Piety versus expediency: Egypt Islamists change tack on IMF loan
Bassem Abo Alabass, Tuesday 28 Aug 2012
Once seemingly opposed to international borrowing, Islamist parties are now giving approval to Egypt's request for a $4.8 billion loan; Ahram Online compares the Islamists' stances to IMF funding before and after Morsi's election


Egypt's Islamist politicians seem to have had a rapid about-face with regards to a prospective multi-billion dollar loan from the International Monetary Fund.

Before an Islamist held high office, many religious conservatives poured scorn on the idea of borrowing from the international institution, an idea mooted bythe transitional government of Essam Sharaf in spring 2011.

Some politicians called such a measure 'haram'; others suggested there was no need for IMF funding and the budget shortfall could be made up in other ways.

Now, with leading figure of the Muslim Brotherhood Mohamed Morsi holding the presidency, the Brotherhood affiliated Freedom and Justice (FJP) and Salafist Nour parties both seem to be backing the government's request for a facility from the IMF.

A request was made last week for a $4.8 billion loan during a Cairo meeting between President Morsi and the fund's chief Christine Lagarde.

Below, Ahram Online below compares the Islamists' stances to IMF funding before and after Morsi's election.



Before

In February 2012, the FJP's official website quoted Ashraf Badr Eddin, deputy of the planning and budget committee of the now-dissolved People's Assembly, as saying Egypt did not need IMF loans.

Badr Eddin explained that there were alternatives that could bring in greater revenues than the loan. These include amending international gas-sale agreements, raising energy prices for energy-intensive factories, reviewing the subsidies system, and collecting tax arrears.

In March, when former prime minister Kamal El-Ganzouri and his government were taking steps to attain IMF funding, Saad El-Husseini, a leading member of the FJP told Reuters that the government should first seek all other means to improve its standing. He suggested "selling Islamic 'bonds' to foreign institutions and land to Egyptians abroad, as well as slashing subsidies to energy-intensive industries."

El-Husseini rejected the economic reform programme proposed by the government to qualify for the loan, saying it made no provisions for maintaining foreign reserves at their current, depleted level, let alone raising them. He also called the government's plans for revising energy subsidies "very ambiguous."

In March 2012, Ahram Online obtained a copy of the eight-page document listing the interim government's proposals which included a raft of controversial economic amendments.

Key to the proposal was cutting public debt to some 60-65 per cent of Gross Domestic Product (GDP) by 2016/17, mainly through raising tax revenues and one-off sales.

The document proposed a shake-up of Egypt's sales tax, including unifying rates, simplifying rules and rationalising exemptions.

Also in March, Mohamed Morsi, then head of the FJP, was quoted on the party's official website as saying that the party would accept help from institutions such as the IMF in a way that would serve the public interest, develop Egypt's economy and bring growth.

Islamist MPs caused a stir in Egypt's parliament in May when they declared that a $200 million World Bank development loan was against Islamic law.

Several Islamist parliamentarians blasted the international loan, aimed at Egyptian sanitation projects, saying interest payments to the World Bank qualify as usury. Islamic law prohibits usury, the collection and payment of interest.

"This loan will lead us all to hell," the state-run MENA news agency quoted MPs as saying at the time.

Sayed Askar, one of the Muslim Brotherhood's main religious figures and head of the parliament's religious committee, said the loan should be rejected on the basis of Islamic principle.



After

On Monday, the former head of the budget and planning committee in the now-dissolved parliament Saad El-Husseini said he completely supports the IMF loan, even if it entails what is considered usury.

El-Husseini added that in Sharia law "necessities allow the forbidden," according to a report on Ahram's Arabic-language news-site.

In addition, Adel-Hafez El-Sawi, the FJP's Economic Commission Chairman told Ahram Online on Monday that "we never rejected the idea of borrowing."

El-Sawi explained that what the party previously opposed were the economic reforms suggested by Ganzouri's government to attain IMF funding. The plans were not transparent and ignored key issues regarding public debt, wage structures, taxes and governmental spending, he said.

The FJP also issued a statement on Sunday night saying it did not take a "negative" stance towards an International Monetary Fund (IMF) loan to Egypt.

"Our decision not to reject borrowing is based on Egypt's supreme economic interest," the statement read.

For its part, the Nour Party said on Sunday that it had never objected to overseas loans and denied that it had ever claimed an IMF loan was tantamount to usury.

Emad Abdel-Ghafour, head of the party and a recently-appointed member of Morsi's presidential team, told Ahram Online that the party will not approve any loan until it knows the conditions.

“Economists told us that this loan and its interest rates need not be regarded as usury," he said.

Abdel-Ghafour said that any previous statement from a Nour Party member rejecting such loans was not representative of party opinion and was purely a personal view.

http://english.ahram.org.eg/News/51412.aspx