Arab Monetary Fund

Arab Monetary Fund

25-10-2018

-        I recently reviewed the Arab Monetary Fund's annual report...for the year 2017, which is prepared annually pursuant to the requirements of Article Thirty-Three of its Establishment Agreement dated 27-4-1976..in the city of Rabat..in Morocco. I noted the broadening of its assigned objectives..and the flexibility of the means afforded to it to achieve them...For example, Article Four of its Establishment Agreement included many objectives..which the Fund seeks to achieve through its activities..among them what was stated concerning the Arab Accounting Dinar, where the text reads: "study ways to expand the use..of the Arab..Accounting Dinar" and "prepare the conditions leading to the establishment of a unified Arab currency"..It appears that the conditions are still not ready after more than forty years to use the Arab Accounting Dinar as a single circulating currency among the Arab countries!!...as the euro is within the European Union...for example.!!..
The Arab Accounting Dinar is considered the Fund's official base currency..and its exchange rate was fixed by the Arab Monetary Fund in 2016 at an amount equivalent to 3 units of the Special Drawing Rights unit as defined by the International Monetary Fund.

-        The Fund's organizational structure includes the Governors of all the Arab member states, the Board of Governors, which is the supreme authority concerned with strategic guidance..and the Board of Executive Directors..and the emanating departments..
As for the strategic objectives, the Fund aspires to achieve its strategic vision..by attaining a set of objectives covering three integrated areas represented by enhancing opportunities for inclusive growth, establishing efficient economic, financial and monetary institutions..and strengthening Arab economic cooperation and integration in close cooperation with other relevant regional and international financial, monetary and economic institutions..in line with the Fund's vision, which reflects the hopes and ambitions of its member states...The Fund's vision as stated in its text:
"that the Fund continue to perform its mission..as a leading Arab financial institution in supporting economic, financial and monetary reforms in the Arab region"!!

·       Summary of the Fund's activities during the year 2017

-        Among the challenges that the Arab countries faced during 2017 was the relatively limited fiscal space available for investments in general and infrastructure-related investments in particular..Fiscal reforms were at the forefront of policymakers' priorities in the Arab countries as an essential requirement to drive inclusive and sustainable economic growth.....

-        There was a need to exert and intensify greater efforts to meet development requirements, especially since these efforts varied from one country to another in the Arab region...Countries with relatively large financial reserves were able to gradually correct their situations to revive non-oil economic activities and diversify government revenues, whereas countries with fewer reserves still have a long way to go in reforms in energy pricing and additional reductions in current expenditure and measures aimed at increasing revenues through improved tax administration...and modernizing systems related to public financial management including the introduction of accrual-basis accounting and updating the financial management information system and the establishment of a unified treasury account.

·       Main activities of the Arab Monetary Fund in the year 2017

·        The Fund's lending activity in 2017

-        During 2017 the Fund received five requests to benefit from Fund loans from Jordan, Morocco, Tunisia (2 requests), and Sudan..where both Jordan and Tunisia requested to benefit from the Fund's resources in the form of compensatory loans..to confront the emergency situation in their balance of payments..whereas Morocco requested a loan under the framework of a structural adjustment facility for the financial and banking sector to support reform programs in that sector..while the Fund received two requests for a loan under the framework of a facility to create an enabling environment for small and medium enterprises in both Tunisia and Sudan..The Fund's Board of Directors, in its meeting in December 2017, approved the recommendations of the Loans Committee for Tunisia; the contracting procedures for the two loans are expected to be completed during 2018..

-        As for Sudan, at the end of 2017, the Fund's Economic and Technical Department began taking the measures and arrangements applied at the Fund, where a technical mission from the Fund will visit to consult and agree with the authorities on a reform program in the concerned sector..
Through its lending activity the Fund works to support economic and structural reform programs in borrowing member states in areas relevant to its mandates, and to provide the necessary technical assistance to design these programs..quickly and efficiently..

-        The loans provided by the Fund include two main groups. Loans of the first group contribute to addressing imbalances in the balance of payments..Types of these loans: automatic loan, ordinary loan, extended loan, and compensatory loan..

-        While the second group supports reforms in economic sectors..such as structural reform loans, trade reform facilitation, oil facility, short-term liquidity facility..facility to support the enabling environment for small and medium enterprises.

-        The total value of loans contracted with member states during 2017 amounted to 82.9 million Arab Accounting Dinars..equivalent to about 352 million US dollars..for Jordan and Morocco..Thus the balance of loan liabilities (including the undrawn portion of contracted loans) reached about 543 million Arab Accounting Dinars..representing approximately 73% of the resources available for lending...

