TEXT-Fitch: Egypt IMF request only a first step

Egypt's request for a USD3.2bn IMF standby facility is encouraging, although IMF assistance on this scale would only have a meaningful impact on the country's finances if it catalysed additional international support, says Fitch Ratings.

If granted, the facility's most positive impact would be to reassure international investors that Egypt is implementing clear and sustainable fiscal and economic policies, an essential platform for kick-starting renewed foreign investment.

This in turn could stabilise - or even ease - borrowing costs until the transfer of power from the military council, due in June.

Talks between the Egyptian government and the IMF mission began in Cairo Monday, seven months after the country's military council turned down USD5.2bn of assistance from the IMF and World Bank, reflecting its reluctance to take on large new external debt and its preference to rely on domestic funding to finance the budget deficit.