Friday, Aug 24, 2012
Egypt’s negotiation for a $4.8 billion (Dh17.63 billion) five-year loan agreement with the International Monetary Fund (IMF) comes at the right time when an elected civilian government strengthens grip on power and begins to focus on the core economic issues faced by the embattled country.
Egyptian people took to the streets at the beginning of the last year to overthrow the three-decade-old regime of Hosni Mubarak, not just to change the old guard, but to elect a democratic government that will unlock potential for economic growth, social development and eventually improve living conditions of the millions who have been ignored by the previous regimes.
The government’s move comes a few weeks after Qatar Government extended $2 billion support to Egypt — the third largest Arab economy. During the last 12 months, the government borrowed nearly $12 billion, of 4.5 per cent of the country’s GDP from the central bank to finance the budget deficit. Foreign currency reserves have fallen to well under half the level seen before the fall of Mubarak regime.
Egypt faces considerable challenges, including the need to restart growth and reduce budget and balance of payments deficits, IMF Managing Director Christian Lagarde said following her meeting with Egyptian leaders. Getting the country’s economy back on track and raising the living standards for all will not be an easy task. The Egyptian people have legitimate expectations for a better life and greater social justice.
An IMF deal would help Egypt to add credibility to economic reforms needed to restore investor confidence. As Egyptians look forward to a better future, its government should ensure that these funds are spent well in a transparent way to improve the country’s economy.
However, the government should also fast-track economic reforms that will help the return of the domestic investors, attract foreign direct investment and generate employment — a ticking bomb that has been a key ingredient behind the Arab Spring.
A failure is no longer an option for Egypt.
Gulf News
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