Dec 11 2012
NY Times: In Egypt, New Challenge to Referendum as Loan Is Postponed
New uncertainty over the country’s economy added to the political turmoil. On Tuesday, Mr. Morsi’s government postponed a $4.8 billion loan from the International Monetary Fund that was intended to help Egypt avert financial collapse, saying that the delay would give Egyptian officials more time to discuss the related package of economic policy changes with the public, the country’s finance minister told Reuters.
The monetary fund’s board had been expected to approve the loan this month to prop up the economy, which has been battered by the near-evaporation of tourism and general slow growth since the revolution that unseated Mr. Mubarak nearly two years ago. But a huge public outcry against planned tax increases prompted Mr. Morsi to back away from them on Monday, and Finance Minister Mumtaz al-Said told Reuters on Tuesday that the government had asked to postpone the loan until the fund’s board meets next in January.
The military-led transitional government that followed Mr. Mubarak drained the country’s foreign exchange reserves, which were propping up the Egyptian pound, and economists say the aid package from the fund is essential to avoid a collapse of the currency and the soaring inflation and worsened unrest that might follow.
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