Egyptian newspapers reported Tuesday that the government has declined a World Bank loan because its terms were incompatible with Egypt's national interest.
The Minister of Planning, Fayza Aboul Naga, was quoted yesterday saying that the government will not accept any conditional loans from the IMF or the World Bank.
She did not provide any further details on the declined World Bank loan.
Other officials seemed to be unaware of the decision.
"I do not know anything about a World Bank loan that we rejected," Abdel Fattah El-Gebaly, advisor to the Finance Minister, told Ahram Online.
Officials from the Ministry of Planning, including the Minister were not available to elaborate on the statements.
According to Egyptian dailies, Aboul Naga said that the final agreement on 12 month IMF loan has not been concluded due to some conditions the government does not approve of.
In late May the World Bank said it was planning to loan Egypt US$4.5 billion over two years, with payment related to social and political reforms.
On 5 June, the IMF announced that an initial agreement on a $3 billion loan for Egypt had been reached. The delegation which visited Egypt suggested the IMF expects the country to alter its subsidies system and adhere closely to free market principles, despite previous claims that assistance would be unconditional.
Egypt's 2011/2012 budget plan includes significant Increases in spending, which will cause a sharp rise in the deficit, already at 11 per cent of GDP.