- Life Style
The procedures for securing a US$3.2 billion loan from the International Monetary Fund will stop due to concerns of fund officials about social and political discord over the loan, Finance Minister Momtaz al-Saeed has said.
At a news conference Saturday about the state budget, Saeed said IMF officials worry about a repeat of the Greek experience, when political forces denied previous approval of the loan, according to state-owned newspaper Al-Ahram.
Not only would have the loan supported the budget, the minister said, but it would also have marked official recognition by the IMF of the strength of Egypt’s economy and its ability to recover and attract foreign investments.
The loan negotiations started last year as a way to face the budget deficit and support the economy, which had been deteriorating since the 2011 uprising.
But the IMF set political and economic consensus as a condition for the loan in light of the Islamist-dominated Parliament's rejection of Prime Minister Kamal al-Ganzouri’s address to Parliament in February.
The People’s Assembly Economic Affairs Committee meanwhile will set rules that the Cabinet should stick to in case it asks for parliamentary approval of any loans.
The People’s Assembly earlier halted a loan of US$300 million from the World Bank that would have supported wastewater projects, saying it was illegal from the perspective of Sharia, which bans interest on loans.
Ibrahim Abdel Rahman, deputy chairman of the committee, told Al-Masry Al-Youm that interests on international loans represent costs on the state budget, describing it as a “point of disagreement” between Parliament and the Cabinet.
The committee would not approve any international loans that are considered unessential and have local alternatives, Abdel Rahman added.
He said the committee noticed that the Cabinet had recently intensified demands for international loans, which burdened the committee with considering them and hindering discussions of other important laws.
“We don’t mind dealing with international funding organizations, but only when necessary,” Abdel Rahman said, accusing the Cabinet of depicting Egypt as a poor country even though expenditures exceed LE500 billion.