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Egypt government finds surprising praise for economy hours before IMF visit

After weeks of gloomy pronouncements, officials admit foreign investment and exports are improving. It could be a government move to build support for a controversial loan, says former finance minister

Michael Gunn, Saturday 14 Jan 2012
Currency shop
The economy is recovering, say ministers, in the shadow of contentious IMF visit (Photo: Reuters)
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Egyptian government officials declared a "big improvement" in key indicators of the economy on Saturday, in a move former minister of finance Hazem El-Beblawi told Ahram Online had all the signs of a "campaign for public opinion" just hours before an IMF delegation arrives in Cairo for talks on a contentious $3.2 billion loan.

Saturday's edition of the state-run Al-Ahram newspaper quoted finance minister Momtaz El-Said as hailing significant improvements in Egypt's economic performance.
 
Said's claims were supported by quotes from ministers with economic portfolios, including petroleum minister Abdullah Ghorab, who said Egypt's oil sector saw $8.6 billion of foreign investment in 2011. 
 
The country's total exports climbed to LE130.76 billion in 2011, up from LE110.259 billion the year before, minister of trade and industry Mahmoud Issa was also quoted as saying.
 
The timing of the news, which follows months of official warnings about the state of the economy, led former finance minister El-Beblawi to suggest the government is trying to build popular support before agreeing to the controversial measure of international borrowing.
 
"In the beginning [the Ganzouri government] started by exaggerating the problems of the economy, now it wants to show Egypt is in good shape to take on the IMF loan," he told Ahram Online by telephone.  
 
In July, Egypt's military rulers rejected a loan from the International Monetary Fund after public outcry, but worsening state finances are forcing the country to return to the negotiating table. An IMF mission is due to arrive in Cairo on Sunday.
 
The optimistic words published in Al-Ahram might have come as a surprise to those who remember the gloomy economic pronouncements made by key government and military figures in recent months.
 
"The gravity of the economic situation is unimaginable," Egypt's Prime Minister Kamal El-Ganzouri said in early December, shortly after being appointed. 
 
Just days before Ganzouri's speech, Major General Mahmoud Nasr, a senior army financial official, suggested Egypt's foreign reserves were in freefall. Earlier in 2011, Nasr claimed Egypt faced bankruptcy and a "revolution of hunger" due to continual protests.
 
In the wake of last January's uprising, revolutionary groups have claimed that Egypt's rulers use the fear of economic collapse to clamp down on industrial strikes and public demonstrations.
 
El-Beblawi, who was finance minister between July and November 2011, said the encouraging financial figures mentioned in the Al-Ahram article were "nothing new". 
 
"I always said during my time in office that the actual economy is not in bad shape but that the main problem is cashflow and liquidity," El-Beblawi explained to Ahram Online.
 
While tourism and foreign investment have been badly hit, production, remittances and exports have been relatively steady, he said.
 
"[Today's announcement] was to show we are not in a desperate position but are entering talks with the IMF from a position of strength," El-Beblawi added, predicting that a borrowing agreement would finally take place.
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