Saudi Arabia – On April 24, 2024, the International Monetary Fund opened its regional office in the Kingdom of Saudi Arabia, making it the first office of the international financial institution in the Middle East and North Africa region.
The opening comes a month following the Saudi Council of Ministers approved a headquarters agreement between the Kingdom’s government and the International Monetary Fund to establish a regional office for the latter in the capital, Riyadh.
In her statements last week, International Monetary Fund Director Kristalina Georgieva said, “Our new office in Riyadh works to strengthen our presence and partnerships with Arab institutions.”
The Arab countries in the Middle East and North Africa have always been active in a mutual relationship with the International Monetary Fund, especially Egypt, Jordan, Iraq, Lebanon, Morocco, Sudan, and Tunisia.
While discussions of any economic reform programs took a long time between governments and the Fund’s missions, due to the latter’s attempt to understand the structure of these economies, opening the office may rearrange the relationship once more between the two parties.
Today, there are disagreements between the Fund and Arab economies such as Lebanon, Tunisia, and Sudan, which have not succeeded in nearly two years in reaching an economic reform agreement with the Fund accompanied by a financial loan.
A survey conducted by Anatolia of historical press releases between the Fund and Tunisia shows that the reform plans presented by the Fund’s mission have almost not changed since 1999 until today.
One of the reasons for this similarity in reform plans is partly due to a lack of sufficient understanding of the structure of the Tunisian economy and the structural changes that have occurred during the current millennium.
While the Fund’s team in Riyadh will be able to reach and communicate directly with Arab economies, in an attempt to build a more integrated relationship that facilitates reaching bilateral agreements.
In an interview with the Saudi Al-Ekhbariya channel, financial analyst Muhammad Makni said that the presence of a fund office in the Kingdom will expand the relationship with Arab countries in the region, and will provide more follow-up to these countries.
Makni added: “The economic activities of these countries will be the focus of the IMF’s attention to build economic programs that are compatible with the needs of these countries. The Fund will be close to these countries to develop their economic policies.”
Many Arab countries suffer from various economic challenges that have prompted them to request entry into economic reform programs, led by Egypt, which has entered into 3 economic programs with the Fund in the last 8 years.
Although the Arab Gulf countries have less contact with the Fund in any economic reform programs than the oil-importing Arab countries, due to the abundance of cash liquidity, they will be facing a new phase in developing their investment climate.
Since 2016, the Gulf countries, in cooperation with the International Monetary Fund and global economic institutions, began searching for new investment channels to diversify their economies away from crude oil and natural gas.
In varying degrees, the Gulf countries have gradually succeeded in reducing the share of energy in total financial income, in favor of sectors such as industry, tourism, services, and technology, such as Saudi Arabia, the Emirates, and Qatar.
The selection of the Kingdom to be the regional capital of the Fund comes at a time when it is witnessing high growth rates, reaching 8.7 percent in 2022, which is one of the highest growth rates in the world.
The decision also coincides with several major international companies opening offices in the Kingdom, as part of a Saudi plan to transform into a financial and economic center of gravity in the region, within Vision 2030.
Saudi Arabia is the largest Arab economy with a gross domestic product exceeding $1.1 trillion, the largest exporter of crude oil in the world with a daily average of 7.6 million barrels under normal conditions, and the only Arab member of the G20.
Last March, the Saudi Ministry of Investment said that a large number of multinational companies responded to the government’s call to open regional headquarters in the Kingdom.
PepsiCo, PwC, and Unilever are among 350 global companies that complied with the decision and obtained licenses for regional headquarters in Saudi Arabia. According to the ministry, other companies, including Boeing, have also applied for these licenses.
The Kingdom previously announced in February 2021 that it would stop dealing with any international companies whose regional headquarters are not located within the country by 2024.
Anatolia
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2024-05-01 08:08:04