Egypt government sparked the Red Sea islands controversy: IMF expert

Egyptian government has dealt with Tiran and Sanafir Islands crisis wrongly, said ex-prime minister and an IMF official, Hazem Al-Beblawi on Wednesday.

Al Beblawi, executive director representing Egypt and twelve Arab countries and the Maldives on the Executive Board of the International Monetary Fund (IMF), noted that the lack of information about the ownership of the two islands led to the current crisis. Accordingly, many have dealt with the crisis emotionally rather than logically, they did not analyse the situation upon legal and historical evidence.

He made these remarks during his meeting with a number of Egyptian journalists accompanying the Doorknock Mission to Washington D.C. organised by the American Chamber of Commerce in Egypt (AmCham).

IMF official further said that Egypt has a solid economic reform programme and it is in the public interest to see more cooperation between Cairo and international financial institutions.

During the Spring Meetings of the IMF and World Bank, Egyptian officials had successfully presented the country’s economic challenges and the government’s efforts and vision to reform, Beblawi noted.  IMF officials and experts during the meeting have commended the Egyptian government’s economic reform vision.

Moreover, Beblawi said IMF and Egyptian officials have agreed on the importance of reducing the country’s budget deficit, which would eventually show the government’s commitment and efficiency in carrying out reform scheme.

He further referred that the most crucial problem facing Egypt’s economy is the growing population, compared to the country’s limited resources.

Al-Beblawi also asserted that the financial system has a number of flaws. On top of these flaws are tax rates which make 15 percent only of the country’s GDP.

In most of the developed countries, these rates make up to 35 percent. This means that most of wealthy businessmen in Egypt do not pay taxes, notably the self-employed persons.

Al-Beblawi pursued saying that finance sector has the greatest influence on economic life, since achieving positive rates for the industrial growth would require a strong, stable, and discipline financial sector.

Meanwhile, Al-Beblawi forecasted that the Egyptian government would successfully and swiftly handle the subsidy reform programme, notably for the petroleum products during the upcoming phase. The drop in the international oil prices will represent a great chance for the government to reduce domestic oil subsidies, he stated.

He further said that society should recognize that achieving development requires sacrifices and concessions. Beblawi also shed the light on exchange rate problem in Egypt noting that the government should set a number of integrated policies and firm reform procedures to overcome these hurdles.