Mohamed Bin Hadi Al Hussaini: The Arab Fiscal Forum is a leading platform for exchanging experiences and deliberating the future steps needed to support sustainable economic growth and enhance investment opportunities
• Mohamed Bin Hadi Al Hussaini: the need for fiscal policies to contribute to enhancing the stability of the economy and accelerating growth through utilising fiscal policy tools to manage aggregate demand
• Mohamed Bin Hadi Al Hussaini: The UAE’s pioneering commercial and economic policies and initiatives have resulted in achieving unprecedented achievements in global competitiveness indices
• The UAE is keen to exchange multifaceted developmental expertise and experiences with various countries
• The UAE achieved real economic growth estimated at 5.9% during 2022 compared to 4.7% in 2021
• The global green finance market has witnessed rapid growth in light of the development of financial instruments like green bonds and green loans Dubai, United Arab Emirates, 12 February 2023: The UAE today concluded the Seventh Annual Arab Fiscal Forum, which was organised by the Ministry of Finance (MoF), in partnership with the Arab Monetary Fund (AMF) and the International Monetary Fund (IMF).
The forum was held under the theme: “Fiscal Sustainability in the Arab World beyond the COVID-19 Pandemic: Challenges and Opportunities”, and it was organised on the sidelines of the 2023 edition of the World Government Summit (WGS2023). His Excellency Mohamed Bin Hadi Al Hussaini, Minister of State for Financial Affairs, inaugurated the Seventh Annual Arab Fiscal Forum. Ms. Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF), and His Excellency Dr. Abdulrahman Al Hamidy, Director General, Chairman of the Board of the AMF, participated in the forum along with Their Excellencies Ministers of Finance and Governors of Central Banks in Arab countries, and presidents and directors of regional and international financial institutions. During his speech, His Excellency Mohamed Bin Hadi Al Hussaini conveyed the greetings of His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, and his patronage to host the forum in its seventh edition within the framework of the WGS2023. His Excellency also conveyed the greetings of His Highness Sheikh Maktoum bin Mohammed bin Rashid Al Maktoum, Deputy Ruler of Dubai, Deputy Prime Minister, Minister of Finance, as well as his wishes to all participants for a pleasant stay, a successful forum and recommendations that would support economic development in Arab countries and strengthen the framework for joint Arab action. His Excellency Al Hussaini said: “The Arab Fiscal Forum is a leading platform for exchanging experiences and deliberating the future steps needed to support sustainable economic growth, enhance investment opportunities, and provide greater job opportunities. It is a great opportunity to discuss regional and international developments and their repercussions on Arab economies.” His Excellency stated that this forum’s edition comes in light of the repercussions of the increasing global economic slowdown on the Arab region, the high inflation levels, disruption of supply chains, geopolitical challenges, high food prices, as well as pressured financial conditions in the wake of the fiscal stimulus. It also comes in light of the unprecedented rise in external debt, and countering this rise requires the establishment of a global partnership with regional and international multilateral development funds, the IMF, the World Bank, in addition to the Debt Service Suspension Initiative, which was launched during the G20 meetings in Riyadh as a result of the COVID-19 pandemic with the aim of addressing the debts of developing countries, increasing development aid, and creating an open global trade system. His Excellency noted that the external debt of the Arab countries amounted to USD364.9 billion until 2020, and the debt service expenses amounted to USD25.6 billion. Additionally, statistics show that the ratio of public debt to the gross domestic product (GDP) of Arab countries increased from 88.10% in 2010 to 176.79% in 2021 (according to the Arab Economic Outlook Report 2022).
Therefore, fiscal policies should be improved in a strategic manner to improve fiscal space and economic growth and reduce debt renewal by reducing expenditures and strengthening public budget mechanisms. Fiscal policy tools On the economic level, His Excellency Al Hussaini stressed on the need for fiscal policies to contribute to enhancing the stability of the economy and accelerating growth. This is through utilising fiscal policy tools to manage aggregate demand, continuing to improve debt management and focus on financing through local markets, and drawing development plans according to current global economic developments. This is addition to deploying counter-cyclical economic policies; whether to boost economic activity and generate jobs or to keep inflation under control and prevent the economy from overheating. His Excellency noted that the UAE has provided loans and development aid to developing countries during the period from 2012 to 2022 at a value of AED 255.5 billion (an average annual rate of 2% of the GDP); 148 countries around the world benefited from these loans and development aid. This falls within the framework of the country’s policy aimed at supporting economic reform programmes and contributing to the implementation of development projects in Arab and non-Arab countries.
