The Multilateralist

More trouble for the IMF in Egypt

More trouble for the IMF in Egypt

The International Monetary Fund’s effort to negotiate a $4.8 billion loan with Egypt’s government has hit new trouble on multiple fronts. First, Egypt’s point person for the negotiations resigned, for reasons that remain unclear. Via Ahram Online:

A key Egyptian negotiator with the International Monetary Fund said on Sunday he has resigned as first deputy finance minister, in a potential blow to Cairo’s prospects of an early IMF deal.

Hany Kadry Dimian has been the crucial point man in Egypt’s protracted and so far fruitless negotiations to obtain a $4.8 billion loan needed to help combat a severe economic crisis…

Kadry gave no explanation for his decision to quit, first reported on the Egyptian dissident Rebel Economy blog, saying he would say more on Tuesday. A senior European diplomat said his departure was not a good omen for Egypt’s hopes of wrapping up a deal on the long delayed IMF loan next month, as the government has said it aims to do.

Kadry was the one expert in the ministry who fully understood the IMF programme and was able to deal with the global lender professionally, the diplomat said.

Then a prominent Egyptian politician inveighed against the draft loan package:

Egypt should refuse a $4.8 billion (3 billion pounds) loan from the International Monetary Fund rather than submit to terms that would further impoverish the poor and could spark a revolution of the hungry, leftist leader Hamdeen Sabahi said on Monday.

Sabahi, 58, who came third in a presidential election last year after the 2011 uprising that toppled autocratic President Hosni Mubarak, told Reuters that neither the global lender nor Egypt’s Islamist-led government had told the public the truth about austerity conditions attached to the proposed loan.

Meanwhile, Egypt’s parliament has delayed consideration of legislation insisted upon by the Fund. Via Reuters:

Speaker of the upper house of parliament Ahmed Fahmy appeared visibly frustrated as he announced that the chamber would halt what had been scheduled as its final reading of the law because it did not have the necessary government data.

"What finance ministry or tax authority does not know how to calculate the income bracket or who benefits and who is harmed? This is not worthy of the council," Fahmy said, as members clapped their support.

Fahmy said that debate was suspended "until the government provides correct data, otherwise this government can go wherever it wants to go."

In addition to cutting fuel subsidies and raising sales taxes, Egypt has said it will rein in its soaring budget deficit with measures including tax changes targeting the wealthy.