Planning Minister: Egypt to formally invite IMF

The government of Egypt is formally inviting the International Monetary Fund (IMF) to resume talks over a pending $4.8 billion loan agreement, announced Minister of Planning and International Cooperation Ashraf El-Arabi Thursday. Al-Arabi said he expected the IMF's technical team to return to Cairo within 10 days to discuss the rescue package. El-Arabi also told state-owned Al-Ahram Arabic website that despite the obstacle posed by Egypt's widening budget deficit in reaching an agreement with the fund, he was confident Egypt would obtain the loan, given the international community's commitment to support Egypt's economy. Egypt's budget deficit currently stands at $17.7 billion, equivalent to 6.7 percent of Egypt's gross domestic product (GDP), according to a statement made by Egypt's finance ministry Wednesday. Egypt had reached a preliminary agreement with the IMF in November 2012, but political unrest postponed final ratification by the IMF board. Doubts had also been raised on the Egyptian government's ability to implement economic reforms, upon which the loan is conditioned, after President Mohamed Morsi promptly suspended a raft of radical tax hikes on 9 December, within hours of enacting them, fearing a popular backlash. On Monday, the government announced a modified economic reform programme, featuring tax hikes and government subsidy cuts aimed at meeting the preconditions for IMF the loan. The recently proposed measures, yet to be approved by Egypt's Shura Council, could save Egypt LE10-12 billion a year, according to the finance ministry. The loan is widely seen as a vital lifeline for the country's foundering economy, on which two years of political turmoil following the January 2011 revolution have taken a significant toll. "The IMF loan represents a certification that Egypt's economy is capable of surmounting the current period," President Morsi affirmed in a televised interview Sunday. "We need this certification in order to unlock more [foreign] investment." In January, the European Council announced that the EU would grant a $6.5 billion loan to Egypt once the IMF loan is sealed. Albawaba Business