Additionally, through the Arab Coordination Group, Arab countries have provided $245 billion until the end of 2022 in aid to developing countries. His Excellency said: “The economic recovery is gaining momentum, thanks to the UAE’s early and strong response and the continuous macroeconomic policies. This is in addition to the strong reform efforts within the framework of the country’s 2050 strategy to encourage the private sector growth, promote non-oil growth, and attract foreign investment. The recovery also resulted from the sound sequencing of efforts to raise productivity and achieve diversified, sustainable, and inclusive economic growth. This is by empowering women economically, enhancing the economy’s resilience in facing shocks, and mitigating and adapting to the repercussions of climate change.” His Excellency noted that taxes are an effective tool that has a significant impact on economic growth, as they are one of the sources of financing the budget and diversifying economic activity.
As such, in December 2022, the UAE issued a law on introducing corporate tax, which will be effective from 01 June 2023. Corporate tax facilitates enabling financial planning in the medium and long term, helps achieve the sustainability and stability of the federal budget, and maintains growth rates. It also promotes the diversification of revenue sources, raising government spending efficiency, empowering the private sector, and adopting a green and sustainable financing policy. Given the importance of green finance as an opportunity to improve the GDP, governments, financial institutions, and companies have sought to take advantage of it.
The global green finance market has witnessed rapid growth over the past decade, in light of the development of financial instruments such as green bonds, green loans, green investment funds, green insurance, and green sukuk that have come to the fore recently. His Excellency added: “Arab countries tended to issue local and international debt instruments to raise the efficiency of debt management, in order to secure budget needs at the lowest costs and at a reasonable level of risk. These debt instruments also help increase Arab countries’ ability to access various markets, including Shari’ah compliant financing instruments, such as sovereign sukuk and green financing bonds.” Economic growth At the end of his speech, His Excellency reaffirmed the UAE’s keenness to exchange multifaceted developmental expertise and experiences with various countries, through which the country was able to achieve real economic growth estimated at 5.9% during 2022 compared to 4.7% in 2021 (according to the World Bank report).
Additionally, the UAE’s non-oil GDP increased by 6.1% in 2022, and the volume of non-oil foreign trade has risen to more than AED 1 trillion in the first half of 2022. His Excellency also mentioned that the UAE’s pioneering commercial and economic policies and initiatives have resulted in achieving unprecedented achievements in global competitiveness indices. The country ranked among the top 10 countries in more than 28 of the most prominent indicators of global competitiveness for the year 2022 in various sectors of finance, economy, trade, communications, information technology, and investment. His Excellency thanked the AMF for the exceptional arrangements for holding this forum, and everyone who contributed to its success. The forum’s sessions The Arab Fiscal Forum included four sessions; the first, titled “Macroeconomic Developments and Prospects”, examined recent global and regional economic developments and the outlook, with a focus on key fiscal policy challenges and priorities.
The second session, titled “Managing Climate Risks and Opportunities: Fiscal Policy and Climate Change”, was chaired by His Excellency Mohamed Bin Hadi Al Hussaini, and it focused on fiscal policy measures to address both the challenges and opportunities associated with climate change and to ensure a transition to a green economy. “Managing Fiscal Risks” session explored the scope for enhanced fiscal risk management and its challenges for Arab countries. The fourth session, titled “Financing Fiscal Needs: Enhancing Domestic Revenue Mobilization”, highlighted the importance of addressing the prevalence of large informal and hard-to-tax sectors or actors, to broaden the tax base and strengthen compliance. At the end of the forum, a roundtable was organised for their Excellencies the ministers.
Arab Finance Ministers, Mr. Vítor Gaspar, Director of the Fiscal Affairs Department at IMF, and His Excellency Dr. Abdulrahman Al Hamidy, Director General, Chairman of the Board of the AMF, attended the roundtable.