Global body is keeping mum over any loan agreement
The IMF delegation to Cairo has announced the completion of its annual review of the country's finances but gave no details of the results of reported discussions over a US$3 billion loan agreement.
The mission visited Cairo from 26 October to 3 November to carry out its annual Article IV Consultation, take stock of recent economic developments and assess financing needs. The one week IMF visit was half the length of previous consultations, raising questions about what exactly took place.
“Egypt’s medium-term economic potential is promising," said a statement from Ratna Sahay, head of the IMF mission to Cairo and deputy director of the Middle East and Central Asia Department.
"However maintaining macroeconomic stability and social cohesion amidst modest short-term growth prospects and a weakening external environment remains challenging."
She then suggested -- by her reference to Egypt's "homegrown" solution -- that the rumoured foreign funding would not be requested.
"The mission welcomes the authorities’ progress towards preparing a homegrown Egyptian strategy to meet these challenges and implement an inclusive growth and job creation agenda," Sahay concluded.
The IMF last visited Egypt in June and concluded its trip with the draft of a programme offering Egypt a $3 billion loan at a variable interest rate, starting at 1.5 per cent.
Egypt's military council, however, rejected the idea of borrowing from foreign sources and the loan offer was ultimately dismissed.
But in the last two months, the steady drop of Egypt's foreign reserves and a looming gap in funding for the interim government's 2011/12 budget has brought the issue of foreign loans back to the table.