Egyptians not in favor of IMF rescue loans

International Monetary Funds experts will visit Egypt in the coming days to conduct a more specific survey for the rescue plan. (Reuters)

Many Egyptians are not seen in favor of the intended International Monetary Fund (IMF) rescue loan of 4.8 billion U.S. dollars, as the government may raise prices and impose extra taxes.

According to local media reports on Wednesday, the country is expected to receive the first part of the loan before this July.

IMF experts will visit Egypt in the coming days to conduct a more specific survey for the rescue plan, reports said.

Hamdi Abdelazim, an economist at Sadat Academy for Management Sciences said that the IMF loan is a project of the Egyptian economic reform.

“For this economic project, we must reconsider their ideas on international financial balance deficits. To meet their conditions -- reducing budget deficit, the Egyptian government has to raise taxes and reduce expenditure,” said Hamid.

However, imposing extra taxes is likely to cause more chaos and worsen the country’s ailing economy. Now, Egypt has seen workers protesting against increasing taxes, which has made it hard for local companies.

Another way of cutting the budget deficit is to raise prices, meanwhile, reducing national subsidies. However, the higher fuel and food subsidies to the public have become the traditional national policy.

In the fiscal year 2012-2013, the Egyptian government subsidized fuel at around 10 billion U.S. dollars.

But according to an official statement from the Central Bank of Egypt (CBE), the country’s foreign fund reserves declined from 36 billion US dollars in January 2011 to 13.5 billion U.S. dollars by the end of February 2013.

Thus, the government has to reduce oil and wheat exports, and plans to cut the fuel subsidies, angering the public.

“I only spent 16 Egyptian pounds refueling every four days before Egypt’s turmoil. But now, I have to pay 105 Egyptian pounds for the same amount of oil. I have not refueled this month because it’s too expensive,” said Mohammed, a local driver.

“I don’t agree. Why will they raise oil prices for the poor and mini-bus drivers? If the oil price continues increasing, drivers have to pass the higher costs onto their clients,” said another drive.

Egypt is currently struggling for a rescue loan of 4.8 billion U.S. dollars from the IMF to survive a severe financial crisis created by two years of turmoil and instability following the upheaval in early 2011 that ousted former president Hosni Mubarak.

Last Update: Friday, 22 March 2013 KSA 15:03 - GMT 12:03