IMF endorses Egypt’s $3B stimulus plan

The International Monetary Fund commended Sunday Egypt’s plan to boost public spending by $3 billion to create jobs and stimulate economic growth as political unrest keeps private investment subdued. “We do think it’s a good idea,” Masood Ahmad, head of the Middle East and Central Asia department at the IMF, said in a briefing in Washington.

The stimulus is financed by aid from Saudi Arabia, the United Arab Emirates and Kuwait, which have pledged $12 billion to Egypt since the military toppled Islamist President Mohamed Mursi in July. The Gulf money offers Egypt a “window” to carry out reforms that would direct more spending toward capital investment, Ahmad said.

The flow of aid led Egypt to halt plans to seek a $4.8 billion loan from the IMF, an agreement it had struggled to secure for more than two years following the ouster of Mubarak.

The economy saw several years of 7 percent growth before the popular uprising that brought down Hosni Mubarak in February 2011 but since then has suffered from a collapse in tourism and foreign investment and an increase in domestic labor disputes.

Egypt’s economy grew by 2.1 percent in the year to end-June, the state news agency MENA quoted Planning Minister Ashraf al-Arabi as saying Sunday, down from the 2.2 percent reported in 2011/12.