Mohamed Morsi of the Moslem Brotherhood is now officially Egypt’s President, yet he might be as powerless as his former rival Shafiq in deals such as the IMF loan that led to dissolution of the parliament and resumption of military rule. DC
Dissolution of Parliament brings back IMF deal
By Islam Zayed
Daily News Egypt
The Egyptian government is back at the negotiating table with the IMF due to the dire need of funding and lack of liquidity in the Egyptian banking sector.
Delegates representing the financial and international cooperation ministries have just returned from negotiating the IMF’s prospective loan in light of the parliament’s dissolution, which partially opposed the terms of IMF loan.
Negotiations with other international lending institutions are currently in progress now that the IMF deal is back on the table; the government is lobbying institutions such as the World Bank and the African Development Bank to obtain external loans with the aim of funding developmental projects or secure the financial needs of the general budget.
Sources revealed that the IMF has promised to re-examine the loan request in light of the pending results of the presidential elections, which they claim would steer Egypt towards more stability, making the conclusion of the deal the top priority for the newly elected president.
The IMF is confident that Egypt is on the correct path to stabilisation, eliminating any obstacle that could curtail the conclusion of the $ 3.2 billion loan designated for the Egyptian government. The loan, however, is contingent upon heeding the economic programme set by the IMF, which doesn’t contain conditions, but rather structural adjustments. Commenting on the IMF loan prospect, Angus Blair, former Head of Research at Beltone Financial told the Daily News Egypt that
“in principle, the IMF is still open to financing Egypt, but it will have a difficult time passing the loan due to the absence of a parliament.”
Despite what Egypt has been undergoing over the previous year and a half, the country has been successful in fulfilling its monetary obligations towards international lending institutions.
The budget for the new fiscal year has EGP 11.5 billion designated to payment of foreign debt and the installments of the external public debt, the interest of which has amounted to EGP 6 billion. During the current fiscal, the government successfully repaid EGP 16.6 billion of foreign debt, with EGP 4.5 billion in interest.
Sources: Daily News Egypt
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