Regional

Egypt says it has up to $12 billion funding gap: IMF

DUBAI: Egypt has indicated it needs up to $12 billion to meet a funding gap but has yet to formally request a loan from the International Monetary Fund, an IMF official said Wednesday.

“At this stage what we know is that the Egyptian authorities have indicated that they have a financing gap of $10 [billion] to $12 billion,” Masood Ahmed, the IMF’s director for Middle East and Central Asia, told Reuters.

“Our own analysis for this suggests that is probably right,” Ahmed said after a presentation of its regional economic outlook.

Egypt has said it was seeking $10 billion in funding from international lenders and rich nations to cope with the fallout from the mass protests that toppled the country’s long-time leader Hosni Mubarak in February.

The IMF head said earlier this month the fund would likely make available $35 billion in loans to oil-importing countries in the Middle East and North Africa where popular uprisings have occurred.

Ahmed said Wednesday that no country has formally approached the fund for a financial assistance, including Egypt.

“At this stage, even Egypt has not asked us for money. Just to be clear, we have not received a request from Egypt yet for financing. But at this stage we really don’t have a sense of how much that amount will be,” he said.

Egyptian Finance Minister Samir Radwan said in Kuwait Tuesday that his government was in talks with the IMF for an up to $4 billion loan.

A collapse in tourism and foreign investment following the protests have hit revenues hard and sent the economy of the most populous Arab country into an estimated 7 percent contraction in January-March.

The IMF projects Egypt’s economic growth to plunge to 1.0 percent this year, well below its long-term average, after a 5.1 percent expansion in 2010, the regional report showed.

Egypt’s budget deficit may top 10 percent of gross domestic product in the coming fiscal year as the government responds to demands for jobs and higher wages, Radwan said earlier this week.

Ahmed also said that the fund was ready to discuss potential aid for impoverished Yemen, torn by three months of protests against President Ali Abdullah Saleh.

“The IMF would be ready to work with the Yemeni authorities including by looking at the means of financial assistance once the situation allows,” he said.

The IMF said in December that it was not considering any fresh funds for Yemen, which faces an estimated budget gap of 6.4 percent of GDP this year, following a $370 million loan approved in August.

Ahmed also hoped to send a team to Pakistan in the next couple of weeks to assess its progress but said the IMF has not decided yet when it was going to disburse remaining two tranches of more than $3 billion from its total $11 billion loan.

“The timing of the disbursement is really a function of the pace of the reform process in the country,” he said.

 
A version of this article appeared in the print edition of The Daily Star on April 28, 2011, on page 5.

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