CAIRO: The International Monetary Fund (IMF) said on Tuesday it planned to meet with Egyptian authorities to discuss the country’s economic problems but added that any funding would have to be based on benchmarks that had broad political support.
Egypt, whose economy has been hammered by the uprising that unseated Hosni Mubarak in February, turned down a $3 billion IMF facility in June, but ministers have indicated the country may now be prepared to return to the negotiating table.
"The IMF team is looking forward to discussions in January with the authorities on their economic program to address Egypt’s difficult economic and financial situation," an IMF representative said in an emailed statement. It said it was too early to discuss specific measures.
Economists say Egypt is heading for a currency crisis if it does not swiftly stabilize an economy battered by the political turmoil, which has prompted an exodus of investors and tourists.
Because of worsening economic conditions the country may now need as much as $15 billion to stave off a full-blown financial crisis, some economists say.
Dozens of protesters have died in clashes with the army, the budget deficit has mushroomed, the cost of domestic borrowing has increased, foreign reserves have fallen and demand for Egypt’s exports has fallen as the global economy weakened.
The IMF said it had remained "in close contact" with Egyptian authorities since early November on possible funding, but security concerns caused it to postpone a planned visit to Cairo in mid-December.
On Thursday, Prime Minister Kamal El-Ganzoury said told the nation on television that Egypt had gone to the IMF but the international body had not responded.
"Regarding the IMF, we were told it was necessary for Egypt to deal with the IMF to get loans. Our colleagues made the request, but nothing has come yet … today we still request but they (the IMF) asked for a short delay."
In its statement, the IMF said benchmarks for any funding package would need to "come from a program that is designed and owned by the Egyptian authorities and enjoys the broad political support necessary for its successful implementation."
On most occasions as government officials seem to edge close to signing up, Egypt’s army has indicated its reluctance.
"The easiest thing would have been for the military council to accept the loans from abroad, give it to Egyptians to live a better life and then hand over power and the Egyptian people would have been responsible to repay these debts," General Mokhtar Al-Molla told reporters this month.
"So we have said that these loans are only for extreme need," Al-Molla told a group of reporters.
Al-Ahram newspaper reported on Sunday that the governor of Egypt’s central bank and four ministers had agreed the country had no choice but to borrow money from abroad to plug a $10 billion to $12 billion financing gap.
It quoted the Central Bank Governor Farouk El-Okdah as saying the budget deficit in the year that began on July 1 could rise as high as LE 182 billion ($30.2 billion) instead of the LE 134 billion forecast last June.
Egypt’s foreign currency reserves plunged to about $20 billion in November from $36 billion at the end of 2010, and economists say this could force the country to devalue its currency as soon as the first quarter of 2012.