Morsi: IMF loan won’t violate Islamic banking laws

Egyptian President Mohammad Mursi sought to reassure conservatives at home that a request for a loan of nearly $5 billion in aid from the IMF would be compatible with Islamic banking principles. Egypt asked for a $4.8 billion loan in August from the International Monetary Fund, which in turn urged economic reforms. “This does not constitute Riba” the Egyptian president said, in reference to abusive interest rates as defined by Islamic jurisprudence. Islamic law prohibits usury but applying interest in some circumstances is acceptable. “I would never accept that Egyptians live off Riba,” Mursi told tens of thousands of people who packed the Cairo stadium to commemorate the 39th anniversary of the October War of 1973. “We would rather starve than eat off Riba,” Mursi said. IMF approval of Egypt’s request would come as a vital boon to its reeling economy. An economic slump following the February 2011 ousting of Hosni Mubarak aggravated the main problems inherited from his regime: budget-draining subsidies, extreme inequality, corruption and poor infrastructure. A chief concern is the decline in central bank reserves which have plunged from $36 billion at the start of January 2011 to $14.4 billion, threatening Egypt’s ability to import basic goods such as wheat and refined oil products. IMF director general Christine Lagarde, who was presented with the loan request during a visit to Cairo in August, said the lender “will accompany Egypt” as it undertakes its challenging journey of reform. But Lagarde made no firm commitments, saying the amount, details and terms of the loan program – which Cairo hopes to seal by the end of the year – were still under discussion. Speaking in Riyadh Saturday, Lagarde said the IMF was not imposing conditions on the negotiations.