Mursi says IMF loan won’t violate Islamic banking laws

Chief of the International Monetary Fund (IMF) French Christine Lagarde arrives to attend the 94th session of the Gulf Cooperation Council (GCC) Financial and Economic Cooperation Committee in Riyadh, on October 6, 2012. (AFP PHOTO/FAYEZ NURELDINE)

CAIRO: Egyptian President Mohammad Mursi sought to reassure conservatives at home that a request for a loan of nearly $5 billion in aid from the IMF would be compatible with Islamic banking principles.

Egypt asked for a $4.8 billion loan in August from the International Monetary Fund, which in turn urged economic reforms.

“This does not constitute Riba” the Egyptian president said, in reference to abusive interest rates as defined by Islamic jurisprudence.

Islamic law prohibits usury but applying interest in some circumstances is acceptable.

“I would never accept that Egyptians live off Riba,” Mursi told tens of thousands of people who packed the Cairo stadium to commemorate the 39th anniversary of the October War of 1973.

“We would rather starve than eat off Riba,” Mursi said.

IMF approval of Egypt’s request would come as a vital boon to its reeling economy.

An economic slump following the February 2011 ousting of Hosni Mubarak aggravated the main problems inherited from his regime: budget-draining subsidies, extreme inequality, corruption and poor infrastructure.

A chief concern is the decline in central bank reserves which have plunged from $36 billion at the start of January 2011 to $14.4 billion, threatening Egypt’s ability to import basic goods such as wheat and refined oil products.

IMF director general Christine Lagarde, who was presented with the loan request during a visit to Cairo in August, said the lender “will accompany Egypt” as it undertakes its challenging journey of reform.

But Lagarde made no firm commitments, saying the amount, details and terms of the loan program – which Cairo hopes to seal by the end of the year – were still under discussion.

Speaking in Riyadh Saturday, Lagarde said the IMF was not imposing conditions on the negotiations.

A version of this article appeared in the print edition of The Daily Star on October 08, 2012, on page 5.




Your feedback is important to us!

We invite all our readers to share with us their views and comments about this article.

Disclaimer: Comments submitted by third parties on this site are the sole responsibility of the individual(s) whose content is submitted. The Daily Star accepts no responsibility for the content of comment(s), including, without limitation, any error, omission or inaccuracy therein. Please note that your email address will NOT appear on the site.

Alert: If you are facing problems with posting comments, please note that you must verify your email with Disqus prior to posting a comment. follow this link to make sure your account meets the requirements. (

comments powered by Disqus



Interested in knowing more about this story?

Click here