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Egyptian PM expects IMF visit this month to discuss revised reform plan

An IMF mission is expected to visit Egypt this month to discuss a revised loan deal with the government, although details remain scarce

Reuters, Ahram Online, Thursday 14 Feb 2013
International Monetary Fund (Photo: AP)

Egyptian Prime Minister Hisham Qandil said on Thursday he expected an International Monetary Fund team to visit this month for talks on a loan agreement seen as vital to supporting the country's economy.

Asked when the IMF mission would return to resume stalled talks on the $4.8 billion (LE3 billion) loan, Qandil said: "Within this month, God willing."

Qandil said in an interview broadcast late on Wednesday that the government had now finished drawing up a revised reform programme seen as vital to securing the loan. He added that changes were based on recommendations from a national dialogue that had been held with different interest groups.

Egypt's government signed a preliminary agreement for the urgently needed loan in November, but the formal signing was delayed after political turmoil forced it to postpone a number of austerity measures necessary for a deal.

The Egyptian government has repeatedly said the IMF delegation would return soon to finalise a deal.

"The new revised programme has been finished," he said in a televised interview with MBC Masr, without giving further details.

Qandil said the government was in touch with the IMF - International Monetary Fund - by email, but when he was asked whether it was true there were difficulties in getting loan negotiations restarted, he said: "Definitely ... (But) we won't go back to zero."

Egypt opposition leader Mohamed ElBaradei on Tuesday called for a national consensus to secure the loan and save the country from economic collapse.

Ratings agency Moody's cut Egypt's credit rating on Tuesday, citing doubts about its ability to secure the loan and the economic impact of a new round of political unrest.

Many economists believe the government could postpone ratification of an IMF deal until parliamentary elections expected to get under way in April or May to delay austerity measures that could hit the popularity of the ruling Islamists.

The IMF accord is seen as vital to propping up the state's battered finances. Ratification would also unlock billions of dollars of further aid from foreign states, economists say.

Ratings agency Moody's cited uncertainty about the government's ability to secure the loan as one reason for cutting Egypt's credit rating on Tuesday.

"What we need desperately, even more than financing is for the streets to calm down and for some patience and hard work from the citizens," Qandil said.

Moody's also cited a further weakening in Egypt's external payments position given a large drop in foreign reserves in January as the country battles to stave off a currency crisis.

Egypt's central bank has said foreign reserves fell to $13.6 billion in January, below the $15 billion level needed to cover three months worth of imports.

"The economy is not in a good state. The economy needs a pause. It needs calm," Qandil said.

The details of the potential loan were never announced openly to the Egyptian public. Leaks have been the main source of information about the package.

Declarations made last month by Ashraf El-Arabi, minister of planning and international cooperation, at a seminar with financial paper Al-Mal, gave some idea about the programme. 

He revealed that the deal with the IMF stipulates minimum foreign reserves of $19 billion. Egypt's foreign reserves fell below this level in December 2011. 

"We will ask the IMF to reduce the minimum foreign reserves' limit fixed in the former Stand-By Agreement," the minister said. 

Budget deficit levels seem to be another worry for the IMF. In the projected national budget for 2013, the deficit was forecast to be $140.3 billion or 7.6 percent of GDP. That figure does not seem realistic any more, especially after the government halted tax increases and subsidies cuts aimed at reducing the deficit.

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