After IMF Deal, Egypt’s Sisi Vows to Implement Tough Reforms, Says Reuters

CAIRO (Reuters) – Egyptian President Abdel Fattah al-Sisi expressed his commitment on Saturday to advancing the necessary reforms aimed at revitalizing the economy and reducing public debt. This statement followed Egypt’s recent negotiation of a $12 billion loan program with the International Monetary Fund (IMF).

The IMF announced on Thursday that it had reached an agreement in principle for a three-year financial facility to support extensive government reforms. However, this deal must receive final approval from the IMF executive committee, and the disbursement of funds will depend on the progress made in various reform areas. These reforms include reducing subsidies, implementing a value-added tax (VAT), and transitioning to a more flexible exchange rate system.

Historically, Egyptian governments have been reluctant to cut subsidies due to the political sensitivity of the issue, especially in a country where millions depend on state-subsidized bread. Previous attempts to reduce such aid in the 1970s resulted in significant public unrest.

At the opening of a factory in Alexandria, Sisi addressed the past fears surrounding reforms, stating that previous experiences would not deter his commitment to execute necessary changes. He reflected on the initial reform efforts of 1977, noting the hesitance of subsequent governments to pursue reforms out of fear of public backlash. "It is not only you who will judge me. God will also judge and so will history… I will not hesitate for one second to make the difficult decisions that have been avoided for years," he asserted.

In 2014, Egypt initiated a program to eliminate energy subsidies over a five-year period, which included a recent announcement of increased electricity prices. A VAT proposal is currently being debated in parliament but has drawn substantial opposition from lawmakers concerned about its impact on prices amid a current inflation rate of 14 percent.

Sisi highlighted the detrimental effects of repeated conflicts over the decades on Egypt’s economic progress, along with the economic disruptions caused by the uprising that ended Hosni Mubarak’s three-decade presidency. He attributed the decline in tourism to terrorist attacks and emphasized the urgent need to combat corruption.

Additionally, Sisi noted that a bloated public payroll has exacerbated the country’s budget deficit and hinted at potential fare increases for Cairo’s metro system. Nevertheless, he assured that measures would be implemented to shield the most vulnerable from the impending effects of the reforms.