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Sunday, September 9, 2012

Hisham Qandeel: Egypt can sign an IMF deal within next two months

IMF Managing Director Christine Lagarde during her meeting
with Egyptian President Mohamed Morsy
and Egyptian government over the IMF loan

Egypt’s Prime Minister Hisham Qandeel announced on Sunday, 9 September, that the deal with IMF (International Monetary Fund) over the $ 4.8 billion loan is expected to be signed within the next two months and the negotiations are ongoing now.

Egyptian economical situation has been deteriorated during the last years, and terrible economic conditions along with the high level of unemployment and level of poverty in the country were among the reasons which sparked the nationwide protests in 2011.

But after the events of January 25 Revolution and during the following months of transitional period the situation with Egyptian economy significantly worsened, as the key sectors of the country’s economy, such as tourism for example, are suffering due to instability and lack of security in the country. The international investments were also dropped, which affected negatively on the financial situation of Egypt.

Under such circumstances, when the key sectors of Egyptian economy still face troubles, there is a need for the active decisions taken by the state’s government in attempt to revive the country’s economy. It’s worth mentioning also, that tourism and international investments were among the key sources of financial inflow for Egyptian economy, and those sectors need special attention.

Egyptian authorities are holding the negotiations with IMF over the financial aid to support the country’s economy since last year’s summer, and this loan considers being one of the ways to restore Egypt’s economy, according to economists. This aid could help to develop state’s economy and to attract more foreign investors.

Since the beginning of the talks with IMF the amount of loan was estimated $ 3.2 billion, but at the current stage Egypt is planning to request $ 4.8 billion aid. It is connected to the deteriorating situation in the country, according to Egyptian authorities.

Christine Lagarde, the Managing Head of IMF, visited Cairo on 22 August to meet Egyptian President Mohamed Morsy, PM Hisham Qandeel, Finance Minister Momtaz El-Saeed and other representatives of the government’s economic team regarding the issue of the loan. The special technical team of IMF is expected to come to Egypt this month to observe the economic situation in the country and to study the issue. This team has to work together with Egyptian authorities and discuss the ways and forms of cooperation and the possible financial support.

Hisham Qandeel, Egyptian Prime Minister
Hisham Qandeel stated today, that the talks with IMF have been going on for more than one year, so the good frameworks for the implementing of the program for financial support are already created in Egypt. Egyptian authorities need to regulate this program adding some changes and proposals coming as a result of the cooperation with the IMF technical team. Egyptian government should make sure that this program will be useful for Egyptian economy and its conditions are comfortable for the country and to implement this program. Then Egypt can receive the long awaited and controversial IMF loan worth $ 4.8 billion. This issue could be agreed in a couple of months, announced Egyptian Prime Minister.

But the reactions on this loan within Egyptian society are mostly negative, with a lot of activists, liberals, leftists and Islamists protesting against the implementation of the IMF aid program. The demonstrations calling to refuse the IMF loan have been held since last year when the idea of this financial support appeared among Egyptian authorities. Most of Egyptian activists don’t see the IMF loan useful and positive for Egypt and are sure it will only deteriorate the economical situation.

Regarding the issue of international financial support of Egyptian suffering economy Hisham Qandeel stated also that Egyptian government also holds negotiations with the World Bank and African development bank which are expected to allocate additional $1 billion for budget support of the country. The loan worth half a billion will be supplied by the WB, and another half a billion will come from the ADB. Those loans are expected to come after IMF financial support.
In addition to that Saudi Arabia and Qatar, rich Gulf countries, have also pledged the financial support programs and budgetary support for Egypt. For example, Qatar announced that it is planning to invest nearly $18 billion in Egyptian economy.

Another Gulf country, Kuwait, is willing to discuss the issue of the possible financial support for Egypt. The representatives of this country have already visited Cairo and the special team and delegation which will include country’s officials and business executives is expected to return to Egypt this Thursday, 13 September, for the further talks with Egyptian authorities.