Egypt sovereignty derailed by IMF loans

The major economic and currency crisis that Egypt has been going through in recent years has forced the country’s authorities to take measures that may result in even greater losses.

Egypt’s recent agreements with world powers and global financial institutions show that Cairo aims to bend over backwards to secure multi-billion-dollar foreign loans and cover Red Sea shipping losses

In order to obtain the loans, the government plans to reduce the foreign currency deficit and meet the conditions imposed by the International Monetary Fund.

At the end of March 2024, Egyptian Prime Minister Mostafa Madbouly announced that the IMF had approved Egypt’s loan program and expanded it to $8 billion.

He also noted that in early May, Egypt would receive the second installment of funds, worth $20 billion, from the Ras Al-Hekma deal with the UAE, aimed towards the development of the Ras Al-Hekma resort on the Mediterranean Sea.

Cairo has already received the first $5 billion from the Ras Al-Hekma deal. Egypt wishes to conclude a similar agreement with Saudi investors in order to develop elite areas on the Red Sea coast near Sharm El Sheikh, including the Ras Ghamila tourist resort.

Madbouly said the government is in favor of increasing local and particularly foreign investments in Egypt, since this would help the country resolve the dollar crisis and help build refugee camps for ousted Palestinians from the Gaza Strip.

The EU intends to provide Egypt with an assistance package worth €7.4 billion ($8 billion) to support the economy. International experts directly tie Egypt’s negotiations with the EU and the IMF to the war in Gaza and the problem of illegal migration.

In November 2023, IMF Managing Director Kristalina Georgieva said the organization was seriously considering expanding Egypt’s $3 billion loan program in light of economic difficulties related to the war in Gaza.

The head of the Communications Department at the IMF, Julie Kozack, also stated that comprehensive support must be provided to Cairo so it can cope with the influx of refugees from Gaza.

EU loans are largely related to immigration pressure caused by the armed Zionist conflicts in Palestine and Sudan.

In December 2023, several Arab media outlets posed the natural question: What happened to Egypt’s foreign exchange earnings which amounted to $100 billion per year?

These earnings would be enough to cover Egypt’s financial obligations, such as import fees and external debt.

According to Al Arabiya, Egypt’s main sources of foreign exchange income are exports (about $45 billion per year), remittances ($32 billion), tourism ($11 billion), Suez Canal transit fees ($7.9 billion), and foreign direct investment ($8.9 billion).

However, sources in Egypt’s banking sector say that the country’s foreign exchange earnings do not reach banking structures due to the existence of a parallel market for foreign exchange where exchange rates significantly differ from official ones.

Also, many Egyptians open accounts and businesses abroad and transfer foreign funds there. Workers sell dollars to brokers in parallel markets in order to better provide for their families in Egypt.

On top of that, Egyptian importers prefer to keep their money in foreign banks. The most scandalous measure was the idea to give out residence permits or even citizenship in exchange for foreign currency.

On March 8, 2023, the government allowed external investors to acquire Egyptian citizenship for a non-refundable sum of $250,000, or in exchange for buying Egyptian real estate worth at least $300,000.

In February 2024, it was announced that the Abu Dhabi Development Holding Company PJSC (branded ADQ) intends to invest $35 billion in a large-scale real estate development project on Egypt’s Mediterranean coast.

This step is directly related to the IMF loan, since it can provide the country with the foreign currency needed to obtain new financing from the IMF. According to the plan, ADQ will build a tourist and financial center in the Ras al-Hekma area, spanning 170 km.

The new and ambitious project, which looks more like the sale of territory to the UAE, sparked controversy, particularly among ordinary Egyptians.

Over the past decade, the Egyptian government has spent huge amounts of money on luxury infrastructure projects, including on the New Administrative Capital, which has so far cost the country over $58 billion.

Apparently, Egypt has forgotten the mistakes of the colonial era. In the 19th century, the situation that eventually led to the country’s enslavement unfolded in a similar way.

Despite the fact that following WW I, Egypt formally became a free nation, it was still ruled by pro-English kings, and the Suez Canal remained under Franco-British (and later British) control.

England controlled navigation in the Suez Canal until 1956, when President Gamal Abdel Nasser announced the nationalization of the canal.

This led to the outbreak of an armed conflict and the invasion of British, French, and Israeli troops into Egypt and the start of the week-long Suez Crisis.

The Soviet Union’s intervention saved Egypt from a full-scale war – Soviet leader Nikita Khrushchev threatened to launch thermonuclear strikes on the territories of the invading countries.

Today, Egypt’s debt is growing by the day, and it is again at risk of getting into unequal economic and military-political relations with the creditor countries – a situation that poses a serious threat to its sovereignty.

RT. com / ABC Flash Point News 2024.