IMF expects talks with Egypt

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CAIRO — The International Monetary Fund (IMF) said on Tuesday it planned to meet with Egyptian authorities to discuss the country’s economic problems, but added any funding would have to be based on benchmarks that had broad political support.

Egypt, whose economy has been hammered by the uprising that unseated Hosni Mubarak in February, turned down a $3 billion IMF facility in June, but ministers have indicated the country may now be prepared to return to the negotiating table.

“The IMF team is looking forward to discussions in January with the authorities on their economic programme to address Egypt’s difficult economic and financial situation,” an IMF representative said in an emailed statement. It said it was too early to discuss specific measures.

Economists say Egypt is heading for a currency crisis if it does not swiftly stabilise an economy battered by the political turmoil, which has prompted an exodus of investors and tourists.

Because of worsening economic conditions the country may now need as much as $15 billion to stave off a full-blown financial crisis, some economists say.

Dozens of protesters have died in clashes with the army, the budget deficit has mushroomed, the cost of domestic borrowing has increased, foreign reserves have fallen and demand for Egypt’s exports has fallen as the global economy weakened.

The IMF said it had remained “in close contact” with Egyptian authorities since early November on possible funding, but security concerns caused it to postpone a planned visit to Cairo in mid-December.

Last Thursday, Prime Minister Kamal Ganzouri told the nation on television that Egypt had gone to the IMF, but the international body had not responded.

“Regarding the IMF, we were told it was necessary for Egypt to deal with the IMF to get loans. Our colleagues made the request, but nothing has come yet . . . today we still request, but they (the IMF) asked for a short delay.”

In its statement, the IMF said benchmarks for any funding package would need to “come from a programme that is designed and owned by the Egyptian authorities and enjoys the broad political support necessary for its successful implementation”.

On most occasions as government officials seem to edge close to signing up, Egypt’s army has indicated its reluctance.

“The easiest thing would have been for the military council to accept the loans from abroad, give them to Egyptians to live a better life and then hand over power and the Egyptian people would have been responsible to repay these debts,” General Mokhtar al-Mullah told reporters this month.

“So we have said that these loans are only for extreme need,” Mullah told a group of reporters.