Egypt seeks to raise $4.8 bln IMF loan

Egypt seeks to raise $4.8 bln IMF loan

CAIRO - Reuters
Egypt seeks to raise $4.8 bln IMF loan

Cash-strapped Egypt eyes to raise IMF’s aid to cure its widening deficit. REUTERS photo

Egypt is seeking to increase its previously-requested $4.8 billion loan from the International Monetary Fund to cover its soaring budget deficit, the planning minister said in comments carried by three newspapers today.

“Egypt will intensify its efforts in the spring meetings of the IMF in the period from April 16-21 to receive additional funding to cover the financing deficit until mid-2015,” Ashraf El-Araby said in remarks carried by Al Masry Al Youm newspaper.

An IMF delegation is in Cairo for loan talks and Araby is one of the ministers involved in the negotiations.

“There are ongoing discussions to increase the loan, estimated at $4.8 billion but it may rise, especially with the increase in the budget deficit to $20 billion,” he was quoted as saying. He gave no new figure and said the talks were not easy.

The minister told Al-Mal financial daily that if a deal is not reached before May, talks will be postponed until October when parliamentary elections are expected to start.

It was the first time a minister had confirmed that the government was seeking to increase the size of the loan.

Finance Minister Al-Mursi Al-Sayed Hegazy was quoted on April 2 as denying that Cairo had requested any change after a senior IMF official said the amount could be raised if Egypt needed.

Asked whether the loan would be increased to $5.5 billion, Araby was quoted in Al-Shorouk daily as saying that figure was wrong without giving details, and any increase would depend on the expected rise in the budget deficit.

Egypt reached a provisional agreement with the global lender for $4.8 billion in November but President Mohamed Mursi halted implementation of the economic conditions the following month after violence erupted over the extent of his powers.

The economic picture has worsened significantly since then, widening the fiscal gap that needs to be plugged.