Socioeconomic Impacts of Macroeconomic Reform Policies in the Arab Region
International Financial Institutions (IFIs) encouraged neoliberal macroeconomic reforms for distressed developing economies. The standard reform package, known as the “Washington Consensus,” prescribes adjustments like macroeconomic stabilisation, openness to global markets and growing the domestic private sector. In their implementation, however, IFI-led policies often clashed with the UN Sustainable Development Goals (SDGs), which promote inclusive growth, social justice and conflict prevention.
IFI critics alleged that the reforms were only partially successful in macroeconomic terms, while often causing severe microeconomic and social impacts. Triangle, therefore, was commissioned to produce a technical paper that aims to test the hypothesis by evaluating Tunisia and Egypt’s experiences with neoliberal adjustment against the SDGs. The report contributed to the UNESCWA expert group meeting “Towards Inclusive Development for Conflict Prevention”. Triangle’s publication is the result of extensive research and analysis using a comparative case study approach to assess the relationship between macroeconomic policies and their socio-economic impacts.
The analysis conducted by Triangle found strong evidence to support the proposition that IFI-led reforms in the Arab region were only partially successful in macroeconomic terms, while often having severe microeconomic and social impacts in relation to Tunisia and Egypt. In both countries, IFIs focused on improving macroeconomic indicators without placing due weight on building public institutions capable of preventing corruption, promoting market competition, alleviating poverty and reducing inequality. This approach resulted in vast numbers of Tunisians and Egyptians not benefiting from realisation of the SDGs, even at times when the national economy was performing well. The recommendations put forth in the research would help IFIs to better align macroeconomic reforms in Tunisia and Egypt with the SDGs, with particular reference to SDGs 1, 8, 10 and 16.