Lagarde Tells Morsi IMF Ready to Support Egypt

The International Monetary Fund's chief has told Egypt's new president that the crisis lender is ready to help Cairo, an IMF spokeswoman said. Christine Lagarde taked with Mohamed Morsi by telephone on Thursday to congratulate him on his election which "represents an important step forward in Egypt's transition," the spokewoman said.

Morsi and Lagarde discussed Egypt’s economic situation and the best ways for the IMF to help, she added, with Lagarde reiterating "that the IMF stands ready to support Egypt and looks forward to working closely with the authorities.”

Egypt's interim government has over the last year held sporadic talks with the IMF regarding a possible $3.2 billion loan to help it bridge fiscal shortfalls while restructuring the economy. But the IMF has repeatedly said Egypt needs a permanent government in place to agree to the loan programme, stressing in April that it requires a broad consensus from the country's various political currents.

The latter may prove a stumbling block, with many Egyptians believing previous tight conditions placed on the economy to qualify for earlier international loans resulted in greater poverty and social inequalities. As talk turned to new borrowing, however, Egyptians abroad have staged small-scale protests calling for an amnesty on loans acquired by the former regime.

On Friday, London saw a small demonstration outside the Westminister government's Cabinet office by the Jubilee Debt Campaign, a social justice group, and the Popular Campaign to Drop Egypt's Debt (PCDED). Both called for an immediate moratorium on Egypt’s debts to Western countries and for a debt audit to assess their legitimacy.

"We believe that Egypt's debt is Mubarak's debt. It is not the Egyptian people's," said Dina Makram-Ebeid, a London-based post-graduate student and member of the PCDED.

"Egyptians never had a say in the borrowing that was being made in their name, let alone borrowing to buy arms. If the UK government is in earnest in its support for democracy in post-revolutionary Egypt, it should be telling the Egyptian people what they are paying for and not demanding that they carry the burden of repaying illegitimate loans."