Voice

Will the IMF and Egypt have to renegotiate?

The Financial Times' Andrew Bowman is skeptical that the International Monetary Fund's planned $4.8 billion loan to Egypt will go through anytime soon:

The loan is conditional on some very unpopular tax increases and fuel subsidy cuts to reduce the deficit to 8.5 per cent during the financial year starting July 2013. The government is loathe to take these on at this moment in time with its authority fragile and new elections looming in 2013. Indeed, when it tried to introduce new taxes on consumer goods a few days before the constitutional referendum, it removed them within a few hours following public outcry. Its loan request has been postponed until January and the delay may entail renegotiation.

Meanwhile, continued uncertainty regarding the IMF loan appears to be shutting down other avenues of financial support for the Eyptian government, whose reserves are running low. Via the New York Times:

Earlier this month, the African Development Bank said it would only disburse its $500 million loan when the country concludes its agreement with the I.M.F., Bloomberg News reported, while this week Germany said it was postponing a €240 million, or $320 million, partial debt relief plan for Egypt, citing concerns over the tumultuous political situation, according to the newspaper Berliner Zeitung. 

The Multilateralist

ASEAN knocks on India's door

The ASEAN countries and India held a summit this week to discuss a range of economic, cultural, and political issues. Clearing the way for an expanded free trade agreement between the bloc and the economic giant was at the top of the agenda:

[T]he two sides concluded negotiations to expand their free trade agreement (FTA) to services and investment, and took a stride towards the aim of increasing trade to US$100 billion (S$122 billion) by 2015.

The talks come a year after ASEAN and India implemented an FTA in goods - creating one of the world's biggest free trade areas with a market of about 1.8 billion people and a combined gross domestic product of US$2.8 trillion.

But as Reuters reports here, the summit also had a strategic dimension:

Southeast Asian nations and India vowed on Thursday to step up cooperation on maritime security, a move that comes amid tension with China in the potentially oil- and gas-rich South China Sea.

In a vision statement agreed at a summit in New Delhi, India and the 10-member Association of Southeast Asian Nations (ASEAN) set their sights on a new "strategic partnership" that would bring closer political, security and economic cooperation.

Significantly, they underlined the need for freedom of navigation, a contentious issue because of competing claims with Beijing over parts of the South China Sea, though there was no mention of China in their statement.