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article imageEgypt rejects IMF offer of emergency rescue loan

By Ken Hanly     Mar 12, 2013 in Politics
Cairo - Egypt has rejected an offer by the IMF of a $750 million emergency rescue loan even though talks remain stalled on a larger $4.8 billion loan.
Egypt has ruled out a fallback on emergency measures. The IMF offer came as there were delays in finalizing the larger loan. The emergency aid, part of the IMF's Rapid Financing Instrument, would not have replaced that loan.
The Egyptian Ministry of Finance, El-Morsi Hegazy said that Egypt had launched a full economic reform program that would entitle to the much larger loan rather than any emergency measures. He insisted that the Egyptian economy was on the road to recovery.
However, the economy is in poor shape and the deficit growing. The IMF had no comment on Egypt's rejection of the emergency loan. Hegazy insisted that Egypt had begun implementing all the economic reforms demanded by the IMF as a condition of the loan. These reforms are in fact austerity measures and will hurt the vanst number of poor people in Egypt who live on less than two dollars a day.
The IMF tries to impose neo-liberal policies which often hurt the poor, for example by forcing reduction of subsidies to basic foodstuff, and President Mursi is aware that he may be facing social unrest as a result of meeting the IMF conditions. The Egyptian government has invited the IMF for further talks but no date was set for a meeting. The govenrment received Egypt's revised economic program and is said to be studying it. Wafa Amr, an IMF spokesperson, said:.“We are in discussion with the authorities on how best to support Egypt, including on the timing of the next staff visit.”
Egypt's currency reserves have dropped from $36 billion in January of 2011 to just $13.5 billion at present. Egyptians have been hit by rising prices of some basic commodities. The government also plans to raise taxes and reduce fuel subsidies. John Kerry's recent visit to Egypt was in part designed to sell the austerity program demanded by the IMF. As reported in the Digital Journal, to sweeten the demands he offered US aid to Egypt.
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