By Hatem Mohamed- Business Editor ABU DHABIThe new value-added tax, VAT, which ideally fits within the economic diversification programme adopted by the GCC states, and part of growth�oriented governance reform measures, is a step forward toward financial sustainability, Arab Monetary Fund Chief told Emirates News Agency, WAM.

Dr. Abdulrahman A. Al Hamidy, Director-General, Chairman of Board of the Arab Monetary Fund, AMF, made the statements on the sidelines of a press conference organised by AMF on the occasion of the Arab Financial Inclusion Day, at AMF HQ in Abu Dhabi on Wednesday, April 27th.

"Taxation is one of the efficient economic tools that should not be relegated to just being a financial burden on the society; it's rather an economic engine that ensures best utilisation of resources, creates an investment-friendly environment and ultimately secures financial sustainability," he said.

Dr. Al Hamidy commended the GCC states in general and the UAE in particular, for implementing an "exemplary diversification programme based on a solid base of new legislation that serves the greater good of the homeland."

He noted that the VAT is an impactful legislation conducive to enhancing investments and generating financial resources.

VAT could generate considerable revenues for the common good of the economy, said Dr. Al Hamidi, commending the UAE for having built large fiscal and external buffers, advancing economic diversification and taking steps to address the consequences of the drop in oil prices.

He stressed the importance of pursuing gradual fiscal consolidation by raising non-oil revenues, safeguarding financial stability and implementing growth-enhancing reforms.

Al Hamidy belittled concerns about a potential negative impact on consumers. "GCC states are now going through a transitional period and the new VAT will be implemented on a gradual basis which will reduce any negative impact on consumers."

"Such measures are a must to overcome the besetting economic challenges that the whole world is facing," he said, noting that the sharp fall in global oil prices has entailed effective measures to accelerate the economic development process.

"The UAE and the rest of GCC states are now adopting a policy of trade openness out of belief in the major role of trade in ensuring economic growth. We should ignore all such trends and calls warning against the negative impact of economic openness, which is now a must more than ever before. Such openness needs a solid infrastructure based on robust legislation, capable of drawing investments," he added.

Despite the fall in global oil prices, the GCC states have posted positive growth, albeit below expectations, AMF chairman said, noting that better growth levels will be achieved during 2018 when a number of the economic initiatives already taken by the region's countries will have been completed.

AMF today announced a partnership with the Alliance for Financial Inclusion and the German International Cooperation, an affiliate of the German Ministry of Economic and Social development. The partnership fits within the AMF's efforts to boost sustainable and inclusive growth in the Arab region.

On this occasion, AMF Director General highlighted the importance of financial inclusion as a driving factor to support the development of policies aimed at promoting access to financial services in the Arab region.

Source: Emirates News Agency