CAIRO: The International Monetary Fund (IMF) came under fire this week for negotiating a $3.2 billion loan with Egypt’s army council and interim Cabinet, seen by some activists and youth movements as “unrepresentative” of the people.
The Popular Campaign to Drop Egypt’s Debt held a conference Saturday to demand that the government leave the decision to accept the loan up to the incoming parliament, set to convene for its first session on Jan. 23.
“The IMF was involved over the past two decades in drawing and implementing the economic and financial policies of Egypt, which led to low living standards, high poverty rates, and deterioration of public services and human resources and human development,” Amr Adly, a political economist and a founding member of the campaign, said in a statement.
Labeling the loan as “odious,” the group stressed that “the current government does not represent the Egyptian people … and the donors realize that the current government is not a legitimate one.”
The IMF announced last week that finalizing the loan would take around two or three months, just days after Egypt submitted a formal request for the support package it initially rejected in June 2011.
“It was claimed that the first loan was rejected because its conditions were unacceptable, however, such conditions were never revealed to the public,” said Adly.
The Muslim Brotherhood’s Freedom and Justice Party, which won a majority in parliament, said it is open to accepting the loan as long as it comes without conditions.
The campaign, which is pushing to drop all debt acquired under the rule of ousted president Hosni Mubarak, said that the current transitional government is borrowing four times as much as the Mubarak regime. Members are currently working with a group of researchers and civil society organizers to review the country’s debt in order to substantiate claims that the money was indeed misappropriated by Mubarak’s regime.
Salma Hussein, a founding member of the campaign, proposed alternatives to accepting the loan and also stressed that the decision to accept the package is being discussed without consulting the public.
“Nobody has given us alternatives and the government has not even asked the people or discussed with the public how or where the loan would be used,” she said.
“Each Cabinet had a different vision, previous finance minister Samir Radwan said he would accept the loan to invest in local businesses and create jobs, the minister who came after him stated that they will loosen the budget — there is no economic plan or transparency,” said Hussein.
Hussein pointed to implementing a progressive tax or a property tax for “distinct” properties, such as luxurious villas or large estates, is alternatives.
“Currently, we have 20 percent of those living in old Cairo and older properties paying taxes, while the current property tax law does not affect those living in distinct properties which includes many villas in Sixth of October City or New Cairo,” she said.
Egypt had introduced a property tax law but its implementation has been repeatedly postponed.
Hussein said these tax increases would only affect the 5 percent of Egyptians who can actually afford it.
Egypt has gone through three Cabinets since the Jan. 25 uprising, which ousted Mubarak and brought the Supreme Council of the Armed Forces into power.
“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 resources development, instead of applying the same old policies of the former regime and its minister of finance who allocated more than 19 percent of the public spending for subsidizing fuel,” Adly said
Monette Doss, senior analyst at Prime Group, previously told Daily News Egypt that the loan on its own “is definitely not going to be enough.”
“What we really need are clear policies — without these policies, aid packages are just a short-term fix,” she said.
While the Fund has previously announced to local media that they do not plan on “imposing any conditions” on Egypt, Adly pointed out that rejecting or accepting the loan is not the main issue.
“The government has not been transparent, and this is frightening,” said Adly.
“The concern is about the absence of public participation and lack of transparency of the Egyptian economic scene, the transitional authority purposely uses the scarcely announced financial data to serve its own interests by scaring the public from the revolution at one time, or giving a rosy picture of the economy at another,” he added.
Weeks ago, Prime Minister Kamal El-Ganzoury was almost tearful when telling journalists about the desperate state of the Egyptian economy.
The Cabinet reiterated the message in local media by announcing on various occasions that the state would need $10-$12 billion in aid to alleviate the current situation as the current LE 140 billion budget deficit was expected to climb to LE 182 billion.
On the other hand, Ismail El-Nagdi, head of Egypt’s Industrial Development Authority (IDA), told reporters at a conference last week that opportunities for foreign investments in Egypt were countless and that he was meeting with new investors every week.