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Tuesday, 10 December 2019

Egypt to sign initial IMF deal by weekend: Finance minister

Finance Minister Momtaz El-Said says Egypt will likely sign MoU for $4.5bn IMF loan before fund delegation departs Cairo on Wednesday

Reuters and Ahram Online, Monday 12 Nov 2012
Views: 1405
Views: 1405

The Egyptian government expects to sign a memorandum of understanding with the International Monetary Fund for a $4.5 billion loan before an IMF negotiating team leaves Cairo on Wednesday, Finance Minister Momtaz El-Said said.

The government also plans to eliminate subsidies on 95 octane gasoline, effective as of Wednesday or Thursday, the minister said, in a move that suggests the government wants to show it is taking active steps to close the deal.

Egypt has been drawing up an economic reform plan in part to help convince the IMF that it is serious about economic reform. Analysts say the IMF usually requires governments to take active measures before signing off on loans.

"We will sign a preliminary memorandum of understanding before they leave," the minister told Reuters by telephone, adding that the team would remain in Egypt until Wednesday.

The loan had initially been expected to amount $4.8 billion, but the minister said last week that this amount would be reduced to match Egypt's ownership share in the IMF.

The government wants the $4.5 billion IMF loan to help it narrow a budget deficit running at 11 per cent of gross domestic product and a balance-of-payments deficit that has gobbled up more than $20 billion of its foreign reserves since the uprising that toppled Hosni Mubarak early last year.

Egypt's Cabinet will meet with President Mohamed Morsi on Tuesday to review the government's "comprehensive development plan," Prime Minister Hisham Qandil said on his Facebook page. The meeting would be followed by a news conference, he said.

No economic plan has yet been released to the public. But government officials have outlined a range of proposed measures, such as cutting fuel subsidies, raising sales taxes on goods and services, and taxing IPOs on the stock exchange.

The current ambiguity surrounding the proposed loan has drawn criticism from Egyptian political groups, the latest manifestation of which was an open letter to PM Qandil and IMF chief Christine Lagarde demanding that all loan negotiations be halted.

Recent leaks about the loan talks to Egyptian media are seen as an effort to prepare public opinion for steps that are certain to be unpopular.

Among the measures reported in recent days are raising the price of natural gas next month and a 1 per cent sales tax increase to 11 per cent.

The government is also proposing higher taxes on telephone calls and purchases of passenger cars, cigarettes, alcoholic drinks, carbonated mineral water, coffee beans and water-resistant cement.

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