Egypt will sign a long-awaited $4.8 billion loan deal with the International Monetary Fund (IMF) by the end of this month, state news agency MENA reported on Thursday, citing the minister of planning and international cooperation.
Recently-appointed Planning Minister Amr Darrag told MENA that contacts between the government and the IMF were "ongoing." He added that Egypt’s economic reform programme aimed to reduce the country’s budget deficit to 9.5 percent of GDP in the upcoming 2013/14 fiscal year.
Darrag pointed out that a new 'smart-card' fuel allocation system, which is supposed to be introduced in August, would not affect the planned reforms.
The use of smart cards will allow consumers to purchase limited amounts of subsidised fuel, beyond which they will have to pay market prices. The new system aims to reduce Egypt's energy subsidy bill by over LE30 billion ($4.28 billion).
Egypt's total bill for energy subsidies is expected to reach LE100 billion in 2013/14, compared to some LE120 billion expected this year.
Talks between the IMF and the Egyptian government in April ended without an agreement. In a statement, the international lender said that Egyptian authorities needed to address the country’s fiscal and balance-of-payments deficits in a “socially balanced way.”
Earlier this week, Reuters reported that the IMF had lent more money to the region in the last three years than ever before after having been criticised for endorsing policies that deepened economic disparity under Arab autocrats.
According to Reuters, loan talks with Egypt remain stuck amid the government’s reluctance to impose unpopular measures, such as raising taxes. Anti-IMF sentiment in the Arab world's most populous country, meanwhile, appears to have spilled into popular culture.
Egypt’s Shura Council (parliament's upper house, currently endowed with legislative powers) is now waiting to ratify a government decision to raise sales taxes on six commodities. The move is aimed at increasing state revenue by around LE13 billion (roughly $2 billion), thereby curbing the budget deficit to meet IMF loan preconditions.