Egypt Must Keep Economic Reforms In Line With Political Imperatives: IMF

The International Monetary Fund will resume talks with Egypt over a proposed $4.8 billion loan once Cairo ensures it that recent economic reform measures are in line with Egyptian “political imperatives,” an IMF spokesman told Ahram Online. 

Egypt came close to securing the high-profile loan deal last December before it was postponed at the government’s request. 

On 9 December, President Mohamed Morsi, fearing a popular backlash, reversed a raft of tax hikes – a core part of the government’s economic reform program – less than 24 hours after enacting them. 

“We understand that the Egyptian authorities are in the process of updating their economic program and adapting it to current economic circumstances,” Wafa Amr, senior IMF press officer, said in an emailed statement. 

The government has since failed to implement the tax raises, but has launched a “social dialogue” to discuss the planned measures.

 “The [Egyptian] authorities also want to ensure that the measures put forward are consistent and compatible with their political imperatives,” said Amr. “Once this step is completed, we will discuss the timing of a possible mission to Cairo to assess the revised program.” 

Egypt’s currency lost some 8 per cent of its value since the beginning of 2013, after the central bank implied it would not be able to freely support the Egyptian pound due to post-revolution declines in the country’s foreign currency reserves. 

Egypt’s severe fiscal troubles were triggered by the instability that followed the Tahrir Square uprising that unseated Hosni Mubarak in early 2011 and which has taken a heavy toll on the country’s tourism sector and investment receipts.