The selection of Hazem
el-Beblawi as the Egyptian prime minister and Mohamed ElBaradei as
vice-president for foreign affairs ensures that a loan will likely be ratified
with the IMF.
The transitional
government will deal with the sinking economy by giving in to demands of the
IMF for huge reductions in subsidies and other economic reforms that will
improve investment conditions for international capital.
Beblawi has a Ph.D. in
economics from the University of Paris. He has worked as an economic consultant
as well as a UN official. He had criticized Mubarak's economic policies for not
opening up free markets. He served as a finance minister in the transitional
government before Morsi's election, He is a strong supporter of the IMF pressure to reduce subsidies:“We
must create a clear understanding for the public that the level of subsidies in
Egypt is unsustainable, and the situation is critical,"He blames Morsi for
not communicating the gravity of the situation to the public. However, Morsi is
a politician whose constituents will be hurt by reduction in subsidies and his
popularity would decline even further.
However, Beblawi goes
on:“The canceling of subsidies requires sacrifices from the public and
therefore necessitates their acceptance. It is crucial that they understand the
scope of the danger that the current size of subsidies impose on Egypt’s
economy, and they must also feel that its rationing is done in a way that
guarantees social justice.”Morsi's reluctance to impose the demands of the IMF
because of the political backlash they would create led Morsi to move slowly
and has held up the package that the IMF and foreign investors claim is
necessary to keep Egypt's economy afloat. The IMF has
constantly lectured Egypt on subsidies and other barriers to
liberal capitalist development in the country. As the video below shows
Islamists have their own objections to the IMF loan.
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