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Egypt sees IMF loan agreement in two weeks
Cairo, April 4, 2013
Egypt's planning minister said on Thursday the government expects to reach a final agreement with the International Monetary Fund (IMF) over a $4.8 billion loan within two weeks, the state news agency Mena reported.
Ashraf Al-Araby also said that Cairo had not requested an increase in the amount of the loan, needed to avert a deepening economic crisis.
An IMF delegation resumed long-delayed negotiations with Egypt on Wednesday and government officials have said it is expected to stay until April 15.
The IMF has set no timeline for a deal and some private economists are sceptical that an agreement can be reached before parliamentary elections later this year because of the need to implement unpopular tax rises and subsidy cuts.
After two years of political upheaval, foreign currency reserves have fallen to critically low levels, limiting Egypt's ability to buy wheat, of which it is the world's biggest importer, and fuel.
Cairo must convince the global lender it is serious about reforms aimed at boosting growth and curbing an unaffordable budget deficit. That implies tax hikes and politically risky cuts in state subsidies for fuel and food including bread.
The government reached a preliminary agreement with the IMF on the loan last November but went back on implementing the economic conditions in December amid political unrest over the extent of President Mohamed Mursi's powers.
In a statement coinciding with the IMF team's visit, Oil Minister Osama Kamel said the government aims to phase out subsidies for bread, other basic foodstuffs and oil within three to five years.
"We are considering starting to increase salaries and decrease subsidies until we manage to completely eliminate subsidies in three to five years," Kamal said in an interview with state-run Al-Ahram newspaper.
Just before the visit, the government announced an increase in the price of subsidised cooking gas. But it has postponed plans to ration subsidised fuel using smart cards until July 1 and some reports say that date may be pushed back further. - Reuters