Even as the Egyptian Government looks to revive the country's economy, it has turned down the International Monetary Fund (IMF)'s stand-by agreement. A bold move no doubt, but was it a populist decision or purely a financial one? And if the Egyptian Government's decision to turn down the IMF a move to spurn Mubarak-praising entities, why is it borrowing from the Gulf?
Egypt's decision to turn down International Monetary Fund (IMF) and the World Bank is a bold move, given that the country's fiscal situation remains fragile.
In April and May this year, the Egyptian government had estimated that the country had a financing gap in the range of $9-11 billion during 2011/12, and reached out to their bilateral and multilateral partners, including the IMF, for financial assistance.
The IMF's 12-month stand by agreement amounting to $3 billion.
"This arrangement would have supported the government's homegrown economic plan, which aimed at promoting social justice through higher social spending, preserving macroeconomic stability, and designing a road map for reforms after the elections," says Ratna Sahay, Deputy Director of the Middle East and Central Asia Department at the IMF.
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