Egypt's minister of planning and international cooperation, Fayza Abul Naga, denied a report published in several Egyptian newspapers on Tuesday that Egypt has declined a World Bank loan because its terms were incompatible with Egypt's national interest.

Fayza Aboul Naga's office manager told Ahram Online that the minister was misquoted as her words were taken out of context. He added that the office was preparing a statement for the World Bank, clarifying the minister's position.

Ahram Online holds a letter dated 2 May 2011 from Mrs. Aboul Naga addressing the World Bank's Country Development Director, confirming the extension of a World Bank loan amounting to US$2.2 billion for budget support.  

The ministry of Finance provided Ahram Online with a statement indicating that acquiring loans from international organisations boosts confidence in Egypt's economy in the international community. The statement also explained that the suggested World Bank loan comprises only 7 per cent of needed funding to cover the budget deficit in 2011/2012.

For their part, as a reaction to what was published today about Egypt declining their loans due to unfavourable conditions, the World Bank issued a press release that implied that the loan has not been cancelled and that the World Bank does not grant conditional assistance.

The release stated that negotiations are currently underway to grant Egypt a loan amounting to $4.5 billion over the next two years.

It also indicated that the central aim of their loan programme is to support the Government's "efforts to expand access to information, enhance transparency and accountability, and generate employment opportunities".

The release also insisted that the bank "dialogues" such conditions, indicating that the Egyptian authorities have the upper hand in determining how fast such reforms are to be delivered.

World Bank loans are notoriously perceived to come with a baggage of associated economic policies, generally favouring free market practices over social benefits.

Egypt's finance ministry, the main caretaker of Egypt's finances, completely denied Aboul Naga's statement, in what was perceived as a possible squabble between ministries of the economic group in the interim cabinet.