Egypt picks IDB over IMF

Egypt's finance minister Samir Radwan decided that the IMF's $3bn facility to help plug a widening gap in its public finances was not needed "for now" after revising his fiscal budget. Jeddah-based
IDB recently agreed a three-year loan to fund development projects, as well as insurance for imports and exports.

Jonathan Lawrence (pictured), head of Islamic finance and investment at law firm K&L Gates, said: "If you're looking at development finance, what's needed in Egypt fits really well into the Islamic finance model. In other words, you will have a road or hospital to show for the financing whereas the proposed IMF facilities may not have been capable of demonstrating such direct tangible results."

Because of its long history of imposing strict economic conditions on borrowing nations and its western roots, the IMF is perceived negatively in the Middle East. Peter Chowla, from the UK's Bretton Woods Project, which monitors IMF activities, said the fund would have pushed to liberalize the Egyptian economy and introduce business-friendly reforms to benefit western banks and corporations. "You don't get this with the Islamic loan necessarily, so it's more favourable in that sense," he said.