptingforthesecountriestocon-tinuemuddlingthrough,hopingthatdonorsandmultilateralagencieswillcometotherescue.Somecountriesmightevenresorttoinflationsurprisestoeasetheirdomesticdebtburden,aspredicted

intheIMF'sMay2023RegionalEconomicOutlook

fortheMiddleEastandCentralAsia.However,the

pathtogenuine,lastingreformcallsformoresub-stantivemeasures.

Eachhigh-debtMENAnationmusttakeurgentstepstocircumventdebtdistressandpotentialcri-ses.Themeasureswillvaryfromcountrytocountry,butallmustaddresskeygovernanceissuesbroadly(ERF-FDL2022)andcrediblycommittoreform.Forinstance,Egyptshoulddismantleitsoverbearingregulatorysystemanddiminishthearmy'sroleintheeconomytospurgrowthandshouldcarryout

DATA

0

ofGDP:Egypt's

estimatedfinancingin2023.

grossneeds

solidprivatizationthatattractsforeigninvestment.Jordanshouldimplementdeeperstructuralreformstoavertacrisis.Tunisianeedstoquicklyreversetherecenterosionofdemocracyandembarkoncrucialreforms.Lebanonmusturgentlyformagovernmentthattranscendsitsdeep-seatedcon-fessionaldivisions(inotherwords,thedivisionofpoweramongreligiousgroups)andsteersthecoun-trytowardreform.

Thechancesofeithertherequisitereformsbeingimplementedortheglobaleconomicclimateturningfavorableareslim-andbothareneeded.TheMENAhigh-debtnationsdohaveanarrowescaperoutefromimpendingdebtcrises,butexist-ingpoliciesandunfavorableglobaldevelopmentsarelikelytoconstrictthatpathfurther.Inparticular,theprospectsforfundamentalchangesinpoliticsandeconomicmanagementaredim.Consequently,someformofdebtrestructuringmaybeunavoid-able.Debtrestructuring,duetoitsinevitableeco-nomicdisruptionandharm,shouldbeseenasalastresort.Butifitisindeedinevitable,itispreferabletodo