Egypt’s Muslim Brotherhood leaning toward IMF loan

The International Monetary Fund (IMF) headquarters building is seen in Washington, DC in this May 15, 2011 file photo. (AFP PHOTO/YURI GRIPAS)

CAIRO: The Egyptian Muslim Brotherhood’s political wing supports Egypt’s request for an International Monetary Fund loan, but first it wants the government to produce a coherent plan to battle corruption and get costs under control, its economic policymakers say.

The government said earlier this year it had formally requested a $3.2 billion IMF loan to stave off a financial crisis after more than a year of political and economic turmoil.

The IMF has asked Egypt to draw up an economic reform plan with benchmarks and targets, line up aid pledges from other donors and sell the plan to the country’s political forces, especially the Brotherhood’s Freedom and Justice Party, which won nearly half the seats in the new parliament.

Analysts say any reservations the Brotherhood has about the IMF are largely based on concerns of a public backlash against the Washington-based lender, which in the 1990s imposed liberalization policies that were later blamed for hurting the poor.

The Brotherhood may have no choice but to accept an agreement in the end, but it seems to be following a strategy of delaying as long as possible while calling for austerity and emphasizing it is not opposed to foreign borrowing.

“We are not for the agreement nor against it. This is the responsibility of the government,” said Saad al-Hoseiny, a member of the FJP and chairman of parliament’s Planning and Budget Committee.

“The government will take this step, and we will not prevent it. But we want to be certain that it goes along a sound economic path and does not resort to borrowing as the easy way out,” he told Reuters in an interview this week.

Hoseiny also said the government had been meeting with parliament to build support for the IMF loan.

The IMF said Thursday it was studying a document the Egyptian government had given it, and expected to send a mission to Cairo in the second half of March.

The Brotherhood, whose members include entrepreneurs and established businessmen, broadly supports a market economy, although it says it wants greater social justice.

Ahmad al-Naggar, a member of the FJP’s internal economic committee, said the program outlined by IMF regional director Masood Ahmad in a meeting with FJP leaders in January had no demands that touched on Egypt’s sovereignty.

“The terms [of the loan] are good. The interest rate is 1.1 percent. There are no conditions that we see as interfering in internal politics. The IMF stressed that fully in the meeting,” Nagger said.

The IMF told the FJP it had changed its approach to lending to be more efficient and to bolster its image in developing countries.

Since then, the FJP had only received a summary of the government’s 18-month reform plan, not the whole document, Nagger said.

It got more details in a broad policy statement that Prime Minister Kamal al-Ganzouri read out to parliament on Feb. 28.

A version of this article appeared in the print edition of The Daily Star on March 09, 2012, on page 5.




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