'Black Sunday' could cause headache for Egypt-IMF deal
Egypt's deal with the IMF could be off after President Morsi's constitutional decision
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Egypt’s $4.8 billion loan from the International Monetary Fund (IMF) could be delayed due to instability following President Morsi's Constitutional Declaration.
A senior IMF official, who requested anonymity, told Ahram Online on Sunday that the development could bring into question the stability of state institutions and raise doubts that could delay the loan.
The IMF announced last week it had reached a staff-level agreement with Egypt regarding the loan.
A stable political scene is seen as vital for Egypt to implement reforms required under the loan's terms.
“Broad-based domestic and international support will be crucial for the successful implementation of the planned policies,” Andreas Bauer, IMF Division Chief in the Middle East and Central Asia Department, stated last week.
Egyptian President Mohamed Morsi later issued a Constitutional Declaration that was condemned by many and brought thousands onto the streets in protest.
The declaration said all presidential declarations, laws and decrees could not be appealed or blocked.
It also protected the Constituent Assembly and Shura Council (upper house of parliament) from dissolution, effectively pre-empting the verdicts of ongoing appeals that might see either body declared unconstitutional.
The president also dismissed the prosecutor-general.
“I do not think the IMF will rescind its agreement, but if the situation in Egypt deteriorates it could suspend the loan,” Samir Radwan, former Egyptian finance minister, told Ahram Online.
Radwan said the IMF executive board would be closely monitoring events in Egypt, including mass protests on Tuesday by those opposed to and in favour of President Morsi's recent move.
The IMF will express its view on current developments in December, he added.
Minister of Planning and International Cooperation Ashraf El-Arabi said on Sunday that Egypt would receive the loan’s first tranche in a few weeks after ratification by the IMF board.
“The total amount of loans brokered with our development partners, including the European Bank, African Development Bank, the European Union and several gulf countries, have reached approximately $14.5 billion to be received before July 2014,” added El-Arabi during a press conference on Saturday.
Abdullah Shehata, head of the Freedom and Justice Party's economic committee, has endorsed President Morsi’s decree. He confirmed to Egyptian radio on Sunday that the declaration would pave the road for economic stability and increased investment.
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