And with inflation rates soaring since last year, as part of the aftermath of the war in Ukraine, central banks in many countries around the world have been forced to raise interest rates to contain inflation. inflation and overcome the challenges resulting from this alarming rise. The politics of the markets significantly, the average citizen was able to directly affect in relation to the prices of goods and services.
The elderly are among the most affected groups, as these groups need price stability from health care programs and increases in pensions that match the increases in inflation rates that have caused central banks to follow the policy of monetary tightening (the sum of the measures that the Central Banks follow to reduce the demand for money), during the last period.
The elderly – almost everywhere – have suffered these consequences, while the social protection programs pursued by some countries have contributed, even to a small extent, to alleviating the burden of these groups.
Aging of the population
For his part, the Tunisian economist, Reda El-Shakandali, argues that countries suffering from an aging population must:
Directing large financial allocations for health care. Protect pensions from the risk of failure of the institutions that finance them. Search for solutions to counter inflation apart from rising interest rates.
Al-Shakandali adds, in statements to “Sky News Arabia Economy”: Inflation in Arab countries is not only monetary (referring to imported inflation factors), and therefore its treatment must be away from politics monetary tightening.
He explains that the increase in interest casts a negative shadow on the internal debt of countries, and thus increases the pressure on public finances and the institutions that pay pensions.
Health care costs
A report by the British newspaper ‘Financial Times’ has highlighted how older age groups are being affected by public financial conditions around the world, at a time when rating agencies have warned that recent rate hikes interest had increased the negative impact on pensions and health care costs.
The report states that with interest rates rising in response to the biggest rise in inflation in decades, Moody’s, Standard & Poor’s and Fitch warned that:
Deteriorating demographics are already hurting government credit ratings. It has become likely to downgrade the rating without comprehensive reforms. This threatens to create a vicious cycle of increasing financial burdens and rising borrowing costs.
Rating agencies say higher borrowing costs are compounding both growing changes in the working-age population and the damage to public finances from rising health care and pension bills.
effect of arousing interest
Furthermore, the Egyptian financial analyst, Mustafa Shafie, indicates in statements to the site “Sky News Arabia Economy”, that the increase in interest has negative repercussions on any economy (other than its positive repercussions on the fight against inflation) as it leads to postpone any target expansions in Rowad’s plans, especially in defense sectors such as healthcare which is one of the most important sectors for the elderly.
He referred to the social protection programs that many countries have followed in this context, pointing out that, for example with regard to Egypt, the Egyptian budget is currently overburdened by the debt burden, so government initiatives come to spend on what serves the elderly, especially health insurance programs.
He also explains that inflation has slowed in most Arab countries in the recent period, due to high revenues from high oil sales prices, and therefore not all countries face the same Egyptian challenges. , especially after the liberalization of the price of the currency.
He points out that the medical services used by the elderly have seen price increases, with the depreciation of the Egyptian pound against the basket of foreign currencies.
Standard & Poor’s said last January that almost half of the world’s largest economies would be downgraded to garbage by 2060, up from the current level of around a third, if steps were not taken to mitigate the costs. of the aging of the population, according to the financial report .Fois. The agency estimated that in the absence of age-related fiscal policy reforms, a typical government would run a deficit of 9.1% of GDP by 2060, a considerable increase from the 2.4% of the 2025 estimate. S&P also predicted that pension costs will rise by an average of 4.5 percentage points of GDP by 2060, reaching 9.5%, although with wide variations between countries. The agency also projected that between 2022 and 2060, health spending would increase by 2.7 percentage points of GDP for the average country.
normal levels
On the other hand, the Jordanian economist, head of the Constitution Center for Economic Studies, Awni Al-Daoud, speaks in statements exclusive to “Economy Sky News Arabia” of a relatively different situation in his country, since the rates of inflation in the country are at what he described as “normal” levels and therefore interest prices, so that groups in society are not greatly affected by the monetary tightening policies pursued by the central banks of the whole world.
Jordan’s annual inflation rate continued to slow in April to 2.93% from 3.91% in March, according to data from the Jordanian Department of Statistics. The annual inflation rate in March fell from February levels of 4.25%. The monthly inflation rate continued to slow in April to 0.24% from 0.47% in March.
Al-Daoud adds, “The elderly category in the Kingdom of Jordan enjoys government insurance coverage, which pushes them to hedge against the recent increase in prices and costs of ongoing health care,” noting that older people may face a challenge represented by the high interest rates on loans, even if by small percentages, given to stabilize pensions and increase the value of interest on loans they have obtained during years past.
Estimates from the International Monetary Fund indicate that “growth in the economies of the Middle East and North Africa region is expected to slow sharply this year, to 3.1% and 3.4% next year”, against growth of 5.3% in 2022. .
The Fund returns these estimates for a number of reasons. In particular, the restrictive measures taken by countries to combat the sharp increases in inflation rates, the unprecedented hikes in interest rates and the lingering repercussions of the Ukrainian crisis.
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