IMF loan to Egypt could be amended

An IMF team meets Egyptian officials in Cairo today to discuss a much-needed loan.

The amount of a much-needed IMF loan to Egypt may be amended.

"Our team will be arriving there and review the exact financing needs, including the contribution that could be made by the fund," said Masood Ahmed, the IMF's Middle East head, on the sidelines of a conference in Dubai.

Egypt, the most populous country in the Arab world, has been in talks with the agency over a long-anticipated US$4.8 billion (Dh17.63bn) loan to ease its fiscal requirements after two years of unrest.

Government representatives will meet a technical team from the IMF in Cairo today, amid hopes of preventing the country's economy from weakening further.

The delegation will remain in Egypt until April 15, when the team will go to Tunisia to assess the revolution-stricken country's financing needs.

Officials have revised Egypt's national financial and socioeconomic reform programme, that will be presented to the IMF, the finance minister Al Mursi Al Sayed Hegazy said yesterday.

The agency has been seeking reassurances that the country's government can push through a fiscal and financial programme that includes tax increases and spending cuts. "They are looking to see whether these measures are sufficient for fiscal sustainability, whether they will help in social protection," Mr Hegazy said.

The IMF has been working with the Egyptian authorities to help them to develop a programme that is "Egyptian owned", Mr Ahmed said.

"It's important that the programme is broadly supported to ensure its implementation will go smoothly. The programme needs to not just respond to the financial challenges, but to protect the poor and vulnerable. We have had good discussions in the last few weeks."

Securing the IMF loan would send a reassuring message to international markets that Egypt was on the path to a sustainable economy.

"It's not just about the loan," Mr Hegazy said. "It's about attaining a vote of confidence for Egypt's economy."

The finance minister said he expected a final response on the status of the loan by the end of this month, amid meetings expected to be held in Washington.

Moody's Investors Service downgraded the country's credit ratings last month to Caa1, the sixth time since demonstrations toppled the then president Hosni Mubarak.

Egypt's currency, the pound, has lost 6.5 per cent of its value as the banking regulator restricted access to dollars to avert a sharp decline in foreign reserves.

The benchmark EGX 30 Index has lost 7.4 per cent this year, trading at about 5,048 points.