Parliament Inclined to Reject World Bank Loan

Parliament Inclined to Reject World Bank Loan

MPs of the Egyptian People’s Assembly “Plan and Budget” and “Economic” Committees refused to discuss a number of economic and social recommendations stipulated for approval of a$3.2 billion loan from the World Bank meant to finance budget deficit and fix other economic problems experienced by Egypt today.

The MPs emphasized their agreement on the principle of cooperation with international organizations, but said that the package of measures provided by the government is not sufficient, especially the section on the fight against corruption in all sectors, as well as recovery of smuggled funds, in addition to the land sector, which the government did not address at all, and also the section on rationalization of expenditure, which seemed unclear, according to their assessment.

For his part, MP Saad Al-Husseini, Chairman of the Plan and Budget Committee and a member of the of Freedom and Justice Party (FJP) Parliamentary Commission, said: "The Committee has postponed approval of the government’s proposals, because it is necessary to study and respond to them as part and parcel of the government’s economic program".

With respect to Arab loans, Al-Husseini said only that Egypt is certainly a big country that respects its agreements and opens its arms for international cooperation, stressing that an economically strong and stable Egypt will enhance the stability of the whole Arab region, and that supporting it is an Arab advantage par excellence.

He added that opening the door to foreign borrowing would burden the next government with obligations bound to negatively impact its economic, and even political, decisions. Adding that the value of the proposed loan would mean Egypt lose the opportunity to borrow from the Fund for 5 years to come.

Meanwhile, MP Fahmi Abdu, Member of the Plan and Budget Committee and member of the FJP Parliamentary Commission, said: "MPs are seeking out other sources of finance instead of borrowing, especially LE95 billion (about $16 billion) energy subsidies which never reach those who deserve them". He explained that the Minister of Finance Dr. Mumtaz Al-Saeed suggested some policies to finance the budget deficit. However, he added that there was a political conviction that Egypt should take the loan deal, because it will give Egypt something akin to a certificate of authority as a stable state, which would encourage foreign investment.

Moreover, Abdu pointed that he suggested selling lands to Egyptian expatriates (in foreign currencies), and that MPs proposed a reduction is such land prices to encourage expatriates to buy them. Further, Abdu said that the government tried to put pressure on parliament to approve the loan deal, but they refused.

On the other hand, MP Abbas Abdul-Aziz, Deputy of the PA’s Economic Committee and a member of the FJP’s Parliamentary Commission, said: “Finding adequate alternatives to borrowing will take time”, adding that some lawmakers have stipulated an option to cancel the loan if alternatives are found, even after signing the agreement.