An International Monetary Fund (IMF) delegation will visit Egypt 15 January to pick up negotiations on a $3.2 billion facility to support the Egyptian economy, Minister of Finance Momtaz El-Said was reported saying in Al-Ahram Arabic daily Sunday.
El-Said added that the IMF had not imposed any conditions on Egyptian policymakers.
In June 2011, Egypt's military rulers rejected a $3.2 billion facility from the IMF just before a deal was concluded. They cited their unwillingness to increase Egypt's foreign exposure as reason for their decision. However, with the continued deterioration of Egypt's fiscal status, and mounting pressures on the local currency, Egyptian officials resumed negotiations with the global fund.
Last week, El-Said stated Egypt would maintain its budget deficit at 8.6 per cent of GDP, denying earlier official statements that it could surge above 11 per cent. A top level ministerial committee announced in December that Egypt might need up to $12 billion from the IMF to maintain economic stability.
Prime Minister Kamal El-Ganzouri announced a set of budget cuts aimed to reduce the deficit by some LE20 billion.
Despite so, the pressure remains on the local currency with Egypt's foreign currency reserves depleting at an accelerating rate. Last Thursday, the Egyptian Central Bank announced that net foreign reserves fell to $18.12 billion as of the end of December, down some $2.03 billion from the previous month — the largest monthly drop in 2011.
The country's once extensive reserves dropped 50 per cent in 2011 following a popular uprising that unseated former president Hosni Mubarak.
For his part, Hany Kadry, assistant finance minister, indicated that the talks with the IMF aim at assessing the ability of Egypt's economic programme to maintain economic and political stability.
Kadry explained that the IMF will issue a report on the Egyptian economy, and that if it fared favourably, it could be the country's ticket to regaining trust with investors and in international markets.