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The IMF agreement signed is expected to address the deep-rooted structural flaws in Egypt’s economy including the role of the military and inadequate social protection. However, there are concerns that the other provisions in the agreement such as austerity and the sale of state assets, may be counterproductive.
The International Monetary Fund announced in January its approval of US$ 3 billion loan to Egypt. The loan, to be repaid over a 46-month period is intended to support the government meet its budget and balance of payments and pop up the sagging economy. It is expected to set in motion another $14 billion in foreign funding.
The IMF agreement signed is expected to address the deep-rooted structural flaws in Egypt’s economy including the role of the military and inadequate social protection. However, there are concerns that the other provisions in the agreement such as austerity and the sale of state assets, may be counterproductive.
Human Rights Watch and Democracy in the Arab World Now (DAWN) allege that IMF’s approach overlooks the economic rights of millions of Egyptians who are struggling with spiralling costs exacerbated by the program. According to Human Rights Watch, Egyptians are facing an unprecedented cost-of-living crisis due to skyrocketing inflation and surging food and commodity prices. The Pandemic and the Ukraine war worsened the economic crisis.
In line with the IMF programme, the Central Bank of Egypt announced a shift to a flexible exchange rate in October leading to further depreciation of the pound by 23 percent and bringing the total depreciation since February 2022 to about 50 percent. This further increased the cost of import, and food prices in October climbed by 37 percent compared to the previous year.
Also Read;
https://trendsnafrica.com/egypt-to-tame-inflation-using-imf-loan/
https://trendsnafrica.com/world-bank-appreciative-of-economic-strides-made-by-egypt/
The new loan program proposes to increase the social spending floor, to 153 billion pounds (US$5.1 billion on January 24, 2023) from 115 billion ($7.3 billion on February 1, 2022) the previous year. Critics point out that the nominal increase gets washed out due to the depreciation of the currency making it inadequate to protect people’s economic rights from the multiple impact of the program’s reforms, high inflation, and Egypt’s low social spending baseline.
