Experts solve the mystery .. Why do Arab countries not benefit from foreign loans? Why does the IMF give it other money?

The "Scenarios" program continued (11/2022) that Cairo obtained a $3 billion loan under the agreement with the International Monetary Fund, and this comes after another IMF agreement with Tunisia in the middle of last month on a loan of nearly $2 billion over 4 years in exchange for Painful reforms may include lifting subsidies on some basic materials and privatizing some public institutions, while Lebanon is waiting for a $3 billion loan in return for binding conditions.

With regard to the Egyptian issue, journalist and economic expert Mamdouh Al-Wali said that Egypt has prior agreements with the International Monetary Fund, and the latest agreement is the seventh in the history of its relationship with it, explaining that in all stages the “chronic pains” of the Egyptian economy have not been treated.

He explained that the Fund provides the loan because of the budget deficit and the treatment of the balance of payments, and this is what makes the loan spent on financing imports and current matters unrelated to production, as foreign loans amounted to 156 billion dollars, and the cost of Egypt's external debt will be 44 billion dollars, which is a huge burden on the deficit. Chronic in the country's trade balance.

Al-Wali expected that things would turn more difficult, because there were positive factors that previously helped Egypt improve its conditions during the previous loan, but the current conditions do not allow Egyptian bonds to be offered abroad and do not encourage foreign investments.

save Tunisia

As for Tunisia, the former Minister of Trade and Economist Mohsen Hassan confirmed that Tunisia is experiencing an unprecedented stifling crisis and the International Monetary Fund was the last resort to save the country from bankruptcy, noting that this year it is expected that the state budget deficit will reach 10%.

He added that the internal market could not meet all the needs of the public treasury, and therefore there was no escape from resorting to external debt, pointing out that all sources of external financing are closed to Tunisia pending a final agreement with the International Monetary Fund.

He expected the year 2023 to be the most difficult economic year for Tunisia in light of the increase in external debt service by more than 2.5%, as well as the continued rise in the prices of basic materials that are imported due to the weakness of the national production system, but he expressed his optimism conditioned on Tunisia reviewing its political options, as well as dialogue with partners to launch in Internal economic reforms to dispense with external loans.

politicizing the IMF

According to the opinion of the economist and former Executive Director of the International Monetary Fund, Muhammad Fneish, that financial institutions reflect the political philosophy of their major owners (America and European countries), noting that the IMF comes with certain measures, including reducing public and private incomes and spending through new austerity measures.

The Fund also resorts to devaluing the exchange rate in order to increase the competitiveness of exports in order to reassure investors, pointing out that the Fund does not deal with the real problems and the structure of the economies of countries in general because they do not fall within its competences.

Many accusations are directed against the International Monetary Fund and its experiences with many debtor countries, which are sinking more into one crisis after another after falling into the trap of accumulated debts and rescheduling them.

In this context, a lot of controversy arose about the conditions included in the recent agreement between the Fund and Egypt, and what some considered as a kind of imposing international or regional guardianship on the Egyptian economy.

Analysts had given many warnings about loans associated with difficult conditions and procedures, as it seems that the financial and economic conditions of some Arab countries will deteriorate further by sinking into the foreign debt crisis and the increase in the size of their indebtedness, especially in light of the continued depreciation of the local currency against the US dollar and the rise in commodity prices. the basic.