Middle Eastern countries should pursue fiscal policies to support growth and build broader tax bases to fund infrastructure projects and social spending, the head of the International Monetary Fund said Tuesday.

“A key priority is building broader and more equitable tax bases. All must pay their fair share, while the poor must be protected,” IMF Managing Director Christine Lagarde told an economic conference in Marrakech, organized by the Washington-based fund and the kingdom.

That would allow them to spend more on social safety nets, health and education services than the current 11 percent of gross domestic product in the region. “Fiscal policy can and must be redesigned to support inclusive growth in the region,” Lagarde said.

More efforts are also needed to support the private sector, she said. The state, the dominant employer in many Arab countries with their young populations, can no longer hire newcomers to the labor market.

“This, too, can help make room for high-return social and infrastructure outlays,” Largarde said, adding that better access to finance, a more favorable business environment and fewer barriers such as red tape were necessary.

“Protracted regional conflicts, low commodity prices, weak productivity and poor governance have held back the considerable potential of the region,” the final statement issued by the IMF and two other international bodies said.

“Growth has not been strong enough to reduce unemployment significantly, and a staggering 25 percent of young people are jobless,” it added.
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