Egyptian lawyer files lawsuit to halt 'unconstitutional' IMF loan

An Egyptian lawyer has filed a lawsuit against President Abdel Fattah al-Sisi demanding a halt to the proceedings of a loan recently approved by the International Monetary Fund (IMF) as it "violated the Constitution".

Ali Ayoub announced in a Facebook post that he filed the lawsuit with Cairo's Administrative Court also against Prime Minister Sherif Ismail, Finance Minister Amr al-Garhy, and central bank governor Tarek Amer.

The three-year $12 billion loan approved by IMF's executive board earlier this week is "unlawful as it should have been reviewed by the parliament", Ayoub explained.

According to Article 127 of the Egyptian Constitution, the executive authority may not contract a loan, obtain funding, or commit itself to a project that is not listed in the approved state budget entailing expenditure from the state treasury for a subsequent period, except with the approval of the House of Representatives.

"The cabinet did not consult with the parliament over the big loans or the issuance of $4 billion worth of international bonds in the Irish Stock Exchange," Ayoub said.

Egypt's central bank confirmed on Saturday that it had received $2.75 billion as the first part of the IMF loan, which aims to support its economic reform programme.

Besides the IMF loan, Egypt received $4.6 billion from 62 grants and loans in 2016. This included a total of 36 loans worth $4.27 billion, according to Ayoub.

He added that the parliament discussed all of these loans except the World Bank's $500 million loan and the Japanese government's loan to finance the construction of the Grand Egyptian museum, which was worth $475 million.

The cabinet did not consult with the parliament over the big loans or the issuance of $4 billion worth of international bonds in the Irish Stock Exchange. - Ali Ayoub

Ayoub's lawsuit said that the Egyptian government should get the parliament's approval over loans as well as the amendments that will be applied to the budget as a result of the economic measures adopted to secure those loans.

"The parliament is facing a political dilemma due its absence from the structural changes done to the Egyptian government's economic policy last week," he said.

The loan announcement by the global crisis lender comes after Cairo took crucial preliminary reform steps in recent weeks to meet IMF requirements, including cutting fuel subsidies, announcement of a value added tax, and floating the Egyptian pound, which subsequently lost 45 percent of its value against the US dollar.

Egypt is reeling after six years of political and economic turmoil involving the ousters of two presidents.

Cairo governments had avoided implementing the economic reforms for years fearing unrest, but Sisi said Egypt no longer has the luxury of postponing them.

Loans from Saudi Arabia and China will help Egypt gather the $5-$6 billion in additional financing required to complement the IMF loan.