The debate on the International Monetary Fund (IMF) loan to Egypt has been limited and circumscribed by various interests and power dynamics.

A distinct “liberal” subjectivity and lack of historicization, practices that aim to compartmentalize the opposition and break its ranks, and the institutionalization of power (and attempts to institutionalize the opposition) are some of the attributes that control the “rules” of this debate.

In probing these interests and themes, it is clear that discussions about the IMF loan all lead to a predetermined conclusion, namely, that the IMF loan is Egypt’s only choice.

Power manifests itself in what it is politically correct and incorrect to say about the IMF loan. As the discussion’s terms make clear, this debate is merely a superficial exercise in transparency and pluralism. At the end of the day, the IMF listens only to those views that advance its own objectives.

In a classic case of discipline and punish, the local narrative on the Muslim Brotherhood-led government has been “stability, no protests, and no strikes so that the economy can move forward.” This perspective, however, leaves out far too much and creates two logical inconsistencies.

The first is that the decisions of President Mohamed Morsi led to recent protests and instability. The second is the creation of a subjectivity firmly grounded in the logic of production rather than justice and equity. The focus of this narrative is on turnover and quantity, with the government churning out numbers, at times fabricated, to support its position on the Egyptian economy. For example, in an address to the Shura Council, Morsi gave on Egypt’s economic situation were false, as demonstrated by a statement issued by the Central Bank of Egypt a few hours after his address.

Subjectivity and Historicization

The IMF and the World Bank are institutions that supposedly value and embody transparency, equality, and freedom of competition. In reality, however, , “a set of economic policies that constitute the standard reform package promoted by the two organizations and Western countries since the late 1980s” determines the objectives of these institutions.

A survey of the IMF’s historical practices in Asia and Latin America points to the power of the Washington Consensus. As such, historicization becomes key to uncovering the IMF’s less than pluralistic approach to policy-making.

Only by looking at the history of the IMF, particularly in Egypt, can we break away from the discourse of neo-liberalism. By examining this history, we, as Egyptians, can identify with a different subjectivity, namely, with those who have also suffered under the IMF’s control. Rabab El-Mahdi’s work and Nicholas Hopkins’ edited volume Cairo Papers in Social Science elaborate on this idea for readers who are interested in learning more.

Unfortunately, of the many articles about the IMF loan, few engage in this process of historicization or make reference to Nobel-prize winning economist Joseph Stiglitz’s ground-breaking work, Globalization and Its Discontents.

Most ignore Stiglitz’s chapter on the Asian crisis and the IMF’s role in exacerbating the economic situation in that region. As Stiglitz points out, those Asian countries that did not listen to the IMF recovered much faster than those that adopted the institution’s economic policies.

Egypt has similarly been victim to the IMF’s destructive approach to economic planning. Under pressure from the IMF and World Bank, the Egyptian government incorporated itself into the Global Political Economy by dispossessing its people of their land and accumulating this property for its own benefit.

In a chapter in the Cairo Papers in Social Science, Ray Bush explains this process, demonstrating how the Egyptian state adopted capitalism by taking ownership over large swathes of land in a process known as “primitive accumulation.”

Coinciding with the World Bank and IMF programs, USAID sponsored initiatives shifted Egypt’s high yield agricultural subsistence farming to much lower outputs. This was achieved by forcing farmers to adopt USAID machinery and farming practices that increased costs and were more inefficient than the physically intensive labor methods that had been previously employed. These techniques also produced significantly lower yields. Together, these USAID initiatives favored big business and disempowered local farmers.

In addition to these practices, the IMF has been notorious for attaching very opaque conditions to its loans. While it does not spell out loan conditions in its agreements, the IMF does require World Bank approval of a loan before it goes into effect. The World Bank, in turn, will not sign a loan agreement until the IMF gives its approval.

This produces an unspoken modus operandi where the IMF and World Bank work off of one another through this informal “negotiation process” to privately impose conditions after a country has signed a loan agreement. Former Egyptian Supply Minister Gouda Abdel Khaliq has written extensively about this phenomenon of “dual conditionality.”

The IMF Loan to Egypt

Arabic media reports make clear that the Egyptian government has not publicly discussed any aspect of the IMF loan. Some smaller regional newspapers have, however, picked up on Western reports about the loan conditions, which include austerity measures.

Still, debate on the IMF loan continues to be controlled by the interests of corporate media. Without discussing the full IMF program, one blog post presents the loan as affordable and beneficial to Egypt.

The blog in question, Rebel Economy, adopts a cost-benefit analysis on the loan (a problematic calculation in and of itself) and argues that it is Egypt’s best option. The post is a response to published by Muftah, criticizing the IMF loan to Egypt. Rebel Economy writes:

Finally, the [Muftah] article’s subtle criticism of the dominance of the U.S. in influencing the IMF, and therefore Egyptian politics is misplaced. I have spoken to some government officials that tell me the full economic plan submitted to the IMF includes reforms that aren’t as drastic as they would have liked (original emphasis). Yet, the IMF agreed and signed off on these despite wanting more because they need Egypt to survive. Egypt is too big to fail.

