Egypt’s ruling generals have agreed to sign a deal with the IMF for a loan worth $3.2bn to alleviate the country’s financial crisis. The series of measures required by the deal, though, may at best do little to help the country’s development challenges and simply restore macro-economic stability. At worst, they will be counter-productive.
As the clouds of revolutionary dust seem to settle and democratic transition is nearing its electoral end, the country is reawakening — to a financial crisis. In the last two years, the Egyptian pound has lost nearly 10% of its value and the country’s foreign exchange reserves have fallen by more than half. The fiscal deficit this year will likely widen to 11.7%, according to Egypt’s Ministry of Finance, which could result in a downgrade of Egypt’s credit rating.