World Bank to take stock as Egypt scraps IMF loan

Monday 27 Jun 2011

The World Bank said on Sunday it would have to take stock of plans to lend to Egypt after the International Monetary Fund confirmed the authorities no longer wanted an IMF-backed loan program

Egyptian Finance Minister Samir Radwan said on Saturday Egypt would not borrow from the World Bank and the IMF after revising its budget and cutting the deficit target to 8.6 percent of gross domestic product from 11 percent.

A World Bank spokesperson said it was not informed of the decision.

"As far as we are aware these discussions are ongoing and we have heard nothing from the government to suggest the contrary," a World Bank spokesperson said.

"If there is no IMF program, we will have to take stock," the spokesperson added.

The IMF said Egypt had scrapped plans for a $3 billion IMF loan agreed last month. The World Bank and other international donors usually look to the IMF as a seal of approval to lend to governments.

World Bank President Robert Zoellick said on May 24 the poverty-fighting institution would make available $4.5 billion over the next 24 months for Egypt. The funding included $1 billion this year in budget support and another $1 billion next year to help cover a huge budget shortfall after the economy was plunged into turmoil by mass protests that drove Hosni Mubarak from office on February 11.

The World Bank program was also aimed at improving transparency and boosting employment, which were part of demands of the protesters.

Radwan said Qatar had provided Egypt with $500 million for budgetary support in the past week, and Saudi Arabia had offered a similar amount.

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