-        Conventional loans (automatic, ordinary, compensatory and extended) ranked first among the facilities provided by the Fund since the beginning of its lending activity in 1978 until the end of 2017...accounting for 63% of total loans!!..granted during that period, followed by the share of structural adjustment facilities in both the financial and banking sector and government finance sector..at 32.5% then trade reform facilitation at 3%..while oil facility loans accounted for 1.6%...

-        The outstanding loan balance owed by borrowing member states amounted to about 487 million Arab Accounting Dinars at the end of 2017..Past-due loan maturities — considered past due if the delay in repaying the maturities of outstanding loans exceeds a period of 12 months — totaled 109,618..million Arab Accounting Dinars consisting of principal installments totaling 54,939 million and accrued interest 54,679 million Arab Accounting Dinars .....where there were three Arab countries overdue in paying dues: Somalia, Syria and Yemen...

·        The Fund's investment activity in 2017

·       The investment activity includes accepting الودائع from member states and financial institutions and managing investment portfolios on their behalf, and providing investment technical assistance, where the Fund's investment activity at the end of 2017 amounted to an amount equivalent to 2.77 billion (Arab Accounting Dinars) i.e. equivalent to 11.83 billion US dollars.

·        The Fund's training activity in 2017

-        Providing technical assistance and qualifying official cadres and developing and updating the scientific content of all existing training programs and expanding the training programs the Fund provides including distance training programs. The Fund continued its activity in training and capacity building during 2017..and introduced new training programs, as the number of training courses in 2017 increased by 14% over 2016 to reach 32 courses, benefiting 948 trainees from Arab official cadres..

·       The Fund's reports, research, studies and statistics activity in 2017

-        Research, reports and statistics are considered among the most important tools that contribute to informing specialists and those interested in economic, financial and monetary affairs in the Arab countries. The Fund has attached great importance to the activity of studies and bulletins as they represent one of the most important scientific means for research and investigation on various topics in order to reach policymaking and appropriate decision-making..and enrich Arab thought, and it works to develop the Arab Statistics Initiative "ArabStat"

-        As for the reports, bulletins, research and studies that the Fund issued during 2017 to support and assist decision-makers and economic policymakers in the Arab countries..they included, for example but not limited to: issuing the Unified Arab Economic Report ..2017, in both Arabic and English, and the "Arab Economic Outlook" reports issued in April and September 2017 in addition to working papers, studies and bulletins..There is also a library at the Fund that houses a collection of economic and financial references and publications including research papers and periodic reports that have been published

·       Allocations of the Fund's humanitarian aid to the Palestinian people .

· Since 2002 the Fund has contributed 10% of its net annual income for this purpose..where the number of allocations approved by the مجلس المحافطين from 2002 through 2017 for humanitarian aid to the Palestinian people was 15 allocations with total values amounting to 43,479 million (د .ع .ح ) equivalent to 192,1 million US dollars.

· Components of the programs to which the aid is directed Based on a methodology agreed with صندوق الاقصى under the management of the Islamic Development Bank, the methodology consists of the participation of the Governor of Palestine at the Arab Monetary Fund in recommending the sectors that form the overall framework for the programs and the components of the projects proposed to be implemented for each allocation, where the aforementioned allocations during 2017 were distributed among the following sectors:

· Education: such as the construction of new schools, support for the Palestinian Student Loan Fund, renovation, maintenance and equipping of schools; the total appropriations to support the education sector amounted to 68 million US dollars, representing 36% of the total amounts allocated.

· Health services sector: such as the construction of medical centers and the construction and expansion of hospitals and medical equipment for hospitals and clinics; the total appropriations amounted to approximately 22.1 million US dollars, i.e. 12% of total allocations.

· Sector supporting institutions and civil society organizations: such as supporting the activities of the Red Crescent, youth employment and rehabilitation projects; the total appropriations amounted to approximately 29.4 million US dollars, i.e. 15%.

· Integrated rural development and economic empowerment sector: such as supporting small craftsmen, area rehabilitation, village support, electricity and water networks and rural roads, land reclamation, paving and rehabilitation of internal roads...establishing sewage networks, projects for productive women, supporting needy families and orphans. The total appropriations amounted to 66.1 million US dollars, i.e. 34%.

· Sector for the protection and development of historic buildings: such as rehabilitating the old city in Jerusalem, rehabilitating historic buildings; the total appropriations amounted to 6.5 million US dollars, i.e. 3%.

· The Fund also provides training and capacity-building opportunities for government cadres in Palestine in the Fund’s field of specialization, through training courses and workshops offered by the Institute of Economic Policies, and the number of Palestinian trainees reached 429 Palestinian trainees by the end of 2017.