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Egypt eyes $4.8 bln IMF deal in weeks to shore up economy

FILES - The logo of the International Monetary Fund (IMF) at the organization's headquarters in Washington, DC, in this May 16, 2011 file photo. (AFP PHOTO / Saul LOEB)

CAIRO: Egypt hopes to agree a $4.8 billion IMF loan within two weeks of talks set for the end of October, ministers said Tuesday, after long delays caused by political turmoil in the Arab world’s biggest nation.

Egypt urgently needs support to prop up state coffers weakened by a turbulent transition since the popular uprising last year that toppled President Hosni Mubarak.

The IMF, which has said a loan agreement could be reached by the end of 2012, wants Egypt to put a program in place to narrow a budget deficit that has mushroomed to 11 percent of gross domestic product since the uprising.

Prime Minister Hisham Kandil said he was aiming for about 4 percent growth in fiscal 2012/13, in line with previous official forecasts but higher than economists predict, and said Egypt wanted to hit 7.5-percent growth in its five-year plan.

“We are negotiating with the IMF. Our people are traveling to Tokyo to attend the joint IMF/World Bank meeting this week,” Kandil told a conference in Cairo. “They are inviting the IMF to come for official negotiations by the end of this month. We are hoping to reach an agreement by that time.”

Speaking on the conference sidelines, Finance Minister Mumtaz al-Saeed told Reuters he expected an IMF deal could be reached “within two weeks” of the IMF visit.

Egypt initially sought a loan during 2011 when the army was still in charge after Mubarak’s overthrow and Egypt was burning through its foreign reserves to shore up its currency, but the military then said it did not want to add to Egypt’s debts.

The IMF had also sought broad political consensus, tricky to secure when there was only a transitional government in place. But talks were launched again after a new Cabinet was appointed by President Mohammad Mursi in the summer.

 
A version of this article appeared in the print edition of The Daily Star on October 10, 2012, on page 5.

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