Egypt eyes $3.2-bn IMF loan to shore up its economy

Deepening economic problems

CAIRO - Egypt on Monday discussed with the IMF the possibility of obtaining 3.2 billion dollars to shore up its economy which has been badly hit by last year's unrest, the planning minister said.
Fayza Abul Naga, who also heads the international cooperation portfolio, said the loan was at the centre of talks between Prime Minister Kamal al-Ganzuri and a visiting International Monetary Fund delegation.
"We discussed obtaining a loan from the IMF worth 3.2 billion dollars to help the government implement its programme to cut the budget deficit and the balance of payments," state-run MENA news agency quoted Abul Naga as saying.
She put the budget deficit at 144 billion Egyptian pounds (around 24 billion dollars), or 8.7 percent of gross domestic product, and said that the balance of payments stood at 16 billion dollars, MENA reported.
The IMF mission arrived on Sunday to launch talks with Egyptian officials on financial aid.
"The objective of the mission is to see how the Fund can support an Egyptian programme," IMF spokesman Gerry Rice said in a statement last week ahead of the visit. But he declined to comment on the potential size of the programme.
Since the revolution that overthrew veteran president Hosni Mubarak last February, the new authorities in Cairo have hesitated to invite the IMF to help sort out the country's deep economic problems.
The large fiscal deficit, a fall in receipts from the vital tourism industry and an investment climate badly affected by instability and violence all contributed to the slump.
Official figures announced on Sunday showed that tourism earnings fell by 30 percent in 2011 while revenues for the Suez Canal rose by almost half a billion dollars to a total of 5.22 billion dollars last year.
Along with tourism and remittances from workers abroad, the canal is one of Egypt's key revenue earners.
Abul Naga said Ganzuri's government is determined to shore up the economy, cut the budget deficit, create jobs and restore investor confidence through a programme of reform.
The IMF carried a "positive" message to Egypt and was not making conditions in its offer to help, she said according to MENA, adding that a technical team will remain in the country for a week.
Finance Minister Mumtaz Said said in December "it is too soon to know" whether Egypt would take the loan from the IMF.