[The following press release was released by The Popular Campaign to Drop Egypt`s Debt. It was translated into English by Khaled Nagy.]
Press Release by The Popular Campaign to Drop Egypt`s Debt
Interim Government Obtains Loans Four Times as Much as Those during Mubarak`s Time
The International Monetary Fund (IMF) loan issue is looming again in the Egyptian horizon, a few months after the rejection of a similar loan. It was claimed that the first loan was rejected because its conditions were unacceptable, however, such conditions were never revealed to the public.
Dr. Fayza Abu el-Naga, Minister of International Cooperation and Planning, who previously rejected the first loan, refered to conducting positive consultations with the IMF, confirming that this time, the loan is “conditionless”. She further stated that negotiations are necessary to get a three billion US dollar loan from the IMF to support Egypt`s budget.
Only three months earlier, Dr. Abu el-Naga had stated that Egypt was not in need of any loans to support its budget and its economy was instead in need of new investments to expand and create more jobs. Yet, today, she is talking about getting a loan to cover the budget deficit, although this step would not help efforts to achieve economic recovery, boost growth rates or create new jobs.
Why was the previous IMF`s loan rejected at first when Egypt’s credit rating was much better than now and its negotiating position with the IMF was much better? The IMF gives low-interest loans under arrangements that stipulate economic or political conditions. Yet why are we witnessing the conduct of negotiations regarding the same loan, today, when Egypt is in a bad negotiating position, in light of its deteriorating political and economic circumstances? Who is responsible for such confusion and lack of sound vision?
Over the past two decades, the IMF has been involved in drawing up and implementing the main economic and financial policies of Egypt, which led to low living standards, high poverty rates, and a deterioration in public services and human resource development, as recen World Bank and United Nation Development Program reports state. Policies supported by the IMF resulted in the richer getting richer at the expense of the poor, as well as a downsizing in public spending on health services and education once offered to the majority of Egypt`s citizens.
Yet, today, the government is negotiating again with the IMF to get a fresh loan under the pretext that the budget deficit reached unacceptable levels. The government ought to have reviewed the budget after the revolution to be able to restructure it, taking into consideration the requirements of social justice and human resource development. Instead it has applied the same old policies as the former Mubarak regime and its Minister of Finance who allocated more than nineteen percent of public spending to subsidize fuel. The majority of this subsidy goes to capitalists and does not benefit the poor. One fifth of the budget also went to service the public debt, while sums allocated for health, education, and social security remained the same.
Rejecting or approving the IMF loan is not the problem. The concern lies in the absence of public participation and lack of transparency in the Egyptian economic scene.
The transitional authority purposely uses the scarcely announced financial data to serve its own interests by either scaring the public about the revolution or alternatively giving a rosy picture of the economy. The absence of transparency, lack of adequate data, and the publication of misleading information manipulated by the government or the ruling authority are all still going on.
Another dilemma points to the fact that the current interim government`s economic team belongs entirely to the former regime and its dissolved party. Such a government does not have the legal right to get such huge loans that would lead to further burdens on future generations, without any public authorization or real parliamentary monitoring or any measure of transparency that would allow the public to see for itself the benefits and obligations it would have to fulfill due to such interim governmental decisions. The same applies to the international commitments made by the Egyptian government after Mubarak was toppled. All lack transparency regarding the amount of the loan, its sources or its beneficiaries.
The Popular Campaign to Drop Egypt’s Debts has monitored Egyptian foreign debt and has found that it rose from thirty-five billion to thirty-six and a third billion US dollars in the past year, as reported by The Economist. This increase comprises loans obtained during the reign of the interim governments without any public authorization, political legitimacy or full disclosure.
The Popular Campaign to Drop Egypt’s Debts stresses the fact that the current IMF loan for Egypt is an odious one as the current government does not represent the Egyptian people for whom it is supposedly negotiating for, despite the fact that even donors realize that the current government is not a legitimate one.
In the event the Egyptian government gets a three billion US dollar loan from the IMF, the sum of loans obtained over the past year would be around four billion, which is four-fold above the average annual loans obtained during the Mubarak`s era. This would pose a huge burden on the Egyptian people for years to come and thus would have to be addressed by the elected parliament and government.
In view of the Egyptian experience regarding past loan-related conditions imposed by the IMF, The Popular Campaign to Drop Egypt’s Debts insistingly rejects getting any IMF loan and finds it necessary to identify better alternatives to cover Egypt`s current budget deficit.
The Popular Campaign to Drop Egypt’s Debts hereby calls on the interim government to provide complete data regarding the economic conditions of Egypt, including the precise amount of funds in the country`s foreign reserve, the current budget deficit, the economic basis for getting external loans, and all political and economic conditions associated with the current IMF loan.
The Popular Campaign to Drop Egypt’s Debts also calls for the involvement of the elected parliament, not the Security Council of Armed Forces, immediately and without any delay, to reviewi the loan agreement in detail and consideri whether to approve it or not. We believe this is the least to be done.