HomeNewsEgypt says will not need IMF, World Bank funds

Egypt says will not need IMF, World Bank funds

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Egypt will not borrow from the World Bank and International Monetary Fund after revising its budget and cutting the forecast deficit, even though a loan had been agreed, Finance Minister Samir Radwan said on Saturday.

The 2011/12 deficit in the first draft budget was forecast at 11% of gross domestic product, but was revised to 8,6% because of a national dialogue and the ruling army council’s concerns about debt levels, the minister told Reuters.

“So we do not need to go at this stage to the bank and the fund,” Radwan said, adding that Egypt, which had borrowed from the IMF under ousted president Hosni Mubarak, still had the “best relations” with the two US-based institutions.

Despite the budget revisions, the government said it still expected growth of 3,0-3,5%, in line with previous forecasts, which some economists said could prove optimistic.

Egypt this month agreed on a $3 billion, 12-month standby loan facility from the IMF, which Cairo had said came with more lenient terms than usually associated with such lending.

An IMF spokesman confirmed on Saturday that Egypt has scrapped plans for the loan programme.

“In light of these changes, the authorities see no immediate need for a financial arrangement from the IMF,” the spokesman said, adding:

“The IMF continues to maintain a close policy dialogue with the authorities.” The IMF and World Bank had been among a range of foreign countries and bodies to offer funds to Egypt to help cover a big budget shortfall after the economy was plunged into turmoil by the mass protests that drove Mubarak from office on February 11.

Egypt’s cabinet had approved on June 1 a budget for 2011/12 that increased spending by a quarter to create jobs and help the poor.

That was revised and a new draft announced on Wednesday that included raising income tax and reducing fuel subsidies.

Gulf Arab states are among those who offered support. Radwan said Qatar had provided $500 million for budgetary support in the past week. “That is a gift,” he said, when asked if there were any conditions attached to the Qatari cash. He said Saudi Arabia had earlier offered a similar amount.

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