WASHINGTON: Egypt has officially requested talks with the International Monetary Fund on a possible financing program and discussions will begin on Jan. 15, an IMF spokesman said on Thursday as the government seeks to stabilize an economy hammered by a year of political turmoil.
"This mission will constitute the first step in the process leading to possible financial assistance," IMF spokesman Gerry Rice told reporters. "We expect that this visit will be followed by further discussions," he added, suggesting it could be some time before a financing deal is struck with Egypt.
The talks will be led by IMF Director for the Middle East and North Africa Masood Ahmed.
Rice would not confirm that discussions were on a possible 18-month $3 billion financing program. Analysts say however that to avert a full-blown financial crisis in Egypt, the country needs up to $15 billion in financing.
Egypt sealed a $3 billion deal with the IMF last year only to have its military rulers reject it. The negotiations this time take place under tough political conditions by a government expected to hand over power within months.
The Muslim Brotherhood, which will probably dominate the next government, has not said that it is opposed to the idea of IMF aid.
Without a financial lifeline from the IMF, it is unlikely that Egypt will be able to tap an international pool of aid agreed by donors in France last year for countries in the Middle East and North Africa, such as Egypt and Tunisia, radically changed by popular uprisings.
Rice said discussions were under way for IMF Managing Director Christine Lagarde to visit the region in the coming months.
The IMF has insisted that any deal with Egypt needs to have broad political support, meaning it would be transferred easily into the hands of a successor government. The global lender has successfully negotiated programs with caretaker governments before, for example more recently in Portugal and Ireland.
Analysts believe that an agreement with the IMF could be reached quickly to stabilize the economy and encourage investors to return.
Rice also said an IMF mission, together with European partners, would visit Greece for talks on economic developments on Jan. 17. He said the aim of current talks between Greece and private bondholders was to cut Greece’s debt to GDP ratio to 120 percent by 2020.