Max Strasser, Cairo Review of Global Affair
"Six months into his presidency, Mohammed Morsi is about to make a public policy decision similar to one that ultimately helped to bring about his predecessor's downfall. Out of economic necessity, Morsi will likely sign a deal with the International Monetary Fund. But the incoming loan will be accompanied by a set of fiscal conditionality that could make the already precarious president and his Freedom and Justice Party even less popular. Unless the Muslim Brotherhood manages to find a religious, privatized coping mechanism....While activists and politicians have good reason to campaign against the IMF based on Egypt's previous experiences with structural adjustment, an infusion of foreign currency is at this point needed to prevent economic catastrophe. Foreign direct investment has shrunk by around 75 percent since January 25, 2011, and tourism revenues declined by around 30 percent. Egypt is facing a full-on balance of payments crisis. Almost 60 percent of the Central Bank's foreign reserves have been spent trying to prop up the pound in the last two years-and with limited success. Late last month, the Central Bank moved to an auction system to slow the devaluation of the pound, which dropped by more than 6 percent since the start of the revolution." To Read More…..
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