Egypt's newly appointed minister of finance Fayad Abdel-Moneim (Photo: Al-Ahram)
Egypt's talks with the International Monetary Fund (IMF) over an elusive $4.8 billion loan are “serious,” and the negotiations with the global lender are ongoing, said the newly-appointed finance minister on Sunday.
Fayad Abdel-Moneim stated at a press conference that the IMF has asked for a reduction in Egypt's budget deficit, but had not specifically requested the removal of subsidies.
Cutting subsidies, particularly energy subsidies, will be a core part of the Egyptian government’s attempt to reduce the budget deficit, according to previous statements by governmental officials.
Former oil minister Osama Kamal told Ahram Online in April that the government expected to save some LE30 billion ($4.3 billion) from Egypt's fuel subsidy bill in the 2013/14 fiscal year through the introduction of a smart-card system, which would ensure that subsidised petrol reaches only those who need it.
This would be a significant drop from the current fiscal year – ending 30 June – in which fuel subsidies are expected to exceed LE120 billion ($17.2 billion).
According to the 2013/14 draft budget which was presented to the upper house of parliament last month, the government expects the subsidies bill for all products including fuel will account for a full 30 percent of total public expenditure, growing by 12 percent on the previous year to reach LE205.5 billion ($29.5 billion).
On Sunday, the newly-appointed minister of investment announced that Egypt's budget deficit would be around LE 200 billion ($28.75 billion), equivalent to 11.5 percent of national output, in the 2012/13 year to the end of June
Egypt's budget deficit is expected by the government to drop in the upcoming 2013/14 fiscal year to LE197 billion.
On Thursday, IMF spokesperson Gerry Rice stated that the fund is not currently planning a new visit to Egypt to discuss the loan programme as it is awaiting new economic data and reform plans from the government
Abdel-Moneim also said that the ministry will finalise regulations regarding sukuk, or Islamic bonds, within two months, after the plans were approved by President Morsi.