Saudi Finance Minister warns against rise in global fragmentation

Mohammed Al Jadaan calls for IMF and World Bank to enact reforms

Saudi Arabia's Finance Minister Mohammed Al Jadaan speaks at the Peterson Institute for International Economics in Washington. Bloomberg

Saudi Finance Minister Mohammed Al Jadaan on Monday offered a strong defence of multilateralism, warning of the challenges that global fragmentation poses to trade and humanitarian efforts.

Mr Al Jadaan, who leads the International Monetary and Financial Committee, said countries have become increasingly isolated in recent years and that numerous shocks have weakened faith in multilateralism.

“We can see that the world is becoming more and more fragmented,” Mr Al Jadaan said in remarks at the Peterson Institute for International Economics. “It is more difficult to build consensus of digital security, trade, development and countless ambitions.”

Mr Al Jadaan is leading Saudi Arabia's delegation at the International Monetary Fund and World Bank Annual Meetings in Washington, where finance ministers and central bankers from around the world have gathered to discuss the state of the world economy and address issues that require global co-operation.

Pointing to the expanded use and threat of tariffs worldwide, he said: “Nations are becoming more self-isolating. Some say that multilateralism has peaked. Some countries are now doubting that such co-operation is in their interest.”

The Saudi Finance Minister said a key reason why countries are becoming increasingly isolated is because of unequal growth and productivity. While it is understandable for leaders to make their own countries' interests the priority, not carefully balancing their interests and those of other nations will give short-term benefits but have long-term consequences.

Mr Al Jadaan said that a fragmented global community would not only negatively affect industrialised nations, but also “devastate” low-income countries reliant on multilateral efforts.

Drawing a comparison to the 80th anniversary of the Bretton Woods Conference, where the IMF was founded amid the Second World War, Mr Al Jadaan also said it should not take a devastating conflict to bring nations together.

“And it would really be foolish, absolutely foolish, to waste these institutions. The current challenges and multilateralism gives us the space to think more broadly about how global institutions can serve all our interests,” he said.

The Saudi Finance Minister also used his remarks to call for several reforms within the Washington-based IMF.

“Institutional reform must continue to adjust quickly and decisively to solve tough problems such as poverty, inequality, price pressures and energy in ways which respects the new power structure and their diverse situations,” he said.

Among the reforms Mr Al Jadaan called for were increased surveillance, more capacity development and gathering resources more efficiently.

The IMF earlier on Monday approved reforms to support the lender's capacity to support low-income countries in addressing balance of payment needs.

Saudi Arabia's economic transformation

Mr Al Jadaan also used his remarks in Washington to tout Saudi Arabia's economic transformation, as the country continues to implement its Vision 2030 programme.

Vision 2030 was first launched in 2016 with the aim of diversifying the Saudi economy with an emphasis on technology.

The Finance Minister noted Saudi Arabia's young workforce is driving the country's transformation.

“They are really embracing the change. They are moved by the long-term plan and being part of that change,” he said.

He also pointed to the notable growth in Saudi Arabia's female labour force. Mr Al Jadaan said women now make up 36 per cent of the kingdom's labour force, up from 16 per cent in 2016, which is seven years ahead of target. About two-thirds of Saudi women in the workforce are in the private sector, he added.

“That's how we engage the community. That's how the change in the social activity and the economic engagement is happening,” he said.

The World Bank said comprehensive reforms and policies have created an environment that is supportive of women's economic engagement in the kingdom's private sector. Among the reforms Saudi Arabia has made are eliminating employment discrimination, expanding job opportunities and emphasising women's employment as part of its Vision 2030 project, the World Bank said.

Mr Al Jadaan added that today, 45 per cent of small- and medium-sized enterprises in Saudi Arabia are formed by women.

“That's a major shift in the economy and connectivity,” he said.

“These young women and men are indeed our future, and the Saudi transformation is designed to benefit them and their children.”