KUWAIT CITY – The head of the Arab Monetary Fund (AMF) said Monday that the Arab Spring uprisings and the global financial crisis have hit hard the economies of countries struck by revolts over the past years. “These countries have started to suffer from severe contraction in growth, an alarming rise in unemployment rates ... a deterioration in foreign reserves and a hike in inflation,” Jassem Al-Mannai told an Arab meeting in Kuwait. Mannai, speaking at the meeting of Arab central bank governors, said that the economies of Egypt, Tunisia, Libya, Yemen and Syria are also facing rising budgets, balance of payment deficits and an increase in debt levels. He said banking activities have shrunk in most of these countries and the level of bad loans has increased since the pro-democracy movements erupted in January 2010 in Tunisia and spread to other countries. Mannai also warned that the global financial crisis was still negatively impacting Arab economies and could eventually dampen demand for oil which makes up the main revenues for many Arab nations. Due to rapid expansion in spending in the past few years, it would be very difficult for many oil-exporting countries to maintain a fiscal balance if oil prices drop below $100 a barrel, which can not be ruled out, he said. The economies of Arab Spring countries are struggling despite pledges of generous aid from rich Arab nations and international donors. IMF said in April it was working on several loan programs to Arab countries, while the G8 group has also pledged tens of billions of dollars of aid to Arab nations hit by unrest. Kuwait's Central Bank Governor Mohammad Al-Hashel said that Kuwait's government should take all necessary measures to cut spending and current monetary policy settings are in line with economic developments. – Agencies
