CAIRO (MEMO) – The International Monetary Fund’s new loan agreement with Egypt leaves the economic rights of millions unprotected, Human Rights Watch (HRW) and DAWN have said.
The $3 billion loan is the fourth Egypt has received from the IMF since 2016 as the government grapples with surging inflation, soaring food prices and a high debt to GDP ratio.
It has been approved to help the Egyptian government meet its budget and balance of payments as the economy falls apart and goes some way towards addressing the opaque role of the military in the economy and inadequate social protection.
But the two human rights watchdogs say that several provisions in the loan, such as austerity and the sale of state assets, risk harming rights as the country grapples with spiraling costs amid the cost of living crisis.
Under the terms of the deal, the Central Bank of Egypt shifted to a flexible exchange rate in October last year, which caused the pound to depreciate by a further 23 percent which pushed the price of imports and food up even further.
According to the press release, by October 2022 food prices had already gone up by 37 percent from the previous year.
As one of the world’s largest wheat importers, Egypt has been hit hard by the conflict in Ukraine and the coronavirus pandemic before that.
“Egyptians are facing a cost-of-living crisis that has left millions struggling to afford food and other economic rights,” said Sarah Saadoun, senior researcher on poverty and inequality at HRW.
“The expansion of the cash transfer program under the new IMF program, while a positive step, does not do nearly enough to protect people from spiraling costs exacerbated by the program.”
Following a 2016 loan program Egypt was expected to use part of the fiscal savings to invest in social safety nets, but a World Bank review from 2022 showed that expenditure on health, education and scientific research are not only low by international standards, but are declining.
The IMF’s new loan agreement with Egypt includes some steps to increase transparency of state-owned assets, including military owned companies.
In Egypt, the military’s role in the economy is expanding and the government does not make transparent their financial dealings, despite the fact that they produce mainly civilian goods.