SCAF has not raised Egypt's foreign debt ceiling, so far: Official

The current visit of an IMF delegation to Cairo could end up yielding a loan agreement, a finance ministry official has told Ahram Online on condition of anonymity.

The ministry hopes to conclude a US$3 billion loan agreement with the International Monetary Fund at the same favourable terms that were offered in June, despite a cap on foreign borrowing set by Egypt’s ruling military council.

There is evidence, however, that the Supreme Council of Armed Forces (SCAF), which has governed the country since former president Hosni Mubarak’s February ouster, might raise the cap.

On Sunday, the Minister of Planning and International Cooperation told Al-Ahram daily newspaper that the government is discussing a $35 billion package promised to Egypt by the G20 in March.

This amount is equivalent to Egypt's total foreign debt and represents 15.1 per cent of the country's GDP in March. Debt service amounts to 5.3 per cent of total current receipts (exports, service payments and transfers).

Planning minister Fayza Abul Naga is close to the SCAF and a long-standing opponent of any increase in these ratios.

The timing of her announcement, one day before the IMF visit, suggests that Abul Naga was raising the idea of alternatives to a loan from the controversial global body.

Abul Naga has previously stated that she prefers programme-designed loans, such as those from the World Bank and other multilateral development lenders, to policy-driven loans like those offered by the IMF.

But the Minister of Finance, Hazem El-Beblawi, has insisted that the government is suffering from a liquidity crunch which has to be covered by loans. He prefers what he describes as "low-cost" foreign borrowing over the "high-cost" domestic kind.