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IMF's proposed Egypt loan not enough to salvage economy: Expert

Canadian development guru David Malone says proposed IMF loan will not be enough to fix Egypt's ailing economy, says 'only Egyptians' can formulate viable development plan

Karim Hafez , Monday 18 Feb 2013
IMF head Christine Lagarde with Egypt President Mohamed Morsi (Reuters)
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Views: 3162

The International Monetary Fund (IMF)'s proposed $4.8 billion loan will not be enough for Egypt to overcome its post-revolution economic dilemmas, David Malone, president of Canada’s International Development Research Centre (IDRC), said in Cairo on Sunday.

Malone, a renowned development scholar, said that a "western tailored" development model was "not what Egypt needed at the moment," stressing that international borrowing – although badly needed – was not necessarily the solution to Egypt's chronic economic woes.

"Only Egyptians," Malone said, would be able to formulate a development plan compatible with Egyptian social dynamics and the country’s economic potential.

"International institutions cannot be a substitute for internal decision-making,” said the IDRC head, adding that development formulas dictated by the IMF and other international bodies had repeatedly failed in developing countries, such as Argentina and India.

A series of austerity measures is expected to accompany the loan deal, including across-the-board subsidy cuts aimed at reducing Egypt's ever-widening budget deficit.

"The real issue is that economic management is missing from the political discourse; day-to-day politics seems to be the current priority," asserted Malone. "Egypt is in desperate need for economic management."

Economic growth is a prerequisite to Egypt's development effort, he said, but growth must be accompanied with sound governance to combat long-term structural deficiencies, such as corruption and a crumbling public sector that hinders development efforts.

The proposed IMF loan is seen by the Egyptian government as vital to propping up the state's battered finances. Ratification of the deal would also unlock billions of dollars of additional aid from foreign governments.

The IDRC is currently planning to fund a handful of agricultural research programmes in Egypt, along with other programmes focussing on job creation, environmental preservation and anti-sexual harassment awareness.

Since 1971, the IDRC has pumped more than LE400 million into Egyptian development projects.

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21-02-2013 03:02pm
No Plan
I despair of Egypt and the lack of any economic plan. There are thousands of examples in the world of economies that succeed, just pick any one of them and copy the formula. Free up the institutions, allow competition, new licenses, end the import and export controls, sell share in government industries, end monopolies, allow free enterprise by a hungry nation that will explode with creativity, stop the ridiculous beurocracy that is stifling the country. With private companies (hopefully not foreigners) at the helm of companies, with shareholders too the corruption will stop and Egypt will awaken from its socialist past.
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18-02-2013 10:29am
Really !
So we need a Canadian bureaucrat to tell us what every Egyptian should be already painfully aware of ! Everyday we are spending money we do not have and our government has no clue or plan to address the situation. We are afraid to deal with the tough issues of subsidies because politics gets in the way. Every decision the government makes is reversed, like the fuel subsidies on tourism, the extra taxes on certain items, the working hour etc etc etc. Government statistics show we are spending a net $3 billion quarterly so a LOAN of $4.8 , which has to be REPAID, can only cover cash spending for 5 months. Then what ? Unless the Politics change, tourism is dead, foreign investment is dead, the moral of the people is broken, and no external loans or grants will help this country. I don't need Mr. Malone from IDRC to tell me this . Egyptians, WAKE UP TO YOUR SAD FUTURE !
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19-02-2013 04:20am
The Grim Reality
I absolutely agree that the only solution to Egyptian recovery has to come from within. The Government of Egypt will never be able to move forward unless they center themselves in the middle. They must listen to other factions in Egypt that represent all segments of Egyptians and not only the Muslim Brotherhood. The government has to be made of economist and experts in various industries. it is so clear that what the Egyptian Government is doing presently is not working. Then monetary cover of imports is dwelling, Tourism and tourism foreign and domestic investments are at a halt. a civil war is almost in the making. what are you waiting for?
18-02-2013 11:23am
foreign eyes
You are totally RIGHT, maybe foreign eyes not involved can see better.

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