This again begs the question as to whether the terms of the loan have been publically revealed. Khalid Ali, a long-time activist, has brought litigation in Egyptian courts to have the loan’s conditions publicly disclosed, while and Egyptian non-governmental organizations (NGOs) have denounced the lack of transparency in the negotiation’s process.

Dividing Practices

Many have heralded the IMF loan, and praised the organization’s “revolutionary” and unusual step in allowing Egypt to formulate its own “native” program. For these observers, negotiations on the loan are a positive development that has allowed Egypt to present its own conditions to the IMF.

The loan’s interest rate has been celebrated as a record low. Analysts have also speculated as to whether, given the current state of affairs, Egypt will be forced to take out additional loans.

Other countries have pledged to give Egypt $14 billion in aid, 5 billion Euros from the European Union and the rest in bilateral aid agreements from other countries. Distribution of these funds has been postponed until the IMF loan is approved. The IMF’s rubberstamp is also required for others kinds of aid and investment in Egypt. In effect, then, IMF approval amounts to an agreement by the international community to help Egypt survive its on-going economic crisis.

There is, however, another, better path. Donor countries and investors could independently assess Egypt’s needs and invest in the country without waiting for the IMF loan to be approved.

Here, however, it becomes clear that the terms of the IMF debate foreclose exploring alternative options. Depictions of the IMF loan as the “best option” reached according to a “cost-benefit analysis” are lightning rods meant to divide Egyptian society.

In practice, these narratives separate Egyptians into two camps – the “irrational leftists” who oppose the loan and the more “rational players” who see the IMF’s supposed generosity.

Leftists who call for protectionist policies (which have long been in effect in Europe and the United States) are called “Nasserite holdovers.” Meanwhile, those who support free trade and the flooding of the Egyptian market with imports that squeeze local production are celebrated as “forces of stability” and “rational actors.” That they appear blind to the immediate repercussions of floating the Egyptian pound and removing the subsidy regime (as required by the IMF loan) are hardly mentioned.

With regard to the removal of subsidies, the so-called “instability” of the program drives much of this discourse. I invite people to read “Lifting Subsidies Without Impoverishing the People,” an excellent and increasingly ignored option to tackling the subsidy issue.

Using the Iranian example, this alternative approach calls for the distribution of cash subsidies. This would increase Egypt’s banking penetration rate as it requires setting up bank accounts for those in need of aid. The program also ensures that subsidies are not wasted on the rich, and instead only go to those who are truly needy.

By contrast, the IMF’s plan for sanctions’ removal is not pro-poor but rather pro-big business. Discussions of this policy turn often fail to address Egypt’s 40-50% poverty rate, as well as its political economy of big businessmen, whether from the ancien regime or the ruling Muslim Brotherhood. One need only look at how businessmen, such as Mohamed Abu el Enein, are still being used as policymakers and their resurgence onto the political scene to understand corporatist influence on Egypt’s economic policies.

Institutionalizing the Opposition

What does it mean to “institutionalize the opposition”? In practice, it means cornering the opposition and restricting available activities to limit its power. It also means narrowing the opposition’s universe of possible discursive postures, by setting the terms of political engagement. No one makes this point better than Wael Abdel Fatah, an Egyptian writer, who exclaimed:

They [the regime] believe that the president is untouchable and it is they who shape the opposition, an opposition that is polite and respectable.

The Egyptian population is, however, aware of these dynamics and has demonstrated its unwillingness to remain complacent.

The watershed moment came in November 2012 when Egyptian workers won a court case against factory owner and National Democratic Party strongman Abdel Wahab Kota for purposely shutting down his factory in order to avoid paying workers.

Kota had already failed to pay his bills before the revolution and asked his workers to protest in front of government buildings to pressure the government to reschedule his debt. Workers believed his unilateral decision to shut down the factory was yet another attempt to force the banks to postpone debt payments for reasons of political instability.

In the months prior to November, workers obtained the factory’s books and asked the prosecutor general to take custody of the factory. After a four month-long sit-in, the prosecutor general issued an order dissolving Kota’s board. A new board and management team were created that restarted work at the factory. In response, Kota filed a court petition, which he lost on November 14.

It is these stories of a vibrant opposition that purposefully remain in the shadows.


The first step in waging resistance is understanding how the debate is controlled and how facts are informed. This piece represents the beginning of an effort to move beyond the confines of what is accepted and tolerated in debates about the IMF loan to Egypt.

*Karim Malak is an analyst from Cairo.

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  • Dear Karim,
    Thanks for this interesting article. I am the editor of Rebel Economy, which you quote above in your analysis. I’d like to add that the particular blog post you refer to (which is in response to an article in Muftah) was one of many blog posts I have written on the IMF loan and Egypt. If you search the blog, you will find the historical ties, alternatives to the IMF loan, the issue of Sharia-compliance and many other important facets that are included in the negotiations. For you to take this single, very brief post, and use it as representative of my blog is a little unfair. Thank you for linking to it though!