Egyptian President Mohamed Morsi has come under fire from the country's Salafists for agreeing to an IMF loan of $4.8 billion, in strict contravention of the Islamic law which forbids paying interest on loans.
In August Digital Journal reported Egypt formally requested a bank loan of $4.8 billion from the IMF. The loan was requested by Egypt's President Mohamed Morsi, head of the Muslim Brotherhood.
Although Egypt's parliament was dissolved in June, President Morsi does not need parliament's approval to approve any agreement with the IMF. The Ahram Org. reported Alaa El Hadidi, spokesman for Prime Minister Hisham Qandil, said:
"In accordance with the constitutional declaration, any international agreement needs to be approved by the legislative authority, and in the absence of parliament, President Mohamed Morsi is empowered to take such decisions."
It was confirmed on Monday that Egypt will go ahead with the IMF loan agreement.
The loan agreement has created controversy amongst Egyptian salafists who cite Islamic law which prohits loans with interest (riba) as forbidden (haran). Al Arabiya reported some ultra-Orthodox Islamic clerics have criticized Morsi for seeking the IMF loan, objecting that it is not permissible under Sharia law. If Egypt had used an Islamic banking institute for its monetary needs that would have been permissible.
Egypt's ultra-orthodox Nour party has argued that the IMF is loan is permissible under Islamic ‘mudtar’ which means severe conditions make the loan allowable. The IMF loan is repayable at just 1.1 percent interest.