“The International Monetary Fund [IMF] and the Egyptian government have agreed to postpone the IMF’s board meeting to approve the $4.8 billion loan to an unidentified date,” the Finance Minister Momtaz El-Saeed told the Turkish Anadolu Agency on Tuesday.
The minister told Reuters: “Of course the delay will have some economic impact but we are discussing necessary measures [to address that] during the coming period.” He added, “I am optimistic … everything will be well, God willing.”
“In light of the unfolding developments on the ground, the Egyptian authorities have asked to postpone their request for a stand-by arrangement with the IMF,” an IMF spokesperson said. “The fund remains in close contact with the authorities, and stands ready to continue supporting Egypt during the ongoing transition and to consult with the authorities on the resumption of discussions regarding the stand-by arrangement.”
The decision confirmed the views of observers who expressed their concerns about the IMF’s reaction to the president’s decision that suspended the new taxes proposed by the government.
“There is a confidence crisis,” the former Minister of Finance Hazem Al-Beblawy told Daily News Egypt. “If people don’t believe the government there is a problem, the situation wasn’t thoroughly explained to them.” Al-Beblawy said the state failed to convince itself referring to the contradicting decisions, he added that the tax raise was not the best alternative nor was it presented in the best way. The former minister said Egypt has to adopt harsh measures to resolve the crisis, and that problems will not be solved by talking. The price, however, must be paid by those who can afford it, he said, noting that people get upset when the government fails to convince them.
The cabinet issued a decree imposing new taxes on cigarettes, alcohol, cellular services and other items on Sunday. The decision was suspended by the president through a publication on his Facebook page later the same day, after political groups called for protests to reject the tax rise.
The IMF board was supposed to meet on 19 December to give a green light for the loan after a preliminary agreement was reached with the Egyptian cabinet in October.