An International Monetary Fund (IMF) technical team has started the latest round of negotiations with the Egyptian Government over the proposed $4.8 billion loan. The delegation is supposed to discuss actions to solve the Egyptian economy’s enduring problems; a budget deficit that rose to 11 per cent of gross domestic product, large youth unemployment and deteriorating foreign reserves.
Former Finance Minister, Samir Radwan, whose tenure was extended under the premiership of both Ahmed Shafiq and Essam Sharaf, welcomed the resumption of negotiations and pointed out the importance of the loan to Egypt, especially in today’s severe economic circumstances.
“I began the negotiations with the IMF during my tenure, but the negotiations failed due to domestic opposition. Now the situation is much worse and there is now way around signing with the IMF,” Radwan said. He added that the IMF loan was not only about the $4.8 billion, it was also “a certificate of good conduct for the Egyptian economy,” one that could mobilise funds from other financial institutions to Egypt.
Radwan also said that there was enough time wasted and that Egypt simply needed the funding of international institutions. Talking about subsidies, he insisted that they must be phased-out gradually starting with ones benefiting the rich.
The head of the economic committee at the Freedom and Justice Party, Abdulla Shehata, refused to comment on the IMF’s visit saying that “we have adopted a policy within the committee not to comment on anything related to the International Monetary Fund or the loan issue.”
The government has worked out a reform programme to meet the loan requirements set by the IMF. The IMF director for the Middle East and North Africa, Masood Ahmed, confirmed that the objective of the negotiations would be to eliminate any wasteful subsidies, especially in the energy sector, to channel the resources towards the health and education sectors, and to spend more on the infrastructure development.
Ahmed also stated that the government is still working out some of the details and that there were two challenges that need to be faced, the first one is to restore confidence in the Egyptian economy, the second challenge is to move forward and create a better economic future for all Egyptians, by targeting a higher and more inclusive growth rate; a growth rate that generates job opportunities, and provides equal opportunities for everyone.
An agreement with the IMF is also important to unblock $1 billion in aid offered by Europe and the United States, in the framework of the Deauville Partnership. The partnership was launched in May 2011 by the European Union and the G-8 to provide financial support for the Arab Spring countries.
Source: The Daily News Egypt