The International Monetary Fund head of delegation for Egypt, Chris Jarvis (L) and Egypt’s Minister of Finance Amr al-Garhy attend a joint press conference in Cairo. (AFP)
An administration court referred on Tuesday a lawsuit calling for the suspension of the $12 billion loan agreement between Egypt’s government and the International Monetary Fund (IMF) to the state commissioner’s body.
The referral was based on a lawsuit filed by lawyer Aly Ayoub that called for the suspension of the agreement with the IMF and requested that the deal be referred to Egypt’s parliament, Ahram Arabic news website reported.
The lawsuit claims that the IMF loan violates article 127 of the constitution, -- which requires the approval of the parliament – and includes claims to suspend the implementation of the agreement until approval from the House of Representatives.
Article 127 of the Egyptian constitution stipulates that the country’s executive power cannot obtain a loan or funding or engage in a project that is not listed in the approved state budget -- which entails expenditure from the state treasury within the subsequent period -- except with the approval of the House of Representatives.
Egypt's cabinet approved the IMF loan agreement in a meeting on 11 January, referring it to the country's parliament.
In mid-August 2016, Egypt reached a staff-level agreement with the IMF over the $12 billion loan to endorse the country’s fiscal reform programme, which the government embarked on in 2014 in an attempt to curb the growing state budget deficit, estimated at 12.2 percent of GDP in 2015/16.
The loan, which will be spaced out over the period of three-years, required cutting subsidies and the introduction of new taxes, such as the Value Added Tax.
Last November, the Central Bank of Egypt (CBE) received an initial $2.75 billion tranche following the IMF board’s approval of the loan.
On 3 November 2016, before the loan, the CBE decided to freely float the pound and raise key interest rates as part of a set of reforms aimed at alleviating a dollar shortage and stabilising the country's flagging economy.