Vol. 5 Num 263 Tue. February 22, 2005  

WB warns oil cash no cure for job woes

A cash bonanza from higher oil prices will fail to create millions of jobs needed across the Middle East unless governments take tough reform decisions to lessen their dependence on energy, the World Bank said on Sunday.

The bank's top Middle East official, Christian Poortman, said some countries had better insulated their economies against oil price crashes by cutting debt and spending and by creating rainy day funds.

But the region needs to do more to create the 4 million to 5 million new jobs needed a year, he said on the sidelines of the Jeddah Economic Forum.

"Some countries need to get their growth rates up ... For the oil producers it is to create a growth that is more labour intensive, because oil brings in a lot of money but doesn't create too many jobs," said Poortman, World Bank Vice President for the Middle East and North Africa.

World Bank estimates showed growth across the Middle East at a healthy 6 percent in 2003 and 5.8 percent last year. The bank projects growth of around 4.8 percent this year and next.

Much of that has been fuelled by rising oil prices. US crude hit a record $55.67 a barrel late last year, and prices remain close to $50 a barrel.

Poortman said states must spend money on revamping education to give job-seekers useful skills in an environment where bloated civil services no longer automatically hire graduates.

"The oil boom provides new financing to all of these countries and in a sense decreases the urgency for reform, and we are arguing the opposite for everyone, including Saudi Arabia," he said.