Countries in the Middle East and North Africa (MENA) face a dual shock from the Covid-19 pandemic and a collapse in oil prices. The dual shock has severely affected the economies of the region and threatens livelihoods, especially those of informal workers. To deal with the dual shock, governments should focus first on responding to the health emergency and the associated risk of economic depression—which includes supporting the private sector and vulnerable households. While efforts to actively reduce leakages should start now to ensure the relief and stimulus funds reach the right target, fiscal consolidation should be postponed until the recovery from the pandemic is well underway.
Financial Markets Group Special Papers SP 256