Rebel Economy has compiled a non-exhaustive timeline of Egypt’s 30 year history with the IMF. We welcome additions and important dates we may have missed.
Egypt has a choppy history with the International Monetary Fund (IMF) dating back to the 1980s.
Then, the international bank put pressure on the country to carry out far-reaching economic reforms that were met with widespread criticism.
Four years into Hosni Mubarak’s tenure as president (1985), the country faced difficulty paying $31 billion of foreign debts and the IMF warned that Egypt’s balance of payments was undergoing a “serious deterioration”. There was an “urgent need” for an austerity project, the IMF said at the time.
For the next decade, the country was to witness some of the most dramatic economic upheavals since Anwar Sadat’s “infitah” policy, or opening up of Egypt’s economy.
Under proposals agreed with the IMF, an economic plan for Egypt in the 1980s paved the way for Egypt to float the currency, cut the budget deficit dramatically, then in the 1990s, implement a swathe of privatisation deals.
That is when everything went wrong.
In 1996, despite strong disagreements of the plan, the Egyptian government went ahead with the privatisation of its national companies. At the time, of 314 public sectors identified for sale, 24 were sold and another 72 were set to be auctioned off. Opposition groups, especially Nasserists, attempted to block sales through court orders but fail.
This decision haunts Egypt to this day and has prompted critics of the IMF to cast aspersions on the current $4.8 billion package being discussed. The loan has been described as “bondage and slavery”, and a decision that will force Egypt “to sell the pyramids”. For some, the IMF are simply liars and opportunists.
But years have gone by, and the IMF institution is a different animal, with different leaders. Egypt is also not so disconnected from aid as it would like to be . It has a history of having its debt written-off, which if had not happened, may have left Egypt bankrupt, struggling to pay its bills.
Accepting aid may be a contentious subject if taken as the only solution to Egypt’s financial crisis, as Rebel Economy has mentioned before, but as with a currency devaluation, if it is applied within an intelligent broad economic reform package, it will benefit Egypt tremendously.
The issue of a currency devaluation warrants its own post, but for now, here is a senior advisor to the Muslim Brotherhood and Freedom and Justice Party, responding to RE’s questions on whether a devaluation is necessary: