Arab countries called to reform subsidy system to the poor

Arab governments need to reform the system of subsidies given to their populations, says the Arab Monetary Fund (AMF) chief.

Arab countries need to replace blanket subsidies with financial aid targeted to the poor, the director general of the Arab Monetary Fund (AMF) has urged.

"We need to revisit the issue of subsidies," Dr Jassim al Mannai said in a speech this morning at the AMF's headquarters in Abu Dhabi. "If they are not well targeted they go to every Tom, Dick and Harry. Those who drive big cars receive gasoline subsidies and those with mansions receive electricity subsidies.

"If someone drives a small family car it makes sense to give them financial assistance."

Subsidies have become an increasingly contentious issue this year in the wake of popular uprisings across the Middle East.

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Governments have come under pressure to boost financial handouts in economies

hampered by high unemployment and rising prices.

But experts and organisations like the AMF warn such subsidies need to be targeted to help the poorest.

"They can be an ineffective allocation of resources and a financial burden without warrant," said Dr al Mannai. "The warrant is to help the poor."

He was speaking at the start of a training course for Arab policymakers about the need to reform public finance management.

Regional governments also needed to work to bring down high debt to GDP ratios in the Arab world, said Dr al Mannai.