IMF Says No Discussions with Egypt’s Interim Government

The International Monetary Fund on Thursday said it was not currently discussing a possible loan with Egypt’s interim government, and its decision on whether to engage would be guided by the views of the international community.

The IMF had been negotiating a critically needed $4.8 billion loan with Egypt before last week’s military removal of elected President Mohamed Morsi.

“In determining how to deal with the interim government of Egypt, we will be guided, as is usually the case in these circumstances, by the views of the international community, in particular those of the Fund’s membership,” IMF Spokesman Gerry Rice told reporters.

The IMF typically does not negotiate with governments that have not been recognized by the international community.

Rice said the Fund had not been in touch with the interim government, but continued to remain in “regular contact” with Egyptian bureaucrats on the technical level.

“We continue to follow developments (in Egypt) closely, and are considering their implications for the IMF’s work in helping Egypt address its serious economic problems,” Rice said.

He declined to comment on the $12 billion aid package promised to Egypt by its wealthy Gulf allies this week, and said he did not have the details of the program.

While the massive package should be enough to help Egypt avert a balance of payments crunch that was looming this year, an IMF loan is widely viewed as critical for convincing foreign donors and investors that Egypt’s economy is on the right track.

To satisfy the IMF, the government would likely have to commit to deep cuts in its budget deficit. It remains unclear whether any Egyptian government can muster the will to make politically explosive cuts in subsidies required to reduce the deficit.

Source: Reuters