Egypt talks on $4.8bn deal with IMF delayed
Cairo, October 1, 2012
Egypt's negotiations for a $4.8 billion loan from the IMF have been delayed to give the government more time to draw up its economic reform programme, the two sides said on Monday.
Egypt was due to receive a team from the International Monetary Fund at the end of September to discuss the terms of the loan. It urgently needs financial support to prop up state coffers weakened by economic turmoil since the popular uprising last year that ousted President Hosni Mubarak.
"The authorities are working on their economic programme and have indicated that they need some additional time to advance their preparations and be ready to receive a mission," IMF spokeswoman Wafa Amr said in emailed statement on Monday.
"We are ready to send a technical team to Cairo to discuss possible financial support for a homegrown programme as soon as this process is completed."
Al-Borsa financial daily quoted Egyptian Finance Minister Mumtaz al-Said on Monday as saying the government needed to complete the economic programme before the loan talks to demonstrate to the IMF that it is serious.
The programme's two main axes are a restructuring of subsidies and taxes, he said. The government is working diligently on studies of these and the reform programme should be finished soon, Saeed added.
Optimism that a new, Islamist-led administration was moving fast to secure the long-delayed loan and avoid a fiscal crunch has sent the country's stock market soaring in recent months, and yields on government debt have tumbled.
Economists and stock market traders said they were concerned the postponement meant Egypt's fiscal crisis could drag on for months. The benchmark share index tumbled 3 percent on Monday partly on news of the delayed visit.
"I think delaying it creates more uncertainty, and uncertainty is bad," said David Cowan, an economist with Citi.
The IMF is demanding Egypt put a programme in place that will narrow a budget deficit that has mushroomed to 11 percent of gross domestic product since the uprising ousted Mubarak in February 2011. - Reuters