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Bloomberg Businessweek: Egypt Aims to Sign IMF Loan Agreement in June, Minister Says

Egypt will have access to half of the sum of $3.2 billion once the memorandum of understanding is signed.
03.04.12 | Interesting article at Bloomberg Businessweek

Egypt is aiming to sign a agreement with the International Monetary Fund on a $3.2 billion loan in June, Minister of Planning and International Cooperation Fayza Aboulnaga said.

Egypt will have access to half of that sum once the memorandum of understanding is signed, Aboulnaga said in an interview in Cairo today. She said the IMF has asked for broad backing from all political groups in the country before approval is granted.

The Muslim Brotherhood, whose political arm holds 47 percent of the seats in the lower house of parliament, has said it wants to make sure that the interim government has exhausted all avenues of domestic funding before taking on additional debt. It also says the government’s economic program, submitted to the IMF as part of the loan negotiations, is too vague.

Egypt, whose economy is struggling to recover after the uprising against Hosni Mubarak last year, has turned to the IMF to help cover the budget deficit and replenish plunging foreign currency reserves. An agreement with the Fund may encourage investment and spur other donors to deliver on aid promises.

The central bank said on its website today that net international reserves fell to $15.1 billion last month, from $15.7 billion in February and $36 billion at the end of 2010.

Egypt officially requested the IMF loan in January, after turning down a similar loan offer last year amid domestic criticism of the move. An IMF committee was in Egypt last week to discuss the loan.

Masood Ahmed, the IMF’s Middle East and Central Asia department director, said in a March 19 interview that the loan could be concluded in “the next couple of months,” assuming that the interim government’s economic program wins broad public support.

Lawmaker Moustafa Bakry told reporters yesterday following a meeting with Prime Minister Kamal el-Ganzouri that the premier said a political group was impeding progress on the loan.