CAIRO: An International Monetary Fund team resumed long-delayed negotiations with Egypt Wednesday on a $4.8 billion loan to ease a deepening economic crisis in the most populous Arab country.
After two years of political upheaval, foreign currency reserves have fallen to critically low levels, limiting Egypt’s ability to buy wheat, of which it is the world’s biggest importer, and fuel.
President Mohammad Mursi’s government signed a preliminary deal with the IMF in November but postponed ratification in December due to unrest ignited by a political row over the extent of Mursi’s powers.
The IMF mission began by meeting Finance Ministry and central bank officials and is expected to stay “a week or 10 days or more,” government spokesperson Alaa al-Hadidi told reporters. Prime Minister Hisham Kandil will meet the team when it has completed its work, he said.
Cairo must convince the global lender it is serious about reforms aimed at boosting growth and curbing an unaffordable budget deficit. That implies tax hikes and politically risky cuts in state subsidies for fuel and food including bread.
An IMF deal has eluded Egypt for nearly two years, despite on-off talks first with an army-led government and now with Mursi’s Muslim Brotherhood-controlled administration.
Economists say the IMF appears to question whether Egypt has the political consensus needed to enact reforms – doubts that months of turmoil have done nothing to ease.
Parliamentary elections that were due to start this month have been pushed back until October and a new legislature may not be in place until December.
Finance Minister Al-Mursi al-Sayed Hegazy said Monday the government aimed to have a loan agreement completed by the IMF’s spring meetings, held on April 16-21.