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IMF will not grant Egypt loan without tough reforms: UK official

A UK official tells Ahram Online that they back the IMF conditions to the long-awaited loan to Egypt and, if met, are willing to speed up slow-going negotiations

Amer Sultan in London, Tuesday 20 Nov 2012
Lagarde
IMF Managing Director Christine Lagarde (L) talks with Egypt's Prime Minister Hisham Kandil during their a news conference at the cabinet headquarters in Cairo, 22 August 2012. (Photo: Reuters)
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A well-positioned UK official close to the negotiations between the IMF and Egypt over a $4.8 billion loan deal reveals to Ahram Online that "The IMF wants economic reforms before it gives the money."

Although the UK government agrees with the IMF conditions, it also believes it will not be easy for the Egyptian government to accept the loan's terms.

The UK government expressed it is willing to help accelerate the talks if Egypt will respond to the international financial institution's demands.

The anonymous government worker also says the UK has been pushing Egypt to take the negotiations with the IMF on the loan forward.

"We have some influence in some international institutions. So, we can help push the process in a diplomatic sense, but the IMF ... should make sure that Egypt implemented reforms.

"If you are going to lend someone a lot of money, you are going to make sure that they will be able to pay it back to you, essentially," the official explained.

The conditions are no doubtedly tough for Egypt. In fact, the now-dissolved People’s Assembly (lower house of parliament) and other political groups rejected it, which is one reason why Egyptian president Mohammad Morsi is hesitant in signing. The negotiations also began before Morsi came to power in June.

"The negotiations are very slow because it is very difficult for the Egyptian authorities to be happy with conditions requested," said the official.

"He [Morsi] is correct in looking it over cautiously because he is aware that it will be very tough for Egypt [to accept the reforms needed] in the current climate," the official admitted.

Egypt seeks a deal on a $4.8 billion loan from the IMF help face its financial and economic difficulties after the January 25, 2011 revolution.

An IMF delegation has been in Cairo since last week. It extended its stay for a few days, saying it is having constructive consultations with the government on the deal - which some financial experts see as crucial to restore international investors’ confidence in the Egyptian economy.

"I am sure the Egyptian authorities will not be fully happy with what the IMF is asking, but these are its terms and conditions," the UK official added.

He warned that "the situation will be even worse if the IMF poured money in and this money disappeared down in the drain."

The IMF expressed it wishes to see Egypt as a place with a stable economy where jobs are being created.

However, the UK official reiterated that to achieve such aim "The IMF is realistic about the conditions needed."

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