Macro-Fiscal Modelling and Forecasting for Arab States

Overview of the Macro-Fiscal Modelling and Forecasting tool

Governments are facing complex challenges posed by global climate risks, security issues, and increasing debt burdens, which are further exacerbated by the war in Ukraine, inflationary pressures, and the repercussions of the COVID-19 pandemic. As such, maintaining fiscal sustainability while advancing social development goals has become increasingly difficult.

The Macro-Fiscal Modelling and Forecasting (MFMF) tool supports Governments in addressing these challenges by strengthening their policy simulations, growth, and fiscal forecasts. It particularly focuses on improving fiscal space to finance growth-enhancing social expenditures and sustainable development with the aim of achieving development priorities and visions.

The user-friendly MFMF tool provides valuable support to policymakers by enabling them to assess macroeconomic policy scenarios using the cutting-edge Extended Single-Country World Economic Forecasting Model without needing to solve complex system equations, which will remain at the backend of the interface (Altshuler and Sarangi, 2022). This streamlined access enhances decision makers’ ability to use macroeconomic forecasts and simulations to inform better decisions on financing social expenditures and the SDGs.

Strategic Partnership

The partnership between the United Nations Economic and Social Commission for Western Asia (ESCWA) and the Department of Economic and Social Affairs (DESA) has led to the development of the Macro-Fiscal Modelling and Forecasting (MFMF) tool, which is piloted for selected Arab countries. The globally recognized World Economic Forecasting Model (WEFM) model, which plays a vital role in the United Nations' analysis of global economic trends, is customized to meet the specific needs of selected ESCWA member States. The cutting-edge model has been recoded and equipped with a user-friendly interface, developed by ESCWA, to provide decision makers with an accessible platform for assessing economic policy simulations quickly.

The ESCWA-DESA training workshops on Macro-Fiscal Modelling and Forecasting (MFMF) equip policymakers with the essential skills and tools to perform macroeconomic forecasting and simulate various policy scenarios, particularly concerning fiscal policies, public debt management, and social expenditures related to the SDGs. The ESCWA-DESA partnership aims to foster knowledge sharing on advanced simulation tools, benefiting countries in the region and their development and trade partners.

The MFMF tool, together with training workshops and policy materials, is implemented jointly by ESCWA and DESA under a capacity development project supported by the Peace and Development Fund grant. The project supports 10 target countries across multiple regions over the period 2023–2027. Learn more about the Peace and Development Fund project here.