A delegation from the International Monetary Fund (IMF) arrived in Cairo on Saturday to discuss conditions for a new economic program meant to provide Egypt with financial support of up to US$12 billion over the next three years. The negotiations come at a time when the Egyptian state continues to run-up a budget deficit, and is in dire need for hard currency to prop up its ailing economy.
The IMF delegation wil remain in Egypt until mid-August to finalize conditions for the deal with authorities from the Ministry of Finance and the Central Bank of Egypt. This delegation is headed by Christopher Jarvis, the mission chief for Egypt and advisor at the IMF’s Middle East and central Asia department.
Egypt had initially been seeking an IMF loan around four years ago, but negotiations stalled two years later.
Last week, IMF spokesperson William Murray commented that “the scale of IMF financing will depend on the mission team’s assessment of the financing needs and the strength of the authorities’ reform program during the visit.” Murray stated that the visit is expected to last about two weeks, and that the IMF will “communicate publicly on its outcome when that mission concludes.”
According to Minister of Finance Amr al-Garhy, Egypt is seeking a total of US$21 billion in financing — the US$12 billion from the IMF together with another US$9 billion from different sources, including loans from the World Bank and African Development Bank, issuing foreign currency bonds, and selling shares of five or six state-owned companies (amounting to partial privatizations) on the Egyptian stock market.
The state-owned news portal Al-Akhbar reported that the Egyptian government is also preparing further economic structural reform policies, including drafting a new law to impose a value added tax (VAT) upon consumer goods, together with cuts to state-provided subsidies.
According to Egypt’s State Information Service, this week President Abdel Fattah al-Sisi argued that action must be taken to reach a balance between austerity measures stipulated in “the IMF’s reform program and steps meant to contain their impact on the limited income brackets.”