Mursi to consider Egypt IMF loan
Published Monday, July 2, 2012
Egypt will approach the International Monetary Fund (IMF) and other financial institutions to help get its economy back on track once new President Mohammed Mursi appoints a government, a presidential financial adviser told Reuters.
The decision represents a reversal of position for the new premier, who had previously been hesitant to back the loan.
Speaking in March, Mursi – then the head of the Muslim Brotherhood's political wing – said: "The loan will be a burden on the shoulders of Egyptian people, who have the right to know how it will be spent and how it will be paid off."
A popular uprising last year plunged the economy into crisis, chasing away tourists and foreign investors and prompting government employees to strike for higher wages.
Mursi was sworn in on Saturday as Egypt's first Islamist, civilian and freely elected president and will begin working to form a new government in the coming days.
"We intend to approach the IMF again," said Amr Abu-Zeid, development finance adviser to Mursi's Muslim Brotherhood.
"Give him one week or two weeks, so at least he has a cabinet...I believe these issues will not go further until they have a cabinet at least."
The country's army-backed interim government kept the economy under the cosh since the overthrow of Hosni Mubarak in February 2011 through a series of short-term measures.
The ruling military financed a burgeoning budget deficit by borrowing short term from local banks at high interest rates, draining the country's foreign reserves.
The military council that took power from Mubarak rejected an agreement that Egypt negotiated with the IMF in mid-2011, then resumed talks for a $3.2 billion loan early this year.
The economy contracted by 4.3 percent in the first quarter of 2011 and stagnated in the following three quarters.
IMF loans are often criticized for coming with conditions that determine the country's economic policies, undermining the power of sovereign governments.
Egyptians are also wary that the IMF could be a new method to constrain Egypt's new found freedom at the behest of the IMF's largest contributor, the United States.
Abu-Zeid dismissed the criticism, saying the country's financial woes meant that they would accept support from all potential sources.
"We will negotiate with the IMF, with the World Bank, with the Islamic Development Bank, with anybody who wants to help. We are very open to this," Abu-Zeid said.