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RIYADH: Inflation levels in the Gulf countries are lower than in other states, given the structure of the consumer basket, a senior International Monetary Fund official told Al-Arabiya. 

Jihad Azour, the fund’s director of the Middle East and Central Asia Department, said that with the global rise in inflation, it is necessary to adapt monetary policies to maintain acceptable levels of prices.

“On the other hand, the policies that have been adopted over the past years in terms of diversifying sources of income, are steps in the right direction, and it is necessary to continue and deepen them so that the economy becomes less dependent on energy,” he explained. 

Speaking of the rise in interest rates, Azour explained that they are linked to inflation jumps, as central banks resort to higher interest rates to curb the surge in prices. 

“It is a priority for all countries, including countries in the region. Therefore, other complementary measures must be taken,” he said. 

Azour added that other complementary measures should be taken as well. 

On the social level, the IMF official suggested that measures should be taken to protect the most vulnerable through a targeted support policy. While on the economic level, some work must be done to reduce the levels of deficit and its impact on the debt.

In countries that depend on foreign issuances, he said the high interest rates will reflect the cost of debt, “so it is necessary to hedge this type of risk through economic and financial reforms that contribute to reducing the need for financing.” 

Azour noted that although this year has seen multiple shocks, including the war on Ukraine and the rise in the cost of energy and raw materials, oil-exporting countries’ financial conditions will improve. 

This is because it is expected that there will be surpluses exceeding $1 trillion in the next four or five years, he said. 

The rest of the countries are divided into ones that depend on financing through financial markets, and that have to hedge the risks of rising interest, and others that have to speed up the reform process because of the rise in the dollar. 

Speaking of IMF financing, Azour said in the interview that negotiations to obtain new financing are continuing with Egypt and things are progressing according to the schedule.

He pointed out that upon reaching an agreement with Lebanon in April, there are a set of measures that the government must quickly take in order for this program to be presented to the fund’s management. 

With regards to Tunisia, he noted that negotiations have also begun over the past months and are currently in progress.