RebelEconomy.com wrote a great short piece about the significance of the IMF’s much-needed loan to Egypt’s government. In their piece, they said:
The reality is that without the IMF loan, investors and financiers will have little confidence in Egypt.
And it’s largely true. Other investors are waiting for the IMF to make good on its loan to Egypt, which means that the Fund is confident in the reforms that the government will have undertaken or plans to undertake. If they IMF thinks Egypt is moving in the right direction, and offers the loan, other investors will see that as a token of confidence in Egypt’s leadership, and will put their money to Egypt’s demands.
I am not worried that eventually Egypt will get the money. My worry is that Egypt is running out of time with its limited resources and reserves. Some analysts, as RebelEconomy.com noted in another post, say that Egypt might frankly run out of money by February. Will the agreement with the IMF come in time? Will other investors’ money come in time?
My second worry is in the first scenario – in which Egypt gets the money in time. Will this boost to the economy have any effect on the working classes? Or will it, like other economic boosts in Mubarak’s time, only benefit the more affluent classes?