Egypt Islamists change tack on controversial IMF loan

Egypt's Islamist politicians seem to have had a rapid about-face when it comes to their attitudes to a prospective multi-billion dollar loan from the International Monetary Fund Al Ahram reported

Before an Islamist held high office, many religious conservatives poured scorn on the idea of borrowing from the international institution, an idea first mooted by
the transitional government of Essam Sharaf in spring 2011.

Some politicians called such a measure 'haram'; others suggested there was no economic need for IMF funding and the budget shortfall could be made up in other wats.

Now, with President Morsi in power, the Freedom and Justice (FJP) and Nour parties both seem to be backing the government's request for $4.8 billion from the IMF.

The request was made last week after a Cairo meeting between President Mohamed Morsi and the fund's chief Christine Lagarde.

Ahram Online below compares the Islamists' stances to IMF funding before and after Morsi's election.

Before:

In February 2012, the FJP's official website quoted Ashraf Badr Eddin, deputy of the planning and budget committee of now-dissolved people's assembly, as saying Egypt would have no need for IMF loans.

Badr Eddin explained that there were alternatives that could bring in greater revenues than the loan. They includes amending international gas-sale agreements, raising energy prices for energy-intensive factories, reviewing the subsidies system, and collecting tax arrears.

In March, when former prime minister Kamal El-Ganzouri and his government were taking steps to attain IMF funding, Saad El-Husseini, a leading member of the FJP told Reuters that the government should first seek all other means to improve its standing, "including selling Islamic 'bonds' to foreign institutions and land to Egyptians abroad, as well as slashing subsidies to energy-intensive industries."

El-Husseini rejected the economic reform programme proposed by the government to qualify for the loan, saying it made no provisions for maintaining foreign reserves at their current, depleted level, let alone raising them. He also called the government's plans for revising energy subsidies "very ambiguous."

In March 2012, Ahram Online obtained a copy of the eight-page document listing the interim government's proposals which included a raft of controversial economic amendments.

Key to the proposal was cutting public debt to some 60-65 per cent of Gross Domestic Product (GDP) by 2016/17, mainly through raising tax revenues and one-off sales.

The document proposed a shake-up of Egypt's sales tax, including unifying rates, simplifying rules and rationalising exemptions.

Also in March, Mohamed Morsi, then head of the FJP, was quoted on the party's official website as saying that the FJP would accept help from institutions like the IMF in a way that would serve public interests, develop Egypt's economy and bring growth.

Islamist MPs caused a stir in Egypt's Parliament in May when they declared that a $200 million World Bank development loan was against Islamic law.

Several Islamist parliamentarians blasted the international loan, aimed at Egyptian sanitation projects, saying interest payments to the World Bank qualify as ursury.

"This loan will lead us all to hell," the state-run MENA news agency quoted MPs as saying at the time.

Sayed Askar, a former FJP MP, one of the Muslim Brotherhood's main religious figures and head of the parliament's religious committee, completely rejected the loan on the basis of Islamic beliefs.

After:

On Monday, the former head of the budget and planning committee in now-dissolved parliament, Saad El-Husseini said he completely supports the IMF loan, even it is considering 'usury' (a concept forbidden in the Quran).

El-Husseini added that in Sharia law "necessities allow the forbidden", according to a report on Ahram's Arabic-language news-site.

In addition, Adel-Hafez El-Sawi, the FJP's Economic Commission Chairman told Ahram Online on Monday that "we never rejected the idea of borrowing."

El-Sawi explained that what the party previously opposed were the economic reforms suggested by Ganzouri's government to attain IMF funding. The plans were not transparent and ignored key issues regarding public debt, wage structures, taxes and governmental spending, he said.

The FJP also issued a statement on Sunday night saying it did not take a "negative" stance towards an International Monetary Fund (IMF) loan to Egypt.

"Our decision not to reject borrowing is based on Egypt's supreme economic interest," the statement read.

For its part, the Nour Party, an ultra-Islamist group, said on Sunday that it had never objected to overseas loans and that it had never dubbed an IMF loan taboo or tantamount to usury.

Emad Abdel-Ghafour, head of the party and a recentl appointed deputy to the president, told Ahram Online that the party will not approve any loan until it knows the conditions.

"Economists told us that this loan and its interest rates are not regarded as usury," he said.

Abdel-Ghafour said that any previous statement from a Nour Party member rejecting such loans was not representative of party opinion and was purely a personal view.