IMF Loan: The Counter-Revolution’s Most Aggressive Attack

Statement by the Revolutionary Socialists

Approving a $12 billion IMF loan to Egypt over three years was no surprise. The Egyptian regime had already fulfilled all the IMF’s conditions to secure the loan, granting investors everything the fund recommended—and even more.
This loan reflects the counter-revolution’s continuation of Mubarak-era economic policies, which impoverished workers and people experiencing poverty while allowing a small elite close to power to accumulate enormous wealth through monopolies and privileges. These policies placed a heavy burden on the majority of Egyptians and were among the key causes of the January Revolution.

Now, with the disbursement of the first $2.75 billion tranche, the regime is cementing its authoritarian and oppressive approach. Major economic decisions—some of the most transformative in Egypt’s history—were made without consultation with unions, political organizations, or civil society groups. This demonstrates that policies of impoverishment and exploitation are intrinsically linked to repression and authoritarianism. The Protest, VAT, and Civil Service Law are all part of the same framework.

Aside from IMF recommendations, the only input the authorities considered was that of investors. These investors enjoy strong representation in the Supreme Investment Council, chaired by Abdel Fattah el-Sisi. The council convened just before the loan’s approval, postponed the three-year stock market transaction tax, offered investors no or minimal-cost land, and granted extensive tax exemptions.

The burden of funding these extraordinary benefits—more significant than those granted even during colonial times—has been placed squarely on people experiencing poverty. The VAT has increased the cost of essential goods, while the Civil Service Law has reduced public sector wages. Energy prices have also been raised, ensuring that low-income Egyptians bear the costs of the privileges given to investors.
One of the most significant steps leading up to the loan was the government’s decision on November 3 to float the Egyptian pound, which caused its value to plummet and sharply increase fuel prices. These measures were implemented without consideration for their devastating effects on the cost of essential goods for people experiencing poverty. In response, the government offered token compensations, such as a paltry three-pound increase in food subsidy cards, as if such a minor adjustment could shield families from poverty. The government also reduced the eligibility age for the “Takaful and Karama” pension program from 65 to 60 years, another inadequate gesture.

Meanwhile, the working class continues to face relentless blows, as though it alone is responsible for the economic crisis. Proposed laws targeting labor unions and workers’ rights aim to strip them of job security and weaken their ability to organize and defend their interests.

The state budget starkly reflects these class biases. In the 2016-2017 fiscal year, targeted corporate taxes (under “corporate profits tax”) amounted to 45.1 billion Egyptian pounds, while consumption taxes on cigarettes alone were projected to yield 42.5 billion pounds. This reveals how the state alleviates burdens on investors while shifting them onto ordinary Egyptians.

The government promises that the economy will improve once the IMF funds strengthen foreign currency reserves, arguing that this will earn Egypt the IMF’s “seal of confidence” and attract foreign investment. But how can investments grow in a climate of political repression and suppressed freedoms? The IMF has extended loans to countries like Yemen and Iraq—are investors flocking to these places?
This loan will only deepen austerity measures and impoverishment policies, further eroding the living standards of the working and middle classes. How can we trust a government that addresses external debt by taking on even more debt?

The state’s economic policies, supported by unprecedented levels of repression, demand a united response. Professional and labor unions, political parties, and civil society organizations must join forces to support the poor and marginalized in resisting this assault on their livelihoods. Similar policies in Latin America, East Asia, and Europe have sparked labor and social struggles. In those regions, workers, pensioners, and the poor fought to protect their rights, leading to the rise of powerful grassroots movements that reshaped their countries’ political paths and overthrew oppressive regimes.
Today, the current crisis in Egypt places a heavy burden on unions, political organizations, and civil society. The counter-revolution’s attack spares no one, and collective resistance is essential to defend the rights and dignity of the poor and working class.