IMF loan faces political hurdles

Negotiations between the government and the International Monetary Fund over a US$3.2 billion loan were adversely affected by the position of the Muslim Brotherhood's political party, which has criticized the economic policies of the current cabinet.

“We told the IMF mission that the government is not transparent in how it spends the state budget,” said Abdel Hafez al-Sawy, chairman of the FJP economic committee. As an example, he pointed out that factories still receive subsidized energy, even though the finance minister had said the subsidies have been lifted.

“We neither refuse nor accept the loan before the government tells us how it would be spent," he said.

According to Sawy, the government said it would come up with $11 billion using local resources before taking the IMF loan. He added that the loan would significantly increase Egypt's $34 billion foreign debt.

The IMF said it would only grant the $3.2 billion if there was a broad political consensus on it among Egypt's political forces. It sought approval from the FJP in particular, which holds the largest bloc in Parliament. The fund had requested that Egypt prepare economic reform plans complete with benchmarks and goals, as well as obtain supplementary commitments from outside states.

The Egyptian government says it needs the loan to help plug an estimated $11 billion budget deficit.

Sawy said the current government is leaving office in three months and would therefore burden the next government with loan's interest payments.

“The government did not say how we would pay back the loan,” he said.

Translated from Al-Masry Al-Youm