[The following press release was issued by the Popular Campaign to Drop Egypt`s Debt on 20 March 2012.]
No to reproducing Mubarak’s failed economic policies!
MP Saad Al Hossaini, head of the parliamentary Plan and Budget Committee, received in his office a delegation from the Popular Campaign to Drop Egypt’s Debt (PCDED), to discuss the issue of Egypt’s foreign debt in light of the discourse around a new loan the interim government intends to draw from the IMF.
In an hour and a half, the meeting addressed how the Parliament could support the Campaign’s demands of monitoring and audit of all debts contracted in the Mubarak era, and discussed the so called economic ‘reform’ program whereby the IMF would agree to lending Egypt 3.2 billion dollars.
Based on that meeting, the Campaign has submitted a memo to MP Saad Alhosiny, rejecting this program, for the following reasons:
The government’s main objective in the program is to shrink the budget deficit and not to create employment and social justice: This objective is a continuation of the same approach of Mubarak’s previous governments, which resulted in impoverishing Egyptians and in an increase in budget deficit. How can the government attempt to decrease the deficit succeed by raising borrowing rates, producing an additional burden of debt payment and servicing, thereby exerting more pressure on the budget?
The program mentions amendments on income tax laws without providing any details: This lack of transparency is a cause for concern – the choice of who pays income tax in itself is a socio/political stand, either directed against the poor or against the rich.
Resorting to Sales Tax is the manifestation of taxing injustice: A Sales Tax is paid by everyone buying any commodity, paid equally by the rich and the poor. Worth mentioning here is the fact that taxes in Egypt are higher than in the USA. The program states an amendment of Income Tax Law to expand the taxing base, meaning more tax exemptions for rich investors under the pretext of discouraging tax evasion – Yousef Boutros Ghali’s approach - instead of imposing progressive taxation to promote social justice.
Raising agricultural land rents: A policy that resulted in the concentration of poverty in rural areas (40%) and the destruction of small investors when first implemented during Yousef Wali’s tenure in 1996. Added to that is the negligible subsidy directed to farmers (L.E. 250 million), which has remained the same for over 4 years, as opposed to a subsidy of L.E. 4 billion for exporters.
Lifting of the energy subsidy was vague in the plan presented to the IMF by the government: As it did not touch upon the subsidy on petrol fuel 95 and 92 or any other subsidy except to undertake the improvement of butagaz drum disbursement. The government also did not undertake to lift the subsidy from heavy usage factories – only 40 plants such as steel and cement works receive the same amount directed to butagaz drums that service millions of people.
This comes at a time when the IMF visits Egypt to meet with representatives of the government and the main political parties and NGOs, where the government presents an economic plan to meet with the IMF’s approval. The IMF has stated that its acceptance of the plan is conditional upon the approval of the party of parliamentary majority, before signing the loan agreement.
The parliament has still not discussed this plan to date, but it is doubtful that it will be accepted in its present layout.
The PCDED calls upon the Freedom and Justice Party (FJP) and all other Egyptian political parties to reject this economic plan and to exchange it with another that is based upon channelling the resources of this loan to increase public spending on high employment projects in the fields of education, health, housing and public transportation.
The Campaign has noted that total foreign debts contracted by Egypt after the revolution has exceeded 8 billion US dollars (details attached), and they are loans that have not been approved by the parliament or any elected body can therefore be considered corrupt and or odious as per international law.
Accordingly, the PCDED therefore demands the following:
That the government should declare the full amount of foreign debt contracted by all post-revolution governments during 2011 and 2012 and their contractual obligations, conditions and disbursements.
That parliament monitor those debts closely as not one mention of them has appeared on the Central Bank’s website or any official document released by the government.
Lastly, PCDED strongly criticizes the government for keeping its economic reform program veiled in secrecy until today – not having been presented through the media or to public civil discourse, further confirming the continuation of the non-access to information policy and lack of transparency and preventing the people from contributing to the formation of economic policies.
PCDED also affirms that reviewing previous debts and dropping the corrupt of them is a sure method of making foreign currency available and lifting a burden off the Egyptian economy.