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Egyptian Parliament Deals Blow to IMF Loan

  • Reuters

Egyptian protesters hold placards with the Arabic inscription reading ‘danger’ and shout slogans as they demonstrate against the International Monetary Fund (IMF) delegation visit, in front of the General-Prosecutor's office in Cairo, April 3, 2013.

Egyptian protesters hold placards with the Arabic inscription reading ‘danger’ and shout slogans as they demonstrate against the International Monetary Fund (IMF) delegation visit, in front of the General-Prosecutor's office in Cairo, April 3, 2013.

Egypt's parliament halted its reading of a new income tax law on Monday, saying the government had not shown who would be affected by the measure that is needed to secure a badly needed $4.8 billion IMF loan.

Lawmakers criticized the government's competence in drafting the legislation, adding to uncertainties about the IMF deal just days after a deputy finance minister who was a key negotiator with the International Monetary Fund resigned.

Speaker of the upper house of parliament Ahmed Fahmy appeared visibly frustrated as he announced that the chamber would halt what had been scheduled as its final reading of the law because it did not have the necessary government data.

“What finance ministry or tax authority does not know how to calculate the income bracket or who benefits and who is harmed? This is not worthy of the council,” Fahmy said, as members clapped their support.

Fahmy said that debate was suspended "until the government provides correct data, otherwise this government can go wherever it wants to go."

In addition to cutting fuel subsidies and raising sales taxes, Egypt has said it will rein in its soaring budget deficit with measures including tax changes targeting the wealthy.

Two weeks of talks in Cairo between Egyptian officials and an IMF team earlier this month failed to produce an agreement.

Diplomats told Reuters at the time that President Mohamed Morsi had yet to endorse required tax increases and subsidy cuts that prompted him to halt implementation of an earlier IMF deal in December.

Cairo has said it hopes to get an IMF deal by next month.
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