No Agreement Between IMF and Egypt – IMF Official

The International Monetary Fund does not yet have an agreement with Egypt on providing financial support to the cash-strapped country, the head of the fund’s Middle East department, Masood Ahmed, said Friday.

“We have been working with Egypt, but we have not yet got an agreement on financial support,” he said at a lecture in London, without giving additional details on when an agreement might be reached.

The government is short of funds and has been negotiating with the IMF over a $4.8 billion loan, which analysts and investors say is critical for the country. IMF officials left Cairo in April without agreeing on the terms of the loan.

The IMF wants to see Egypt reduce its spending on subsidies as part of a reform plan for the loan. However, President Mohammed Morsi’s government can ill afford to introduce cutbacks and austerity measures while anti-government protests continue to sweep across Cairo and other major cities ahead of parliamentary elections later this year.

Mr. Ahmed, who was speaking about regional economic developments and the outlook for the Middle East and North Africa, said that getting broad support for a program is difficult during a period of political transition, but without that consensus it is hard to move forward.

Source: Wall Street Journal