Last updated: 20 November, 2012

IMF agrees $4.8 billion loan for Egypt

The International Monetary Fund said Tuesday it had reached a deal with Egyptian authorities on a 22-month loan totalling some $4.8 billion to help the country overcome economic difficulties.

The staff-level agreement is expected to be submitted to the IMF’s executive board for approval in a few weeks, a statement said.

“The Egyptian authorities have developed a national programme that seeks to promote economic recovery, address the country’s fiscal and balance of payments deficits, and lay the foundation for rapid job creation and socially balanced growth in the medium term,” said IMF official Andreas Bauer, who led the Washington-based lender’s mission to Cairo.

“The policies contained in the authorities’ programme will help address Egypt’s pressing economic and social challenges, and reduce vulnerabilities,” he added.

The so-called Stand-By Arrangement will support the government’s economic programme through the 2013/2014 fiscal year and support an economy left battered by the 2011 uprising that toppled Hosni Mubarak’s regime.

Egyptian Minister of Planning and International Cooperation Ashraf al-Arabi said the agreement would be presented to the cabinet on Wednesday as a matter of procedure.

In Cairo, talk of an Egypt-IMF agreement had met some opposition from civil society groups and some political parties.

In a letter addressed to Egypt’s Prime Minister Hisham Qandil and to IMF chief Christine Lagarde, 17 groups expressed concerns over the lack of transparency and called for the negotiations to be frozen.

“The negotiations of the terms and conditions of the loan agreement, including the government’s economic reform programme, have lacked transparency on the part of both the IMF and the government of Egypt,” the groups said in the letter.

“The austerity measures associated with this potential loan agreement, including cutting subsidies as well as other deficit reduction policies, may aggravate the economic deprivation of a large section of the population, threatening their basic economic and social rights,” they said.

Political instability has hammered the tourism industry in Egypt, the country’s major source of revenue, and has led to a drop in foreign investments, worsened the budget deficit and sparked social conflict.

The Egyptian central bank’s currency reserves plunged, threatening the country’s ability to import commodities and support the Egyptian pound.