From hell to heaven: Egypt Islamists change tack on IMF loan

[DJKeefy]

Once seemingly opposed to international borrowing, Islamist parties are now giving approval to Egypt's request for a $4.8 billion loan; Ahram Online compares the Islamists' stances to IMF funding before and after Morsi's election.

Egypt's Islamist politicians seem to have had a rapid about-face with regard to a prospective multi-billion dollar loan from the International Monetary Fund.

Before an Islamist held high office, many religious conservatives poured scorn on the idea of borrowing from the international institution, an idea mooted by the transitional government of Essam Sharaf in spring 2011.

Some politicians called such a measure 'haram;' others suggested there was no need for IMF funding and the budget shortfall could be made up in other ways.

Now, with leading figure of the Muslim Brotherhood President Morsi holding the presidency, the Brotherhood affiliated Freedom and Justice (FJP) and Salafist Nour parties both seem to be backing the government's request for a facility from the IMF.

A request was made last week for a $4.8 billion loan during a Cairo meeting between President Mohamed Morsi and the fund's chief Christine Lagarde.

Below, Ahram Online below compares the Islamists' stances to IMF funding before and after Morsi's election.


Before.................

In February 2012, the FJP's official website quoted Ashraf Badr Eddin, deputy of the planning and budget committee of the now-dissolved People's Assembly, as saying Egypt did not need IMF loans.

Badr Eddin explained that there were alternatives that could bring in greater revenues than the loan. These include amending international gas-sale agreements, raising energy prices for energy-intensive factories, reviewing the subsidies system, and collecting tax arrears.

In March, when former prime minister Kamal El-Ganzouri and his government were taking steps to attain IMF funding, Saad El-Husseini, a leading member of the FJP told Reuters that the government should first seek all other means to improve its standing. He suggested "selling Islamic 'bonds' to foreign institutions and land to Egyptians abroad, as well as slashing subsidies to energy-intensive industries."

El-Husseini rejected the economic reform programme proposed by the government to qualify for the loan, saying it made no provisions for maintaining foreign reserves at their current, depleted level, let alone raising them. He also called the government's plans for revising energy subsidies "very ambiguous."

In March 2012, Ahram Online obtained a copy of the eight-page document listing the interim government's proposals which included a raft of controversial economic amendments.

Key to the proposal was cutting public debt to some 60-65 per cent of Gross Domestic Product (GDP) by 2016/17, mainly through raising tax revenues and one-off sales.

The document proposed a shake-up of Egypt's sales tax, including unifying rates, simplifying rules and rationalising exemptions.

Also in March, Mohamed Morsi, then head of the FJP, was quoted on the party's official website as saying that the party would accept help from institutions such as the IMF in a way that would serve public interest, develop Egypt's economy and bring growth.

Islamist MPs caused a stir in Egypt's parliament in May when they declared that a $200 million World Bank development loan was against Islamic law.

Several Islamist parliamentarians blasted the international loan, aimed at Egyptian sanitation projects, saying interest payments to the World Bank qualify as usury. Islamic law prohibits usury, the collection and payment of interest.

"This loan will lead us all to hell," the state-run MENA news agency quoted MPs as saying at the time.

Sayed Askar, one of the Muslim Brotherhood's main religious figures and head of the parliament's religious committee, said the loan should be rejected on the basis of Islamic principle.


After.................

On Monday, the former head of the budget and planning committee in the now-dissolved parliament Saad El-Husseini said he completely supports the IMF loan, even if it entails what is considered usury.

El-Husseini added that in Sharia law "necessities allow the forbidden," according to a report on Ahram's Arabic-language news-site.

In addition, Adel-Hafez El-Sawi, the FJP's Economic Commission Chairman told Ahram Online on Monday that "we never rejected the idea of borrowing."

El-Sawi explained that what the party previously opposed were the economic reforms suggested by Ganzouri's government to attain IMF funding. The plans were not transparent and ignored key issues regarding public debt, wage structures, taxes and governmental spending, he said.

The FJP also issued a statement on Sunday night saying it did not take a "negative" stance towards an International Monetary Fund (IMF) loan to Egypt.

"Our decision not to reject borrowing is based on Egypt's supreme economic interest," the statement read.

For its part, the Nour Party said on Sunday that it had never objected to overseas loans and denied that it had ever claimed an IMF loan was tantamount to usury.

Emad Abdel-Ghafour, head of the party and a recently-appointed member of Morsi's presidential team, told Ahram Online that the party will not approve any loan until it knows the conditions.

“Economists told us that this loan and its interest rates need not be regarded as usury," he said.

Abdel-Ghafour said that any previous statement from a Nour Party member rejecting such loans was not representative of party opinion and was purely a personal view.

Source: http://english.ahram.org.eg/News/51412.aspx

[Horus]

I think it's called being two faced but you know what they say "needs must when the devil drives"

[Ra-Mont]

I'm glad they eventually had good sense enough to take that loan. Egypt needs all the financial push it can get while it slowly recovers from what went on before.

[Horus]

I doubt if they had any alternative other than to take the loan with Egypt slowly sliding into bankruptcy. I am always amused by the way that these new brooms very quickly find that in the real world all their posturing and ideals quickly come to nought in the face of reality, I am not saying that the old regime was anything other than corrupt, but they did seem to keep the country running reasonably well. How often do we see someone new get into power on promises of fairness and change only to see the hopes of the common man dashed yet again when the reality of the situation hits home. This type of politicking happens all over the world and not just in Egypt when the people put their faith in the new saviour who promises them all a brighter future, but the real truth lies elsewhere.

Maybe, just maybe, if this guy can keep religion out of the equation (doubtful) and concentrates on ending a culture of corruption and Baksheesh from the top down and that will take some doing. If he can motivate a de-motivated workforce by increasing their wages (doubtful) to a decent living standard without having to subsidise just about everything from gas, bread, electricity and fuel and mortgage Egypt to pay for it. (again doubtful). If he can control a population that has realised its own potential for forcing political change without having to use force himself to suppress that same population once they get tired of “jam tomorrow” (again doubtful) and if he can keep the peace with his neighbours and keep the army on his side when things start to get bad without them staging a coup against him, then he may just succeed.

Me? I hope he succeeds and I wish him well and if he pulls it off then at last we will have seen a great politician.