The country has been in discussions with the IMF since June 2011 regarding a $3.2 billion fiscal support package. On Tuesday, Egypt's finance minister said the value of the loan could rise to $4.8 billion.

 

The borrowing is contingent on Egypt's interim government presenting the global body with proposals on how it would reform the country's troubled economy.

 

In February 2012, Egypt’s government prepared an economic programme that suggested raising sales taxes, levies on property, alcohol and cigarettes. The now-dissolved Islamist-led parliament overwhelmingly rejected the proposals.

 

"The new programme will have more focus on social justice, it will be a fresh start for talks with the IMF," Abdallah Shehata, economic adviser to President Morsi and a member of the Freedom and Justice Party, told Ahram Online.

 

Shehata gave no details on any changes to income taxes, the key generator of revenue for the Egyptian state. 

 

February's programme said little about income tax, despite long-standing demands from some quarters that Egypt's tax structure be made more progressive.

 

"We rejected [the reform programme] because the government was reluctant to share details on it. When the IMF insisted that a consensus should be created over the loan, Farouq Al-Oqda [President of the Central Bank of Egypt] was upset with the IMF and stopped replying to their emails," Shehata said.

 

Parliament rejected the programme at a time when the FJP was in deep disagreement with the Supreme Council of the Armed Forces (SCAF) and the prime minister it appointed, Kamal El-Ganzouri.

 

Members of parliament said at the time that the programme did not include proposals to improve public security, reduce poverty or provide the revenue to raise wages.

 

Ironically, the finance minister who prepared the first programme, Momtaz El-Said, is now preparing the second.

 

The managing drector of the IMF, Christine Lagarde, will visit Egypt on 22 August, according to a statement from the fund on Wednesday.

 

"This is a preliminary visit to kick off the new round of talks," Shehata explained. "But we expect it will take us two months at least before the loan is approved."

 

Egypt’s state budget deficit for 2012/13 is projected at LE140 billion, almost 8 per cent of GDP. 

 

The government has borrowed from the local market, causing liquidity to dry up and leading yields on treasury bills to shoot up to 16 per cent per annum. 

 

An injection of funds from abroad is seen by many as necessary to stabilise the economy.