Country Rankings - Egypt
Jun 19, 2014 Egypt: a military solutionNo-one yet knows what sort of economic steward new Egyptian President Abdel Fatah al-Sisi will be of his country, although his attempt to throttle back on fuel subsidies by riding a bicycle around Cairo seems to have more to do with spin than substance. He has had one clever idea, though: faced with a drop in tourist arrivals from 14 million to 9 million, he has decided to impose an exit tax of USD25 on them. If we can't force them to arrive, at least we can stop them leaving!
May 22, 2014 Egypt: clutching at strawsIt would be a brave girl who asserted that she understood the economic situation of Egypt, except to say that it is dire; but it seems a reasonable proposition that the IMF (from which the government is hoping to borrow USD15bn or some such number) was behind this week's five percent increase in the top rate of tax. Individual well-off Egyptians are round about 99 times cleverer than any government they have had in the past 50 years or are ever likely to have, so this has to be regarded as a piece of window-dressing. But other IMF prescriptions this week also follow the usual tax-increasing path: in Luxembourg it's VAT and property taxes; in Lithuania it's property taxes and vehicles; in Latvia it's the flat tax thresholds. And here is a particularly abysmal example of first world high-taxing double-speak applied to a troubled third-world country: "eliminating tax exemptions that have little benefit for production but undermine growth-enhancing spending and constrain vibrant private sector growth." If these weasel words are capable of any translation into understandable English at all, they seem to be saying that giving tax incentives takes away from government spending. Excuse me, but there is no such thing as "growth-enhancing spending." All spending is bad. What planet does this person live on? I am reminded of The Gipper's famous joking words: "I'm from the government, and I'm here to help." I have to admit however to being slightly conflicted over the IMF, given that, as part of the Troika, it is playing a useful role in controlling the spending of bankrupt EU countries that have proved unable to manage themselves. I suppose that, like the OECD, another sprawling, undirected organization, the IMF has good bits and bad bits. Trouble is, we only seem to hear from the bad bits: the horny-handed sons of toil working away at the coal-face persuading Finance Ministers to stop spending money get no recognition, while the Article IV tax-and-spend brigade get all the kudos. Which side is the management on, I'd like to know? Attacking the IMF may be a fairly futile exercise in the short term; but the OECD seems more vulnerable. Its recent "BEPS" propaganda onslaught against multi-national businesses has started to run into the buffers, with a growing chorus of negative responses to such idiocies as translated country-by-country reports and the proposed separation of digital business from non-digital business for tax purposes (at least we now know which century they're living in, and, hint, it isn't the 20th or the 21st). They are living in the century of nation states, which is of course an accurate reflection of their membership. With any luck, we will find that they have over-reached themselves, and they will implode. I continue not to understand why the business world has failed to create a countervailing organization to fight against the OECD's statist doctrines. But perhaps the ever-wise bosses of the world's MNEs have simply calculated that the OECD, in its overweening arrogance, will bring about its own downfall, leaving behind an international community of nations even less coherent than it was before the OECD's arrival on the world stage.
Apr 04, 2013 Egypt: desperate measuresEgypt is another country with a leader who is making mistake after mistake, and I am not coming from any kind of anti-Islamist perspective. If a country, like several in the neighbourhood, votes in an Islamist government, then as long as they are tolerant of minorities that is their affair. It's unclear that such a vote has taken place in Egypt, because of the semi-dictatorial way that President Morsi has gone about things. The message coming out of Egypt is that it is suited to a pluralist regime, and attempts to deny this are tearing the country apart. Meanwhile the Government, desperate for money, is making mistakes: the imposition of a "capital gains tax" of 10% on the takeover of local bank NSGB by the Qataris can only do damage to the stock market. Local businesspeople were strongly against this tax, and indeed the local stock market index has fallen by more than 25% since the tax was announced; it was down more than 40% at one point. It's not really a "gains" tax, anyway; it's a tax on the proceeds of trading. Now, as the first step in a proposed program of tariff reductions (excuse me?) the tariffs on various types of luxury imports are rising to 40%. Boats is one category. Who in their right mind would import a boat into Egypt under these conditions? This is probably to be laid at the door of the IMF, which is forcing the Government to swallow nasty medicine as the price for lending it money. But the deal isn't done yet, and probably can't be done until elections take place: they have just been delayed until October. If you're transiting the Suez Canal, just keep going!
Feb 21, 2013 Egypt: has the other canalThe Suez Canal Authority isn't Egypt, but the difference might be more academic than real. At all events, one is inclined to blame Egypt for the SCA's pricing peccadilloes; and even without them the government's behaviour over the last few months doesn't engender much confidence in the future business environment in the country. There was to have been a reform package which owed a lot to the IMF's influence, but it was abandoned last December. There wasn't much in it for international businesses to be happy about, but at least it indicated that the government was trying to get a grip on the situation. Now, who knows? The government is in a kind of stasis; surely it's desperate for inward investment, but who would want to go there under current circumstances? If you can't restrain yourself, at least wait for the currency to stop falling, which may not happen before elections in April, and those may hold surprises in themselves. The IMF is waiting, too. What a mess!
Sep 06, 2012 Egypt: is free (for now)Egypt gets this week's last star, for what may seem rather perverse reasons. It's obvious that the government of a country in that much of a mess doesn't have a clue as to how much money it has or doesn't have, or what its deficit will be next year, so it may as well promise no tax rises, which is bound to go down well with the electorate and the IMF both.