IMF loan deal means Egypt is able to pay it back: Sisi

In his meeting with the editors-in-chief of national newspapers, Egyptian President Abdel Fattah al-Sisi said that he understands how the conditions required for the receipt of the International Monetary Fund’s loan could affect the poor in Egypt, and that the government will increase its subsidies for them.

During the meeting held on Friday, he said that Egyptians would be able bear the hard economic conditions and would be prepared to face  challenges in order for Egypt to improve, adding that the results would be great and worth waiting for.

Sisi said that Egypt cooperated with the IMF to prepare the programme, which the people would benefit from greatly, because it aims to reduce national debt and ensure that subsidies will go to those that need them.

The president noted that IMF’s agreement to provide the loan shows that Egypt has the ability to pay it back.

The conditions for the loan seem to be proving hard for people to absorb, and thus far the government has yet to create a more comprehensive method for the poor to enable them to handle the effect of the current economic downturn on prices for commercial goods.

Omar El-Shenety, managing director of Multiples Group, said that increasing support programmes, such as karama we takaful (dignity and solidarity), and applying them in an effective manner could reduce the harsh impact of the government’s measures.

However, he noted that the programmes may prove to be ineffective due to current price hikes. He added that its effect would not be tangible if the government did not reduce the rate of price increases or raise support pension amounts.

The safety net, while available, is not effective due to the rising prices, he stated.

It is hard to believe that the government can control the prices by monitoring the markets, El-Shenety said.

He stated that the government’s efforts to differentiate between those eligible for food subsidy cards and those who are not makes more sense than trying to cut the subsidies from the financial source.

El-Shenety believes that providing food subsidies solely through commissary outlets would make them harder to obtain for the poor, adding that in order to make it easier, the government must find a way to distribute food subsidies through more outlets.

Source: Daily News Egypt