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Thursday, 9 August 2018

Did the IMF just call out Egyptian tax dodgers?

Did the IMF just call out Egyptian tax dodgers? IMF Executive Director Hazem El Beblawi scoffed at the notion that the IMF is against the Egyptian treasury increasing its annual tax haul. El Beblawi made the remarks in response to questions from Al Masry Al Youm at the annual meeting of the African caucuses for the World Bank and the IMF. The former prime minister pointed to what he sees as a large segment of society who evade taxes, particularly self-employed workers including doctors, lawyers, engineers, artists, and accountants.

IMF supports our strategy of long-term borrowing: El Beblawi also reassured the press that Egypt’s current external debt position isn’t anything to be worried about. The facilities are long-term and were necessary to achieve sustainable development goals.

Speaking of foreign debt, CBE Governor Tarek Amer said that Egypt will renew its USD 2.65 bn currency swap with China, which Egypt signed in 2016 as part of the USD 5.7 bn funding required to secure a USD 12 bn extended fund facility from the IMF. The move is part of a series of loans the CBE is looking to roll over, which include the USD 2 bn deposit from the UAE.

Foreign holdings of Egypt’s debt since the 2016 EGP float have reached USD 37-38 bn, Amer said at a conference of African central bankers in Egypt on Wednesday.

African central bankers renew hope in mythical single currency: The conference also appeared to revive the ludicrous (yet long-discussed) proposal to establish a single currency for the African Union. The AU commission is currently revisiting the proposal to establish a single “Africa zone” with its own central bank and a unified currency as part of the AU’s 2063 vision, AU Commissioner for Economic Affairs Victor Harrison told Enterprise. There are certain conditions that need to be met first, including requiring member countries to be guided by a single inflation target, and a single budget deficit target. Good luck: Our grandkids will be rooting for that.

One needs to only look at the West Africa single currency proposal to get an idea of why this knockoff of the EUR will not work. The implementation of that common currency for West Africa’s anglophone countries, which was supposed to merge with the a currency union of francophone West African states, was postponed four times before finally being jettisoned. The main reason? Setting unified criteria akin to the ones proposed by Harrison. Talk of a West African monetary union was revived last year and could take place by 2020, according to CNN. Again, one is not necessarily advised to hold one’s breath.

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