Future planning minister Ashraf El-Araby expects Arab aid to tide Egypt over until political stability allows IMF talks over $4.8 bn loan to resume
Egypt is unlikely to be in a position to seek a long-chased $4.8 billion loan from the International Monetary Fund (IMF) before the end of this year, Ashraf El-Araby, who is set to become planning minister in Egypt's new cabinet, told Ahram Online on Monday.
"It is not appropriate to have a new round of negotiations with the IMF until Egypt regains political stability," said El-Araby, stressing that this was his own personal view rather than official ministerial policy.
El-Araby cited "the political deadlock in the country, the lack of consensus between the various political factions, and the ongoing unrest" as the main factors hampering talks with the international lender.
On Monday, El-Araby told Reuters that aid received from Arab states would, however, carry Egypt through its transitional period.
Last week, oil-rich Gulf nations Saudi Arabia, the United Arab Emirates and Kuwait, pledged a combined $12 billion in aid to support Egypt's economy in its transition after the ouster of president Mohamed Morsi on 3 July.
El-Araby had previously served as planning minister in the Morsi government, from August 2012 to May 2013, before being replaced by Amr Darrag, a senior member of the political arm of Morsi's Muslim Brotherhood.
Egypt started talks with the IMF in 2011 over a $3.2 billion loan. This has since been increased to $4.8 billion.
Lessening the state’s budget deficit and encouraging foreign investors to inject money into the domestic market remain the key objectives of the loan.
Reducing Egypt's subsidy bill has been an acute hurdle in negotiations over the last two years. The global lender has asked the government to rationalise fuel subsidies–which exceeded LE120 billion ($17.2 billion) in the 2012/13 fiscal year– and food subsidies. The Morsi government was wary of implementing subsidy cuts for fear it would incite unrest among a population already suffering economic difficulties.
Prime Minister Hazem El-Beblawi is in the process of selecting a new cabinet.
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