Against this backdrop, Morsi on Monday suspended a series of tax hikes announced a day earlier on 50 good and services including alcohol, cigarettes and mobile phones.
The decision to raise the taxes just days ahead of a referendum that has deeply divided the nation baffled many in Egypt.
The Muslim Brotherhood’s Freedom and Justice Party, which Morsi used to lead, called upon the president to suspend the tax hike until a new parliament is in place to discuss it. Morsi enjoys legislative authorities in the absence of the parliament which was disbanded by a court order.
FJP party member Ashraf Badr Eddin summed up the thinking of many in Egypt: ‘‘The timing, politically speaking, is very inappropriate.’’
Experts say the taxes hikes were part of reform economic package Egypt has to carry in order to secure a badly-needed $4.8 billion loan from the International Monetary Fund.
Egypt reached an initial agreement on Nov. 20 for the loan. The IMF’s executive board is expected to vote on the deal in mid-December.
The government views the loan as crucial to revive the country’s ailing economy and improve the nation’s image in the minds of international donors, which could eventually help Egypt secure more loans to help boost its battered finances.
Economist Ahmed el-Sayyed el-Nagar, from the Al-Ahram Center for Political and Strategic Studies, warned that the flip-flop could hurt Egypt’s ability to secure the loan.
‘‘It shows a deficit within the decision-making circles and doubts about the government ability to meet its commitments,’’ he said.