Tax bases must widen, says IMF

The New Age (Western Cape) - - Business - ULF LAESSING

MID­DLE East­ern coun­tries should pur­sue fis­cal poli­cies to sup­port growth and build broader tax bases to fund in­fra­struc­ture projects and so­cial spend­ing, IMF MD Chris­tine La­garde said yes­ter­day.

“A key pri­or­ity is build­ing broader and more eq­ui­table tax bases. All must pay their fair share, while the poor must be pro­tected,” Lar­garde said here.

That would al­low them to spend more on so­cial safety nets, health and ed­u­ca­tion ser­vices than the present 11% of GDP in the re­gion, less than 19% in emerg­ing Europe.

“Fis­cal pol­icy can and must be re­designed to sup­port in­clu­sive growth in the re­gion,” Lar­garde said.

A senior IMF of­fi­cial said on Mon­day that Morocco’s new, more flex­i­ble hard cur­rency sys­tem was a step in the right di­rec­tion to make the king­dom more at­trac­tive to in­vest­ment and to turn it into a fi­nan­cial hub for Africa.

Two weeks ago, Morocco launched a more flex­i­ble for­eign ex­change sys­tem un­der free-mar­ket re­forms rec­om­mended by the In­ter­na­tional Mon­e­tary Fund to pro­tect the North African econ­omy against ex­ter­nal shocks and safe­guard its re­serves.

“It’s a re­form that goes in the right di­rec­tion,” Ji­had Azour, director of the IMF Mid­dle East and Cen­tral Asia depart­ment, said.

“It al­lows Morocco to be more at­trac­tive for in­vestors and to play its full role as re­gional fi­nan­cial cen­tre es­pe­cially with the am­bi­tion of Morocco to ser­vice Africa in terms of fi­nan­cial ser­vices,” he said. – Reuters

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