Front Matter Page

INTERNATIONAL MONETARY FUND

Middle East and Central Asia Department

Economic Governance Reforms to Support Inclusive Growth in the Middle East, North Africa, and Central Asia

Prepared by an IMF team composed of Chris Jarvis, Gaëlle Pierre, Bénédicte Baduel, Dominique Fayad, Alexander de Keyserling, Babacar Sarr, and Mariusz Sumlinski, with support from staff in other IMF departments

No. 21/01

Front Matter Page

Middle East and Central Asia Department

Economic Governance Reforms to Support Inclusive Growth in the Middle East, North Africa, and Central Asia

Prepared by an IMF team composed of Chris Jarvis, Gaëlle Pierre, Bénédicte Baduel, Dominique Fayad, Alexander de Keyserling, Babacar Sarr, and Mariusz Sumliński, with support from staff in other IMF departments

INTERNATIONAL MONETARY FUND

Front Matter Page

Copyright ©2021 International Monetary Fund

Cataloging-in-Publication Data

IMF Library

Names: Jarvis, Christopher J., author. | Pierre, Gaelle, author. | Baduel, Benedicte, author. | Fayad, Dominique, author. | Keyserling, Alexander de, author. | Sarr, Babacar, author. | Sumlinski, Mariusz A., author. | International Monetary Fund. Middle East and Central Asia Department, issuing body. | International Monetary Fund, publisher.

Title: Economic governance reforms to support inclusive growth in the Middle East, North Africa, and Central Asia / Prepared by an IMF team composed of Chris Jarvis, Gaelle Pierre, Bénédicte Baduel, Dominique Fayad, Alexander de Keyserling, Babacar Sarr, and Mariusz Sumliński, with support from staff in other IMF departments.

Other titles: International Monetary Fund. Middle East and Central Asia Department (Series).

Description: Washington, DC : International Monetary Fund, 2021. | At head of title: Middle East and Central Asia Department. | Departmental paper series. | Includes bibliographical references.

Identifiers: ISBN 9781513520759 (paper)

Subjects: LCSH: Political corruption—Middle East. | Political corruption—Africa, North. | Political corruption—Asia, Central. | Financial services industry—Law and legislation. | Money laundering—Prevention.

Classification: LCC JF1081.J37 2021

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Contents

• Acknowledgments

• Abbreviations

• Executive Summary

• 1. Introduction

• 2. Key Governance Challenges in Middle East and Central Asia Countries

  • Transparency and Accountability in Fiscal Institutions

  • Information Sharing and Civil Engagement

  • Financial Sector Supervisory and Regulatory Frameworks and Central Bank Governance

  • Anti-Money Laundering/Combating the Financing of Terrorism Frameworks

  • Streamlining and Enforcing Business Regulations

  • Anti-Corruption Frameworks

• 3. How to Improve Economic Governance

  • Improving Governance in Key Government Economic Functions

  • Leveraging the Work of the IMF and Other International Organizations

• Annex 1. Methodological Notes

• Annex 2. Country Groupings

• References

• Boxes

  • Box 1. Governance Challenges Arising from the COVID-19 Pandemic

  • Box 2. The Foundations of Good Economic Governance

• Figures

  • Figure 1. Government Effectiveness

  • Figure 2. Control of Corruption

  • Figure 3. Corruption Perceptions

  • Figure 4. Revenue

  • Figure 5. Revenue Efficiency

  • Figure 6. Public Investment Efficiency

  • Figure 7. Test Scores

  • Figure 8. Global Competitiveness

  • Figure 9. Regulatory Governance

  • Figure 10. Compliance to Basel Core Principles for Effective Banking Supervisions, by Region

  • Figure 11. AML/CFT Effectiveness, MECA

  • Figure 12. Rule of Law

  • Figure 13. Jurisdictions with Financial Disclosure Legislation

  • Figure 14. Framework for Economic Governance Institutions

Acknowledgments

This IMF Departmental Paper was prepared under the general guidance of Jihad Azour and supervised by Juha Kähkönen and Zeine Zeidane. The team was led by Chris Jarvis with Gaelle Pierre and comprised Bénédicte Baduel, Dominique Fayad, Alexander de Keyserling, and Mariusz Sumliński from the Middle East and Central Asia Department (MCD), and Babacar Sarr from the Fiscal Affairs Department (FAD). Two accompanying background papers on central bank governance were authored by Wouter Bossu and Arthur Rossi from the Legal Department (LEG), and Julia Cardoso, Elie Chamoun, Arkadiusz Majewski, and Riaan van Greuning from the Finance Department (FIN). The team would also like to thank Chady El Khoury, Ozlem Aydin, Alessandro Gullo, Ioana Luca, Jonathan Pampolina, and Jonathan Swane-poel (all from LEG) for their inputs on anti-corruption, AML/CFT, and the rule of law. The authors are grateful for the editorial assistance of Cooper Allen (MCD) and the overseeing of the publication process provided by Houda Berrada, Communications Department (COM).

The team would like to acknowledge the helpful comments from MCD country teams, Ali Alreshan, Imen Ben Mohamed, Nicolas Blancher, Anastasia Guscina, Kathleen Kao, Eric Mottu, Lorraine Ocampos, Wei Shi, Jean van Houtte, Sergio Rodriguez, Fang Yang, and Mohd Zahir (MCD); Yehenew Endegnanew (Strategy, Policy, and Review Department); Nico Mombrial, Rahim Kanani, Randa Elnagar, and Christoph Rosenberg (COM); Olivier Basdevant, Paulo Medas, Keyra Primus, Gwenaelle Suc, and Benoit Wiest (FAD); Ashraf Khan (Monetary and Capital Markets Department); Parisa Kamali, Mizuho Kida, and David Moore (FIN); Ezatullah Adib (Integrity Watch, Afghanistan); Aleksi Aleksishvili (Chairman of the Board, PCG, Georgia); Sawsan Gharaibeh (Rasheed, Jordan); Adib Nehmeh (United Nations Economic and Social Commission for Western Asia, Lebanon); Azmi Shuaibi (AMAN, Palestine); and Shereen Talaat (Arab Watch Coalition).

Abbreviations