New Loan, Deeper Crisis

Statement by the Revolutionary Socialists

Another loan is added to the list of loans taken by the Egyptian regime from the International Monetary Fund (IMF). The Minister of Finance, Mohamed Maait, announced the day before yesterday Egypt’s preliminary agreement with the IMF “at the expert level” regarding the details of a new loan program that the Egyptian government has been negotiating with IMF officials for several months. Maait stated that the agreement is awaiting the approval of the IMF’s Executive Board, after which its details will be announced “very soon,” according to a ministry statement.

The regime has become accustomed to borrowing from the IMF (in addition to borrowing from some countries), starting from the era of Sadat, who borrowed $185.7 million in January 1977. That loan required subsidy cuts, sparking a massive uprising rejecting the lifting of subsidies on bread. The same policy continued under Mubarak and his successors, accumulating more debts that were only repaid out of the pockets of the majority of Egyptians.

The “New Republic” economic policy is not new but old and worn out. The only “new” aspect is the increased size and frequency of these loans and the regime’s insistence on implementing their harsh conditions on millions of Egyptians to gain the trust of international institutions, especially the IMF, for more future borrowing, thus making borrowing a systematic “policy.” In the last six years alone, the regime has obtained three loans from the IMF: the first in 2016 for $12 billion, the second for $2.77 billion to address the repercussions of the coronavirus pandemic, and then a third loan of $5.2 billion in 2020.

The regime seeks a new loan to address an exhausted and debt-laden economy (debts constitute 94% of the Gross Domestic Product). However, the reason for this economic situation is the regime’s policies, its waste of resources, and its plunging the country into debt for projects that serve no one but itself. For example, the cost of construction projects is estimated at more than 6 trillion pounds, most of which are in new cities like the Administrative Capital and New Alamein, etc., serving only the interests of the regime and the upper classes. This is in addition to arms deals estimated at tens of billions of dollars to strengthen the regime’s relations with Western countries and silence their criticisms. In the face of debt crises and currency collapse, it seeks a new loan, which means new debts, like trying to extinguish a fire by pouring more gasoline on it!

And it doesn’t stop at the IMF. We have, for example, the UAE and Saudi Arabia. Due to the regime’s need to repay the installments and interest on the due debts, it sold last April minority stakes owned by the state in 5 leading and listed companies to the Emirati sovereign fund for $1.8 billion. This was preceded by the selling of Egypt’s shares in two other companies to the Emirati fund. Four months later, last August, the regime sold minority stakes in 4 other companies to the Saudi Investment Fund for $1.3 billion. The regime has overtly sold off the Egyptian people’s assets to Gulf investment to save itself from the economic predicament it has driven the country into.

IMF loans do not come without conditions. Reducing food subsidies, subsidies on services, unfair tax amendments, and more are all conditions imposed by the IMF that the Egyptian government complies with, only to be borne by the majority of the people, whom the regime cares for only as much as it can plunder from their pockets. The 2016 loan, for example, was contingent upon implementing a series of conditions, most notably passing the Value Added Tax law, the Civil Service law that curbed the growth of government wages, liberalizing energy prices, and ultimately liberalizing the pound itself. We have suffered greatly from these measures over the past years.

Such unfair conditions, which will lead to more impoverishment and living hardships, can only be passed with an iron fist that ensures the elimination of any popular or political movement that can confront these policies. This is what the regime has been diligently doing since 2013: repressing and intimidating millions to impoverish them without notable opposition. We reject the IMF loan, reject the borrowing policy in general, reject making the poor bear the cost of the crisis, and reject stripping the masses of their tools—unions, parties, independent press, etc.—with which they defend themselves against the regime’s ferocious assault on their livelihoods.