Marrakech, MOROCCO – In an International Monetary Fund (IMF) Seminar on “Boosting Growth with Domestic Resources: How to Pay for It All,” Egypt’s Finance Minister Mohamed Maait highlighted the complexities of managing debt and taxation in today’s world. While addressing the pressing needs of the country, he emphasized that traditional solutions might not always be viable or politically acceptable.
Minister Maait acknowledged the importance of tackling informality, enhancing tax efficiency through digitalization, and ensuring tax compliance. However, he also underscored that these conventional methods might face resistance, especially from the people who are concerned about the impact on their pockets.
During the seminar, he shared an insight into the political challenge he faces as Finance Minister: “Members of Parliament always tell me that people hate to see me in the Parliament because they know that there is an additional tax. People will never support any increase in the taxes.”
Egypt, like many emerging and developing nations, confronts unique demographic challenges, including a youthful population, a high fertility rate, and the risk of longevity putting pressure on the economy.
With the backdrop of increasing spending needs, limited fiscal space, high financing costs, mounting debt, and various community challenges, Finance Ministers across Africa are under enormous pressure. Minister Maait stressed the importance of re-evaluating expenditure and redirecting government investment towards empowering the private sector for economic growth. He also emphasized the need for unconventional, out-of-the-box solutions.
“I believe a lot of the solutions need to be out of the box because traditional solutions might not work in such circumstances,” he asserted, recognizing that these decisions affect both the economy and the people’s pockets. “Ministers of Finance need to be pitied at this crucial period.”
Joining the conversation on boosting growth, IMF First Deputy Managing Director Gita Gopinath highlighted the substantial financial requirements of emerging markets and developing economies by 2030, estimated at around $3 trillion, or about 5.5 percent of their GDP. She stressed the importance of prioritizing spending to enhance productivity, particularly considering the challenges of high debts, elevated interest rates, and weak economic growth.
In Canada, Deputy Prime Minister Chrystia Freeland emphasized the significance of investments in early learning and childcare as a means to boost women’s participation in the labour force.
Germany’s Finance Minister, Christian Lindner, discussed the need for labour and energy market reforms in his country. He also addressed the potential for some developing economies to increase their tax burden while maintaining efficiency, unlike advanced economies with already high tax rates. Minister Lindner urged leaders not to underestimate their constituents’ awareness of the situation and to make necessary decisions with popular arguments, showing leadership for the long-term benefit.
In an era where financial challenges are substantial, innovative solutions and prudent decision-making are key to ensuring the well-being of nations and their people. ZIJ/16/10/2023