Escaping the cycle of debt: A grand bargain for Egypt’s creditors

Source: Al Jazeera Centre For Studies
Author(s): Imraan Minty

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The November 2016 loan agreement between Egypt and the IMF will provide Cairo with another temporary economic life line. Yet, as with previous loans in Egypt’s long history of international financial assistance, the current agreement reflects not only economic considerations, but also the political priorities of multiple global and regional actors. This report argues that, since the popular uprising of 2011, the priorities of key actors—including the IMF and the GCC states—have been at odds, thus preventing any actor from securing their objectives in Egypt and the region. The article forecasts that Egypt’s reliance on financial aid will continue due to the impact of three regional trends on Egypt’s foreign currency deficit. (1) Amid lower oil prices, GCC countries are increasingly shifting away from expatriate labor in certain sectors, thus reducing Egyptian remittances. (2) Recent discoveries of Egyptian natural gas will not be developed in time to off-set the growing costs of energy imports…

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