Egyptian President Mohamed Mursi
By: Amber Przybysz
Only weeks after the U.S. supported a $4.8 billion loan to Egypt from the IMF, reports have surfaced that negotiations for $1 billion in debt relief from the U.S. are nearing completion.[i] In total, Egypt owes over $3 billion to the U.S., most of which came from the USAID Food for Peace program dating back to 1978.[ii] The White House has not released an official statement on the matter, but a team of State Department economic officials have been in Cairo for a week working on the terms of the aid package, which was first announced over one year ago.[iii] The funding has previously been stalled due to disagreements over use and allocation,[iv] as well as Egypt’s political turmoil.[v]
While the planned debt relief is a step in the right direction, it will do little for Egypt’s total international debt of more than $35 billion, most—if not all—of which was originally loaned to a former dictatorial regime. As Egypt transitions into democracy, the international community must look to forgive these odious debts so that funds may be invested in development, education and healthcare initiatives rather than in repayment, which only further perpetuates the cycle of poverty.
“Relieving a billion dollars of Egypt's debt is a great move by the US government. The US Administration should be commended for acknowledging the role of debt relief in building a new Egypt. If this relief is moving forward, we need to understand this relief in the context of the 35 billion dollars that Egypt owes to several external lenders. We should be looking at ways to bring all of the lenders to the table and arbitrate more of the external debt in a way that recognizes that some of this debt is not the responsibility of the people - but the responsibility of a former corrupt regime. It's another example of why we need a fair international bankruptcy court or transparent debt workout process." Eric LeCompte, Executive Director, Jubilee USA Network.
[i] Michael Birnbaum, “Egypt and U.S. near deal on debt relief,” The Washington Post. http://www.washingtonpost.com/world/middle_east/egypt-and-us-near-deal-on-debt-relief/2012/09/03/87b40dd8-f613-11e1-8b93-c4f4ab1c8d13_story.html
[ii] http://www.upi.com/Top_News/US/2012/09/04/US-poised-to-forgive-1B-in-Egypt-debt/UPI-43421346742000/
[v] Steven Lee Myers, “To Back Democracy, U.S. Prepares to Cut $1 Billion From Egypt’s Debt,” The New York Times, September 3, 2012. http://www.nytimes.com/2012/09/04/world/middleeast/us-prepares-economic-aid-to-bolster-democracy-in-egypt.html?pagewanted=all&_moc.semityn.www
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