Centrum Stosunków Międzynarodowych - 14 August 2016: Domestic opposition to IMF deal intensifies in Egypt

Since the signing of a staff-level agreement on the planned International Monetary Fund (IMF) loan for Egypt, domestic opposition to the proposed deal has mounted. An open letter signed by several political parties, civil society institutions and public figures claims that the IMF deal imposes ‘extremely tough economic and financial measures,’ that are implemented by the government ‘in complete negligence toward the Egyptian people, including its syndicates, unions, and political forces.’ The letter objects to planned reforms: devaluing the Egyptian pound (EGP), civil service reform, introduction of VAT and expansion of privatisation programme. Its signatories also note that the already high public debt will increase as a result of the IMF loan.

The staff-level agreement, signed on Thursday, August 11, is expected to be approved by IMF’s Executive Board in the coming weeks. It will start a three year Extended Funds Facility worth $12 billion. Having the deal confirmed will also allow Egypt to tap into other sources of financing, such as the World Bank of the African Development Bank. IMF aid is dependent on Egypt implementing a series of structural reform aimed at reducing the public debt. Many planned changes – particularly energy subsidy cuts, the introduction VAT and devaluing EGP – are unpopular as they are believed to be leading to an increase in costs of living.

Among the signatories of the letter are non-parliamentary left-wing parties: Popular Alliance Socialist Party, Karama Party, Egyptian Freedom Party, the Popular Current and Egyptian Communist Party. More important are the signatures in the name of six influential professional syndicates: lawyers, doctors, journalists, media employees as well as trade and commerce employees. The letter has also been signed by a number of public figures and activists. As an alternative to the IMF deal, the letter proposes a more statist economic policy and more progressive direct taxation in place of planned VAT. However, president Abd al-Fattah as-Sisi has already vowed to implement the reform programme.