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Satisfying the IMF Won’t Solve Egypt’s Problems

A $12 billion loan has helped the country recover from its financial crisis, but hasn’t fixed its fundamental economic flaws.

Don’t be fooled by appearances.

Don’t be fooled by appearances.

Photographer: KHALED DESOUKI/AFP

When the Egyptian government signed an agreement with the International Monetary Fund in November 2016, it committed to the all-too-familiar austerity measures of subsidy cuts and tax hikes, in addition to the flotation of the Egyptian pound, which lost 50% of its value overnight. In return, the government of President Abdel-Fattah El-Sissi received a three-year, $12-billion-dollar loan from the IMF, part of a $21 billion package to build the country’s foreign-exchange reserves and fix its balance of payments.

A little over two years later, the IMF and the government are hailing the deal as a success. The government has stuck by its commitment to slashing subsidies and raising taxes. Inflation, after climbing to over 30 percent in 2017, has fallen to 11 percent. Foreign reserves have risen, from less than $15 billion in late 2016 to $44 billion. Egypt’s credit rating has improved in tune with its macroeconomic indicators. Finally, the economy is showing signs of a spurt after more than six years of low growth rates.