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New IMF loan would be 'odious' and illegitimate, says Egypt debt amnesty group

Group demanding the cancellation of country's $36 billion in international debts says the Egyptian people must make the decision on further borrowing

Ahram Online, Friday 20 Jan 2012
IMF
Debt relief group slams IMF's track record and calls for full account of Egypt's economy (Photo: AP)
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A group demanding the cancellation of Egypt's debts has branded a potential new IMF loan as "odious", saying any future borrowing should be decided by the Egyptian people and based on a full and transparent appraisal of the country's economy.

The Popular Campaign to Drop Egypt’s Debts (PCDED) made its statement as the International Monetary Fund (IMF) rounded off a two-day visit to Cairo aimed at restarting talks on a contentious $3.2 billion loan. 
 
The campaign garnered global media attention in October when it organised parallel events in London and Cairo calling for the cancellation of the estimated $36 billion Egypt owes to international debtors. 
 
In July, Egypt's military rulers rejected a loan from the IMF after public outcry, but a budget gap pushed ever-wider by a year of political and economic turmoil is forcing the country to return to the negotiating table.
 
Now the campaign has spoken out against the possibility of a new loan signed by an unelected Egyptian government. It demands that an elected parliament, and not the country's ruling military, have final say.
 
In a statement published Wednesday the PCDED claimed an IMF loan would bring the country's total new borrowing agreements over the last year to $4 billion -- four times the average annual loans agreed upon in the Mubarak era.
 
The PCDED went on to demand the transitional government provide "full data about the economic condition in Egypt, including the precise amount of foreign reserves, the budget deficit, economic bases of getting external loans" as well as details of any economic or political conditions stipulated by the IMF.
 
Current and former officials as well as prominent Egyptian economists have said an IMF loan is a necessity to avert fiscal disaster. Foreign financial investors have given Egypt a wide berth since protests erupted a year ago. This has forced the government to rely on local banks for funds, a situation that has forced up yields on treasury bills and bonds to levels that some economists say are unsustainable.
 
Last Friday, a senior economic official in the Muslim Brotherhood's Freedom and Justice Party said the organisation would back a deal provided there are no conditions attached and alternatives are explored first.
 
The Popular Campaign to Drop Egypt’s Debts says it has members in six of the country's governorates and the support of several independent trade unions.
 
It is highly critical of the IMF, accusing its policies of having exacerbated social inequalities in Egypt and reducing public spending on health services and education provided to the majority of the population.
 
The IMF is set to return to Cairo later this month or early in February. Planning and International Cooperation Minister Fayza Aboul Naga told reporters on Tuesday that Egypt wanted an IMF agreement as soon as possible and hoped one would be finalised within a few weeks.
 
The fund's regional director Masood Ahmed said many technical details of an agreement must still be resolved and this week's visit aimed to "listen, and to understand the Egyptian situation."
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