Egypt: President’s adviser blames IMF for delaying the loan
Essam al-Haddad, the closest aide to Mohamed Morsi, has lambasted the IMF for worsening Egypt’s situation. He claimed Egypt has satisfied all the required conditions but the IMF continues to delay the deal. He said the government in a bid to finalize the $4,8 billion loan deal has recently included a phased-out subsidies plan and a sales tax law.
Mr. Haddad claimed that the IMF wants a political consensus on the program before it will act. IMF’s regional director, Massod Ahmad, said that progress is being made on the technical aspect of the deal but some of the problems that will allow “a successful conclusion” are still pending. There are speculations that the deal won’t be finalized until after the parliamentary elections which will be held before the end of the year. The elections have been postponed several times due to the tense debate over the electoral law.
The country’s economy has been diving and its foreign exchange reserves have raised fears of an economic collapse. Capital Economics, a London-based consultancy firm, said this week that public finances could spiral out of control if political uncertainty persisted. Mr. Haddad said the deficit would be brought down to 9.5% by June 2014. After his meeting with companies such as British Petroleum, he said that companies “see huge potential of investment and the interest in staying in the market is big.” He said that the companies however “want a settlement on arrears which shows that we’re trying to find a solution and not ignoring it.”
The central bank still continues to ration its foreign currency reserves through auctions and payments to international suppliers have been delayed. Egyptians believe that the IMF is due to a political motive.