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Egypt's premier says govt very close to IMF deal

Egypt prime minister says Egypt is currently in last minute negotiations with the International Monetary Fund

Reuters, Monday 19 Nov 2012
Egypt's new Prime Minster Hisham Qandil (Photo: Reuters)
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Views: 1051

Egypt aims to secure agreement on a $4.8 billion loan from the International Monetary Fund in a few days to help shore up its battered finances, the prime minister said on Monday.

The IMF team in Cairo said earlier on Monday it was extending its stay for a few days and that it was having "constructive consultations" with the government on a deal seen as vital to restoring investor confidence in the economy.

"I think we are very close. We are still doing the last minute negotiations," Prime Minister Hisham Kandil said in an interview for the Reuters Middle East Investment Summit.

"We think we will be able to close the deal within the next coming few days," he said in Cairo, speaking of a deal that has been at the centre of on-off negotiations since soon after Hosni Mubarak was ousted in a popular uprising in February 2011.

Kandil outlined austerity steps in the government's economic plan, including cutting fuel subsidy spending. He said targetting subsidies on cooking gas cylinders so they reach the most needy had begun in several provinces, adding that when implemented across the nation it would save Egypt 5 billion to 6 billion Egyptian pounds ($820 million to $980 million) a year.

He said a plan to eliminate subsidies on 95-octane gasoline, the highest grade available, could happen within a week. Officials had said it would happen last week. Kandil said the step would save the government 55 million pounds a year.

On other measures, he said a plan to hike the sales tax, now at 10 per cent, was under review. Some reports suggested it would rise to 11 per cent, but Kandil said the hike "might be less."

Kandil said he was "optimistic" the budget deficit for the financial year 2012/13, which ends in June, would come in less than the 10.8 per cent of gross domestic product hit in 2011/12. Officials previously said the deficit last year was 11 per cent.

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