Egypt's deteriorating economic position was a major issue in the political upheavals leading up to the military coup that removed the Morsi government. The country's foreign reserves were reaching a point of crisis raising the possibility that they would be unable to pay for essential imports. The Morsi government was in the process of negotiating an emergency loan from the International Monetary Fund.
Egypt loan talks end without deal but IMF sees progress
Western diplomats said the main sticking points were the government's unwillingness to commit to implementing cuts in fuel subsidies and sales tax increases which were the main conditions for IMF assistance.
"The IMF were extremely worried about deterioration of the economy and about lack of seriousness in dealing with the subsidies problem. I don't think they see any sign of change," Radwan told Reuters in a telephone interview.
This is a rather classic situation of third world countries dealing with the neoliberal fist of the IMF. Loans carry conditions for "liberalizing" the economy which place the greatest burden on the nation's poor. The political unpopularity of these conditions were causing the Morsi government to drag its feet in the negotiations.
The military takeover has done nothing to solve the economic problems. They are still in need of international financial aid. The IMF conditions will be just as unpopular under any other government. There is now an additional problem. There is a definite possibility that the IMF may refuse to negotiate with the new government.
Morsi Removal Makes Egypt’s IMF Loan Even More Distant
The fund typically only engages with a government if there’s widespread recognition by the international community that a legitimate government has been installed. The IMF isn’t likely to negotiate with military authorities in Cairo without such international consensus given that the fund’s board represents the world’s powers, and it’s unclear how long that process could take.
In the meanwhile, it’s also unclear whether the regional governments that had been injecting much-needed cash into Egypt’s reserves will continue to do so after Wednesday’s events.
This to be yet another reason to be skeptical about this story quickly having a happy "democratic" turn of the plot.