IMF: Dollar fluctuations’ impact on the Middle East is limited

Kristalina Georgieva, Managing Director of the International Monetary Fund, said that the impact of dollar fluctuations on the economies of the Middle East and North Africa region remains relatively limited, given the countries’ limited exposure to the US market and the diversity of their economies. She added that the dollar’s decline this week to its lowest level since December 2023, following President Donald Trump’s threat to fire Federal Reserve Chairman Jerome Powell, as well as the threat of a US recession, led to an increase in “selling” of US assets. The currency has begun to lose momentum with the onset of the tariff war.

She noted, in a press conference on the sidelines of the IMF and World Bank Spring Meetings in Washington on Thursday, that countries in the region trade with the United States, but most do not have significant exposure. As is also the case in Africa, most of the impact will be indirect.

Georgieva added, “US Treasury Secretary Scott Bessent’s directives will be discussed with representatives of the Fund’s 190 member countries,” and welcomed Bessent’s expression of US support for the multilateral lender in times of crisis.

She explained that the dollar has historically risen and fallen, and this is nothing new. The negative impact of currency fluctuations on countries in the region lies in the slowdown in the global economy, as many oil-exporting countries are suffering from persistently low prices. She continued: “The Middle East and North Africa region has undergone a slight credit rating downgrade, although its performance this year remains better than last year.”

She noted that the region is highly diverse and the impacts vary from one country to another, referring to oil-exporting and oil-importing countries, with impacts varying within the region and compared to other regions of the world.

Georgieva addressed the repercussions of the decline in oil prices on oil-exporting countries in the region, but at the same time praised the results of economic diversification efforts in these countries. She said: “If you are an oil exporter and receive your revenues in dollars, the weakness of the dollar poses a problem for your financial situation. But if you are a long-standing exporter, it’s a gift, as you can more easily deal with the challenges you face.”