IMF: postponement of vote on loan to Egypt
(Washington, DC) – The International Monetary Fund (IMF) is expected to postpone voting on a $ 5.2 billion loan to Egypt slated for June 26, 2020 until strong anti-corruption demands are included in the program and that the loan conditions are public, eight human rights and good governance groups said yesterday in a letter to the IMF’s executive directors.
On June 5, the Egyptian government reached an agreement with the IMF for a standby agreement of $ 5.2 billion, a flexible instrument that grants loans over a shorter period and with fewer requirements than the traditional programs of the IMF. An IMF press release noted that the objective of the loan is to “support health and social spending, improve budget transparency, and push forward new reforms to boost growth and job creation driven by the private sector ”. On May 11, the IMF Executive Board approved a separate emergency assistance of $ 2.77 billion to Egypt under another loan facility to support the government’s response to the pandemic of Covid-19.
“The IMF has repeatedly said that the fight against corruption and public engagement are key elements of its strategy in the economic crisis linked to Covid-19,” said Sarah Saadoun, business and rights researcher humans to Human Rights Watch. “Yet he is lending billions of dollars to Egypt without making the terms public or ignoring the high risk of corruption.”
The groups that signed the letter are the Cairo Institute for Human Rights Studies; the Committee for Justice; the Egyptian Human Rights Forum; EuroMed Rights; the International Federation for Human Rights; the Freedom Initiative; Human Rights Watch; and Project on Democracy in the Middle East.
The IMF has yet to release documents outlining the lending program, making it impossible for the public to assess whether the agreement includes requirements to ensure that the money is used transparently and that it understands. sufficient guarantees against corruption. The Fund should change its practice of only publishing such documents after votes by the board of directors in order to allow informed public engagement regarding a potential loan. Documents relating to the $ 2.77 billion loan in May have yet to be released.
In recent years, the Egyptian government has undermined the independence of its anti-corruption entities and weakened the role of the judiciary, greatly exacerbating the risks of corruption in the country. As the US State Department’s national reports have noted, the government does not effectively enforce its anti-corruption laws. The military’s swift intervention in the Egyptian economy has also increased the risk of corruption, as military-owned businesses have no independent or civilian oversight, leaving the Egyptian public without access to the information necessary to assess cases. costs and beneficiaries of publicly funded projects.
In March 2016, President Abdel Fattah al-Sisi sacked Hisham Genina, the head of the Egyptian Central Audit Agency, an independent body designed to act as a watchdog against corruption, after reporting that Egypt had lost 600 billion Egyptian pounds (around 76 billion dollars at that time) between 2012 and 2015, due to government corruption. A court later sentenced Genina to one year in prison for “spreading false news” about corruption in Egypt.
To ensure his independence, Egyptian law had granted the head of the Central Audit Agency immunity from dismissal, but President Sisi issued a decree in July 2015, in the absence of parliament, allowing him to dismiss the head of any agency.
In October 2019, the IMF released the last tranche of a three-year $ 12 billion loan to Egypt, which was seen as failing to address serious gaps in Egyptian governance. The austerity measures taken by the government in addition to the floating of the Egyptian pound have contributed to rising inflation rates and increasing poverty with inadequate social support programs.
After the loan was first approved in 2016, the IMF’s Executive Board adopted a new framework to improve the way it deals with corruption in member countries. As recently as June 16, IMF Managing Director Kristalina Georgieva reiterated in an interview with Transparency International, an anti-corruption watchdog group, her commitment to consistently implement this framework. During this interview, she reiterated her view that “entrenched corruption undermines sustainable and inclusive economic growth”, among other pernicious effects.
“Nearly 100 million Egyptians should know that the IMF is not handing their government billions of dollars without proper controls to ensure it is actually helping those most affected by the economic fallout from the pandemic,” Saadoun said . “The IMF’s board should honor its commitment to transparency and anti-corruption and delay the vote until conditions are made public and anti-corruption measures are put in place. “