Egypt Makes More Progress In IMF Loan Deal

The International Monetary Fund said on Friday Egypt’s government and political partners have made good progress in agreeing on the content of economic measures that will make up an IMF funding program for the country.

“We feel there is some progress in terms of getting a commitment and broad buy-in to the objectives and the measures” of a program, including among those who are likely to be involved in implementing it after the elections, said IMF Director for the Middle East Masood Ahmed.

Egypt and the IMF are in discussions on a $3.2 billion loan program, which had been opposed by the powerful Muslim Brotherhood’s Freedom and Justice Party. But the FJP now appears to be on board.

The delay in sealing the deal, which the government had hoped to secure in March, has brought the country closer to a fiscal crisis that could lead to a jump in consumer prices and interest rates, a big currency devaluation and huge pressure on banks.

The IMF is insisting that any agreement on financing is backed by Egypt’s government and political partners ahead of June elections. This would ensure the deal would outlast the political transition following the polls.

Ahmed said the IMF agreed with Egypt’s estimated financing needs of $10 billion to $12 billion, part of it funded by the IMF and the rest by donors.

Saudi Arabia has said it will deposit $1 billion at Central Bank of Egypt by the end of April as part of a $2.7 billion package to support Egypt’s battered finances.

Egypt’s foreign reserves have tumbled by more than $20 billion to $15.12 billion during the political turmoil and spasms of violence since Hosni Mubarak was ousted from power last year. The budget deficit has spiraled, Reuters reported.