SEARCH

Three decades of Egypt-IMF talks

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.

[vodpod id=Video.16524979&w=425&h=350&fv=]

Click here for the full timeline, both visually and in text form.

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:

Tweet from Senior Adviser to the Muslim Brotherhood & The Freedom & Justice Party, Steering Committee Member of the Renaissance Project

 



2 Comments


  • Posted October 30, 2012 at 2:04 pm | Permalink

    Thanks for the graphic. Here’s a few earlier Egypt-IMF dates from the book ‘The Muslim Brotherhood and Egypt’s Succession Crisis’ by Mohammed Zahid

    -1976 Egypt begins first discussion with IMF for an economic rescue package
    -1977 Egyptian government satisfies pre-loan conditions for public expenditure cuts by cutting bread subsidies, leads to the 1977 bread riots
    -Nov 1977 Egypt enters into negotiations for a $600 million loan, up from originally discussed $450 million.

    While economic reform is undoubtedly necessary, it’s always a shame when the people finally gain control over the government but are then conditioned by IMF assistance to forfeit all government control over the economy. As one of Mandela’s economic advisers asked in the first years of ANC rule in South Africa: “Hey, we’ve got the state, where’s the power?”

  • Posted November 4, 2012 at 12:36 pm | Permalink

    Thanks for this addition and your thoughts, interesting!




  • By Do Egyptians Really Want IMF Money? · Global Voices on December 25, 2012 at 7:50 pm

    [...] history of IMF work with successive governments in Egypt. The economy-focused blog Rebel Economy produced a timeline of Egypt's history with the IMF. When president Anwar Sadat started introducing [...]


Post a Comment

Your email is kept private. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>