Egypt may resume talks on financing from IMF

Reuters , Thursday 15 Dec 2011

Planning and international cooperation minister says Egypt may resume negotiations with the International Monetary Fund for a financing facility

Fayza abou Elnaga
Egyptian minister Fayza abou Elnaga (Photo: Al-Ahram)

 

Egypt may resume loan talks with the International Monetary Fund, a minister said on Thursday.

Egypt, which turned down an offer of a $3 billion IMF facility in June saying it did not need the funds, has seen its economy hammered by the uprising that unseated Hosni Mubarak in February, widening the budget deficit.

"Egypt may need to restart talks with the IMF to obtain loans," Planning and International Cooperation Minister Faiza Abu el-Naga told reporters.

The country's new Prime Minister, Kamal al-Ganzouri, said earlier this week the government would not agree to funding while the outlook for the budget was unclear, though he expressed a willingness to consider it.

Soaring prices were among the political and economic factors that drove people on to the streets to oust Mubarak, and inflation has ticked up again. Urban consumer inflation rose to an annual 9.1 per cent in November from 7.1 per cent in October.

Economists say Egypt is heading for a currency crisis if it does not swiftly stabilise an economy battered by political turmoil, which has prompted an exodus of investors and tourists.

Its foreign currency reserves plunged to about $20 billion in November from $36 billion at the end of 2010.

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