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Monday, August 27, 2012

Talks between Egypt and IMF over the loan to be completed till the end of this year

Christine Lagarde, Managing Director of IMF, and
Hisham Qandeel, Egypt's Prime Minister
The talks between Egypt and IMF (International Monetary Fund) will start in September and are expected to be completed till the end of this year, according to Egypt’s Planning and International Cooperation Minister Ashraf Al-Arabi.

The IMF Managing Director Christine Lagarde visited Cairo this week for short talks and meeting with Egypt’s President Mohamed Morsy, Prime Minister Hisham Qandeel, Finance Minister Momtaz Al-Sayeed and the members of Egypt’s government’s economic team.

There was declared during this meeting that the special economic team of IMF will arrive in Egypt in September for studying the new economic program of Egypt and the loan issue. After consultations and cooperation with Egyptian authorities it is expected to take a decision regarding the financial support for Egypt’s suffering economy.

The negotiations over the IMF loan have been held since June last year, but there was no consensus within the country’s political spectrum, especially with some Islamist forces facing disagreement with the necessity of such a support. The stances over this loan are also different among the citizens of Egypt, with some people supporting this loan as a tool for restoring Egyptian economy, and with some other people expressing their disappointment. Thus, there were protests during Christine Lagade’s visit, attended mainly by leftists, who were opposing the IMF loan as the part of capitalistic system and consider this support being only the spreading of capitalism in Egypt and in the world.

But the economists and experts are sure the financial support from IMF is needed for Egypt’s economy at this stage. This loan will help to support Egyptian economy program and resolve several budget and social-economic problems of the country. So, the main aim of this loan is to obtain an international certificate to support the economy in the future and increase the confidence of international investments, who mostly withdrew from Egypt after the events of January 25 Revolution and the following transitional period.

Ashraf Al-Araby, Egypt's Planning and International
Cooperation Minister
Ashraf Al-Araby also stressed that Egyptian government will be not committed to withdraw all the amount of the $ 4.8 billion loan from the IMF, even if it will succeed in securing the loan.

The loan’s conditions will be negotiated during the ongoing consultations with the IMF special team and the following talks with IMF, and the program of development of Egypt’s economy will be also presented to the International financial organization. The loan conditions will be declared later, after an agreement will be reached between Egyptian side and IMF authorities. Egypt first requested $ 3.2 billion loan, now this amount raised due to the complicated economic conditions and increasing pressure on the local currency. Another reason for that is that the key sectors of Egypt’s economy face only a slow recovery (such as tourism, for example). That’s why Egypt requested and increased amount of the loan, which is $ 4.8 billion.
But it is not clear yet, if the amount of the IMF loan will remain $ 3.2 billion as it was negotiated before or if IMF will support Egyptian economy with $ 4.8 billion.

Ashraf Al-Araby also said that Egypt haven’t started yet to implement its new economic reform program, as the negotiations over the financial support are underway with IMF. But this economic program will be implemented and the reforms will continue in Egypt whether Egypt obtained the IMF loan or not, according to the Minister. This program also includes an activating of the ten-years plan to double the national income during 2012-2022 along with promoting local and foreign investments in Egypt.