Egypt Seeks IMF Loan at Any Cost

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A member of the 6th of April movement holds a courgette, which represents corruption and nepotism in Egyptian culture, during an anti-government demonstration demanding the release of political prisoners outside the Egyptian High Court in Cairo on 17 April 2013. (Photo: AFP - Gianluigi Guercia)

By: Bisan Kassab

Published Friday, April 19, 2013

Cairo – As the International Monetary Fund (IMF) and World Bank kick off their joint Spring meetings in Washington DC, neither institution is offering a promising portrayal of Egypt’s economic situation.

Although the IMF’s World Economic Outlook predicted a three percent growth rate for the Egyptian economy in 2014, it does not look like this growth will trickle down to the poor. Inflation is expected to rise to 13 percent and unemployment to 14 percent, an increase from last year’s 13.5 percent.

President Mohamed Morsi is facing an economic situation not dissimilar to that of Mubarak’s last year in power. But with a weaker growth rate.

In light of these assessments, the IMF is supporting Egypt’s bid to undertake several economic reforms related to energy and commodity subsidies, especially as the country continues its two-year bid to qualify for a $4.8 billion loan.

Martine Guerguil, assistant director of the Fiscal Affairs Department, said that Egypt needs to increase petroleum product and food import prices.

Thomas Helbling, chief of the World Economic Studies Division at the IMF’s Research Department, attributed Egypt’s difficulties to a decline in the demand for Egyptian exports and high oil prices. Furthermore, Egypt’s greater political uncertainty has undermined the public’s confidence in its economy.

Several political actors in Egypt have reservations over the loan and its conditions.

In August 2012, Abdul-Hafez Sawi of the Muslim Brotherhood’s Freedom and Justice Party told Al-Akhbar, “We still don’t know anything about the program under which Egypt will get the loan or the measures and steps that will be taken to cut government spending, reform fiscal policy and collect unpaid taxes.”

He continued, “We need to consider who will bear the burden of repayment.”

With rising unemployment and inflation, it’s becoming more clear who will pay that burden.

This article is an edited translation from the Arabic Edition.


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