Egypt must take bold steps without delay: IMF
Washington, March 11, 2013
Egypt needs to take bold and ambitious policy actions to address its economic problems without further delay and could tap temporary IMF funding while it negotiates a full loan program, the International Monetary Fund said on Monday.
IMF spokeswoman Wafa Amr said the IMF's Rapid Financing Instrument was a lending facility designed to provide rapid, but limited, assistance to member countries facing urgent balance of payments needs.
"Use of the RFI could be an option if there is a need for interim financing while a strong medium-term policy program is being put in place," Amr told Reuters. "Ultimately, this is a decision the authorities will have to take," she added.
Cairo has indicated it wants to reopen talks with the Washington-based IMF on a $4.8 billion loan, which was agreed last November but suspended at the government's request after violent street protests the following month.
Amr said the IMF was currently studying revised economic projections by Egyptian authorities and discussing "the next steps in our engagement". She said no date was set for IMF officials to visit Cairo for further talks.
Egypt on Sunday rejected any suggestion of stop-gap IMF funding to help it through a political and economic crisis, saying only broad structural measures as part of an IMF package could help tackle the country's soaring budget deficit.
The country's foreign currency reserves have fallen to little more than a third of the level before the 2011 revolution, forcing the central bank to ration dollars.
With Islamist President Mohamed Mursi struggling to contain violent protests, new figures released on Sunday also showed an increase in inflation.
Analysts have said short-term IMF aid would be a useful compromise for the government while it negotiates an IMF standby loan program. It would also be seen as a down payment by the IMF toward a bigger program.
"The IMF remains fully committed to supporting Egypt at this critical time," Amr said.
The stop-gap measure could amount to about $750 million, which is roughly 50 percent Egypt's quota share, that determines how much the IMF can lend. The United States committed $250 million to Egypt during a recent visit by new U.S. Secretary of State John Kerry to Cairo.
While the amount is not nearly enough to plug Egypt's funding gap, analysts have said it could also help unleash additional loans from allies in the region, including Qatar. - Reuters