♠ Posted by Emmanuel in IMF,Middle East
at 1/23/2012 06:38:00 AM
Elected with a convincing majority, Muslim Brotherhood-linked legislators under the Freedom and Justice Party umbrella are now the forces to be reckoned with in Egypt. It will be fun to see how Yanqui hypocrites of the "elections are great...except when you elect Hamas" variety will respond if and when more elements of sharia law are enshrined there. While it's certainly debatable whether hardline Islamism is a marked improvement over despotism in the freedom department, one thing is for certain: the economic situation in Egypt is deteriorating. Foreign investment has fled. So have the tourists.You certainly can make the argument that Egypt now has the worst of both worlds: a worsening climate for freedom in the very shallow American understanding of being able to do whatever you want and a free-falling economy. What an improvement. Isn't all this progress wrought by the "Arab Spring" grand? Recently, the Egyptians cried uncle and asked the IMF for help to the tune of $3.2B:
Foreign financial investors have given Egypt a wide berth since street protests erupted a year ago, forcing the government to rely on local banks for funds, a situation that has forced up yields on treasury bills and bonds to levels that some economists say are unsustainable. The new negotiations take place as the ruling military council tries to fend off criticism of its temporary rule from pro-democracy groups and grapple with social tension caused by poverty and rising prices.What? You mean those stupid foreigners haven't been impressed with all this US-inspired "Internet freedom"? Such a surprise. Returning to the worst of both worlds POV, we now have deleterious effects from attempting to combine Mubarak's multifarious subsidies and expectations of more (currently non-existent) economic opportunities:
The new cabinet nominated in November needs to cut spending but risks further angering a population that depends on state subsidies and whose hopes for an improvement in living standards were raised by the uprising that ousted President Hosni Mubarak...[T]he projected budget deficit [in 2012] was now 144 billion Egyptian pounds ($23.85 billion), or 8.7 percent of estimated gross domestic product. That compares to an official estimate for the previous year of 9.5 percent.Now to the interesting Allah and moolah part. Even the incoming Muslim Brotherhood leadership that is replacing the military "caretaker" government recognizes that Egypt is in very bad financial straits. However, it appears that they may need a hefty dose of divine intervention since they believe the IMF will provide conditionality-free loans:
Egypt's Muslim Brotherhood would consider supporting a deal to obtain emergency aid from the IMF, providing there are no conditions attached and alternatives are explored first, a senior official in the Brotherhood said..."There is no objection to borrowing. But it must be without conditions. And it should be in accordance with national priorities," Ashraf Badr El-Din, the head of the Islamist movement's economic policy committee, told Reuters in an interview on Thursday.Admittedly, there's a lot of amateurishness in their understanding of what the IMF requires of borrowers after being marginalized all these years under Mubarak:
IMF aid is sensitive in Egypt because of national pride and because the Fund is expected to ask the government for assurances on curbing state spending — an explosive issue in a country where frustration over poverty has been causing unrest...The Brotherhood's ambivalent position on IMF aid reflects both its inexperience in handling economic policy — its activities were severely restricted under Mubarak — and the fact that it is not clear how much it will be able to shape policy in the next government.Indeed, the IMF mission which recently visited Egypt met with the incoming Muslim Brotherhood leadership:
But there is also anger over the IMF negotiations with an unelected, non-civilian government that has failed to articulate a comprehensive economic vision and presided over a repressive transition to democratic rule.The wording of the IMF official statement is obtuse on this point but confirms that the Muslim Brotherhood - IMF meetings did take place. I must meet with the writers of such statements at the IMF who have to deal with such euphemisms day in, day out. I am sure they have a side-splittingly good sense of humour to write such things...
To its credit, the IMF delegation sent to Egypt - and which departed yesterday - met with leaders of the Muslim Brotherhood's Freedom and Justice Party, whose candidates just won a near majority in parliament, to discuss assistance and economic policy. Some saw it as a sign that the IMF preferred not to negotiate with the generals, instead ensuring the assistance had broad and legitimate political support.
The program developed by the Egyptian authorities and its key policies are currently being discussed with emerging political parties to ensure broad political support. This should help reduce uncertainty and boost confidence in the program’s successful implementation. During our visit, we also had the opportunity to meet with the economic committee of the Freedom and Justice Party and members of other parties...Recent Egyptian history is marked by protests aplenty--now including against the IMF--but progress? Not much at all. Still, the possibilities are endless for this Muslim Brotherhood and IMF, religious 'n' market fundamentalists brew. Just think: If matters go sour, will somebody declare a fatwa on IMF officials? You hope otherwise but these are mostly bad possibilities despite being incongruously entertaining in the Benjamin Barber sense.
Can you say "fiscal austerity"? How about "tranche"?
