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Global Economic Challenges Impacted Development in Low-income Countries, Says Saudi Finance Minister

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Global Economic Challenges Impacted Development in Low-income Countries, Says Saudi Finance Minister

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Saudi Minister of Finance Mohammed Al-Jadaan said that the global economy is facing multiple challenges, with the most impacted being the poorest countries, including food insecurity, and insufficient access to water and energy.

His remarks came during his speech in the forum and ministerial meetings of the OPEC Fund for International Development, which were held on June 20 and 21, in Vienna, Austria.

The forum included several sessions where participants discussed the current development landscape, the future of development financing, sustainable food systems, climate innovation for a sustainable future and policies and partnerships that prioritize people and the planet.

"While COVID-related challenges have subsided, the global economy is facing multiple overlapping challenges, including food insecurity, inadequate access to water and energy and rising debt levels, with the poorest countries affected the most. Thus, multilateral development banks need to reinvigorate themselves to deliver a more ambitious, nationally driven, and globally coordinated effort that improves peoples' lives in an inclusive, sustainable and just manner," Al-Jadaan noted.

He also chaired on Wednesday the 44th ministerial meeting of the OPEC Fund for International Development.

In his opening speech at the ministerial meeting, Al-Jadaan expressed his thanks to the members of the Board of Directors for electing him as the Chair of the Council for the coming year, noting that the Fund has achieved a lot, despite many global challenges.

He said that the Fund's current mission is to enable it to achieve sustainable growth and deepen its impact in developing countries, adding that the Fund has grown in terms of both the volume of development finance, with 48 remarkable and new engagements, and over $1.6 billion in loans. The newly established Development Effectiveness Report shows evidence that projects actually deliver impact and change peoples' lives.

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IMF: Middle East Conflict Escalation Could Have Significant Economic Consequences

Displaced families, mainly from Syria, gather at Beirut's central Martyrs' Square, where they spent the night fleeing the overnight Israeli strikes in Beirut, Lebanon September 28, 2024. REUTERS/Louisa Gouliamaki
Displaced families, mainly from Syria, gather at Beirut's central Martyrs' Square, where they spent the night fleeing the overnight Israeli strikes in Beirut, Lebanon September 28, 2024. REUTERS/Louisa Gouliamaki
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IMF: Middle East Conflict Escalation Could Have Significant Economic Consequences

Displaced families, mainly from Syria, gather at Beirut's central Martyrs' Square, where they spent the night fleeing the overnight Israeli strikes in Beirut, Lebanon September 28, 2024. REUTERS/Louisa Gouliamaki
Displaced families, mainly from Syria, gather at Beirut's central Martyrs' Square, where they spent the night fleeing the overnight Israeli strikes in Beirut, Lebanon September 28, 2024. REUTERS/Louisa Gouliamaki

The International Monetary Fund said on Thursday that an escalation of the conflict in the Middle East could have significant economic ramifications for the region and the global economy, but commodity prices remain below the highs of the past year.

IMF spokesperson Julie Kozack told a regular news briefing that the Fund is closely monitoring the situation in southern Lebanon with "grave concern" and offered condolences for the loss of life.

"The potential for further escalation of the conflict heightens risks and uncertainty and could have significant economic ramifications for the region and beyond," Kozack said.

According to Reuters, she said it was too early to predict specific impacts on the global economy, but noted that economies in the region have already suffered greatly, especially in Gaza, where the civilian population "faces dire socioeconomic conditions, a humanitarian crisis and insufficient aid deliveries.

The IMF estimates that Gaza's GDP declined 86% in the first half of 2024, Kozack said, while the West Bank's first-half GDP likely declined 25%, with prospects of a further deterioration.

Israel's GDP contracted by about 20% in the fourth quarter of 2023 after the conflict began, and the country has seen only a partial recovery in the first half of 2024, she added.
The IMF will update its economic projections for all countries and the global economy later in October when the global lender and World Bank hold their fall meetings in Washington.
"In Lebanon, the recent intensification of the conflict is exacerbating the country's already fragile macroeconomic and social situation," Kozack said, referring to Israel's airstrikes on Hezbollah in Lebanon.
"The conflict has inflicted a heavy human toll on the country, and it has damaged physical infrastructure."
The main channels for the conflict to impact the global economy have been through higher commodity prices, including oil and grains, as well as increased shipping costs, as vessels avoid potential missile attacks by Yemen's Houthis on vessels in the Red Sea, Kozack said. But commodity prices are currently lower than their peaks in the past year.
"I just emphasize once again that we're closely monitoring the situation, and this is a situation of great concern and very high uncertainty," she added.
Lebanon in 2022 reached a staff-level agreement with the IMF on a potential loan program, but there has been insufficient progress on required reforms, Kozack said.
"We are prepared to engage with Lebanon on a possible financing program when the situation is appropriate to do so, but it would necessitate that the actions can be taken and decisive policy measures can be taken," Kozack added. "We are currently supporting Lebanon through capacity development assistance and other areas where possible."