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Egypt denies IMF has imposed conditions on loan package

The finance ministry denied reports the IMF required a million state employees be laid off as a precondition to providing funding to Egypt

Ahram Online , Sunday 31 Jul 2016
A customer counts his U.S. dollar notes in a bank in Cairo, Egypt March 10, 2016 (Reuters)
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The International Monetary Fund (IMF) has not imposed any preconditions on Egypt in order to implement a mooted $12 billion loan package, the country's finance ministry said on Sunday.

The ministry's remarks came after media reports suggested that the Fund had laid down requirements to provide a loan package to Cairo, including laying off a million public servants.

“There is no conditionality on Egypt to obtain the approval of the International Monetary Fund for the government's reform programme in order to provide a loan fund to finance its procedures," a statement by the ministry on Wednesday said.

The ministry said negotiations with the IMF delegation, which arrived in Egypt Friday, is within the framework of the government reform programme and the IMF "will review the procedures of [the programme] to ensure their effectiveness in achieving its desired goals."

The government is seeking a package of $4 billion a year over three years, with an interest rate of 1 or 1.5 percent, according to Finance Minister Amr El-Garhy.

In addition, the package will include $2-3 billion in international bonds, expected to be offered between September and October, according to the minister.

The goals of the government reform programme include, the ministry said, curbing a huge budget deficit (ranging between 11 and 13 percent over the past six years) and growing public debt, stimulating growth and creating more jobs to alleviate unemployment and poverty rates and increase national income.

The IMF has not provided information about the request or possible funding amounts.

Egypt's economy has struggled since the 2011 revolution, which unleashed political turmoil and scared off investors and tourists.

The country's plummeting foreign reserves forced the central bank to devalue the Egyptian pound by nearly 15 percent in March. The pound has continued to weaken, falling to an unprecedented 13 EGP to the dollar on the black market earlier this week.

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