CAIRO: A group of researchers and civil society organizers launched Monday the Egyptian Debt Audit and Cancellation Campaign, in a bid to break free from ousted president Hosni Mubarak’s policies.
The campaign to relieve the economic burden from years of debt is supported by the Egyptian Initiative for Personal Rights (EIPR) and the Egyptian Center for Economic and Social Rights.
The group’s goal is to audit and eventually cancel Egypt’s foreign debt that was accumulated under the former president, according Amr Adly, campaign member and political economy expert.
In this case, according to the campaign, the debt would be considered Mubarak’s and not Egypt’s.
“There should be a democratization of public finances,” Adly told Daily News Egypt. “We want to prove that this debt is obviously illegitimate because it was accepted by a dictator and his authoritarian regime.”
Adly said the campaign will bring together a group of researchers who will investigate and audit all of the debt Egypt incurred over the past three decades of the Mubarak era.
“We will investigate how these loans were spent by the previous regime, whether or not they went towards oppressing the people and if they were actually used to strengthen the illegitimate regime,” he said.
But before taking these onerous and lengthy steps, the campaign hopes to create awareness and gain the support of the Egyptian public.
To achieve this, Adly said, the campaign is coordinating with similar movements in Ecuador and Tunisia, for example, which have been successful in reaching out to the people as well as their previous lenders.
Aside from the country’s external debt worth about $35 billion (LE 208.97 billion), Egypt also has a domestic debt of about $167.49 billion (LE 1 trillion) standing at about 68 percent of the country’s total GDP.
However, according to Adly, the campaign hopes to target the external debt first because it is well documented and thus will be easier to review.
“There are legal aspects to these,” said Adly. “When such loans are accepted there are guidelines and safeguards which state that there must be transparency on where this money is going, institutions that finance development can’t give these give such loans without monitoring them properly.”
Adly argues that under the auspices of Mubarak, there was no transparency, accountability, or democracy. Egyptians did not know where this money was going and they seldom reaped the benefits of the loans, which were allegedly targeted towards social and economic development.
“Since the revolution began, several countries that Egypt is indebted to, including the United States took a stance to support democracy and the Egyptian people; therefore if these loans, which we believe were used to oppress the Egyptian people, are proven to be illegitimate, then they must be dropped,” he stressed.
One economic expert, however, argues that while the idea is symbolic of Egypt’s sovereignty, it may not be realistic for the country to cancel the debt entirely.
“I don’t think it’s extremely pragmatic, it will depend on a lot of things,” said Sondos Faramawy, associate at Boston Consulting Group (BCG). “Each and every detail of each and every loan has to be looked into, the only way you can convince the [lenders] is to prove that this money was given to corruption and you have to prove that this was done with their consent.”
However, Faramawy told DNE that the move would show the world that Egyptians are aware of what is going on in their country where their money is going.
The campaign will force multilateral banks and international finance institutions to take caution, ensuring that the money they are lending is being deployed towards democratic development, especially since the country’s uprising came about to demand democracy and transparency.
“Nobody wants the backlash of the people or the next government over the next few months, you don’t know where problems could come from, it is still unclear so now they have to be very certain that the money is going towards a certain cause or development issue,” Faramawy said.
She added that the campaign would also force these institutions to communicate more with the Egyptian people.
Many global finance institutions are currently scrambling to figure outs ways to help Tunisia and Egypt, they are clearly doing this because they want to communicate, Faramawy pointed out.
Moreover, an economic analyst who wished to remain anonymous stressed that the idea does not make sense legally and would not even be considered by international bodies.
“This case would not stand up in court,” he said.
The official argues that the money lent came from taxpayers in the United States, Europe, and from banks, which used savings of clients in order to provide the loans.
The banks and western countries will never let this money go, he said.
He also pointed out that global lenders are not responsible for how the money was used, asserting that they did not lend it so it could be used for corruption.
“Lenders will respond in this situation by asking why Egypt did not do anything about this corruption or illegal use of money at the time instead of allowing their representative, which is the former government, to accept,” he said.