Egypt’s President Morsy has recently spoken with the International Monetary Fund (IMF) Managing Director Christine Lagarde. Morsy formally requested $4.8 billion US dollars loan. It is more than likely, Egypt will receive this loan.
However many unanswered questions about this deal still loom. And without a response to these valid questions, then I can assume that it only intends to serve the elite inside and outside of Egypt, while the poorest bear the cost of repayment.
What are the conditions of the loan?
In Ganzouri’s government, the FJP and other MB members voiced concern over the negotiations with the IMF then because of the lack of transparency. Even today, members of Morsy’s own party raise the same concerns.
The conditions of past deals, and the long history of IMF work in other countries is sufficient motive to demand the release of this information. Usually, the deals involve increase taxes on the citizens, and reduced spending on public services. Privatization and deregulation are other common conditions. Egypt’s last ten years of these same neoliberal economic adjustments have already proven the consequences of such decisions.
Where is the democratic oversight of a deal that will affect the country for at least a decade, if not more?
Democratic oversight by means of parliamentarians is only one method to debate this issue. However, global politics has shown us throughout history that some voices go unheard. In order to ensure a proper debate about taking out a loan, the following should be represented:
- President’s economic team
- Elected Members of Parliament (economic representatives of each party)
- Independent trade unionists
- Economic experts from major Universities
- Thinktanks from both side of the spectrum
Is there a way to rely on Egypt instead of foreign investment/aid in order to boost the economy?
Many suggestions are given time and time again. However it requires strong political will and not a half-hearted ambivalent attitude where the ruler is not really addressing the core issues.
- Progressive taxes for the wealthy (income, property)
- Decrease in fuel subsidies for the rich; Renewable energy projects
- Agricultural programs to support wheat production instead of importing 60% from abroad
- Actively seeking to tackle corruption; reclaiming public property after Mubarak-era illegal takeover by private investors
Why hasn’t worked until now?
It was recently revealed that the past 3 governments have been taking out loans and not revealing it to the public. The loans amounted to almost $6 billion ($4.5 billion during Ganzouri’s government). Obviously it’s not stimulating economy and there is another round of loan talks now. Will Egypt be asking for another $5 billion next year? How long will this go on?
Do we want a Jordan repeat?
The World Bank and IMF have a policy that protects the interests of select entities with a specific economic agenda. Therefore it is not a conspiracy against Egypt to try and dupe the public nor the governments. It is an open and declared policy that follows a neo-liberal economic model of free market, privatization, and deregulation. Among the countries in the
region that recently fell victim to these policies is Jordan. The recently accepted a loan from the IMF and the conditions were also not transparent…until recently. The government announced a fuel price hike up to 10% of the current prices. Many different groups hit the streets in protest, until the government finally rescinded the decision.
Why the flip flop?
When last spring, there were talks with the IMF and the Ganzouri government of taking out loans, the Islamist political forces cried foul. According to Islam, usury is prohibited and the loan carried an interest rate that would fall under this category of haram.
Now, with the current negotiation, Salafi political parties initially protested based on similar ground, then acquiesced in proper Islamist fashion, with a fatwa.
Salafi Dawah vice president Yasser Borhamy Tuesday for his public comments that a loanEgypt is set to receive from the International Monetary Fund does not constitute usury, a practice prohibited in Islam.
Borhamy said in a fatwa, or an Islamic legal ruling, Sunday that since the loan’s interest rate is only 1.1 percent, to be paid in the form of administrative fees, it can be considered a grant.
I will attach more thoughts and reference articles to read as time proves this is a horrible idea and will make Egyptians suffer in the medium to long term.