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Egypt has not requested our financing: IMF

Egypt plans to use alternatives to reduce the deficit such as bonds, loans and broader taxes

Nevine Kamel from Peru, Tuesday 6 Oct 2015
IMF
IMF logo (Photo: Reuters)
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The International Monetary Fund (IMF) is not in talks with Egypt about a new loan program, IMF Mission Chief for Egypt Chris Jarvis has said.

"So far the Egyptian authorities have not requested IMF financing, but we would be ready to consider such a request when the authorities feel it is opportune," said Jarvis, adding that "the Fund stands ready to help Egypt and its people”.

His comments came in an IMF-issued statement after a team led by Jarvis visited Cairo in September of this year to review economic developments since November 2014 when the IMF consulted on Egypt's economy, after being requested to do so as part of their Article IV Consultation program.

The team discussed their economic policies for the remainder of the fiscal year with Egyptian officials.

“The Egyptian authorities succeeded in significantly reducing the underlying budget deficit despite a decline in foreign grants, thanks to a wide-ranging set of reforms including energy subsidy reforms, and progress in containing the wage bill and increasing tax revenues," according to the IMF Mission Chief for Egypt.

"The government’s plan is designed to balance fiscal consolidation with increased spending on social programs and infrastructure investment”, said Jarvis.
However Jarvis noted that "the fiscal deficit is still large and domestic public debt high”.

Such declarations have caused some experts to predict that Egypt will re-enter discussions with the IMF for a loan.

Egyptian finance ministry sources told Ahram Online that “obtaining a loan from the IMF is not on our agenda right now, we'd prefer to use other instruments to reduce the budget deficit and to increase our financial resources”.

The finance minister, Hani Dimian, laid out in a Cairo conference in early September three alternatives for reducing the deficit and for providing the country's other imminent financial requirements: international bonds; sukuk (Islamic asset-secured loans) and broadening the tax base.

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Tut
06-10-2015 12:58pm
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IMF not right for Egypt now
Egypt is wise not relying on the IMF right now for a super loan. The IMF approach to economic development is limited to financial instruments and fiscal tools aim to improve liquidity and cash flow at the expenses of real economic development. Egypt’s issues are industrial not fiscal; Egypt needs to revamp and rebuild its Agriculture, Infrastructure, Energy, Manufacturing, and Tourism; for that it needs Infrastructural partnerships; both financial and operational. Only taking a super loan from the IMF (or other bank) will compound its loan service obligations, adding more to its fiscal ills without major impact on real economic development. Furthermore, the IMF and other similar institutions are less interested in long-term infrastructure development with low or negative short-term ROI.
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