The Minister of Planning and International Cooperation, Dr. Ashraf Al Araby, said the Egyptian Cabinet is not be obliged to withdraw the total value of the US$ 4.8 billion loan which the country seeks to receive from the International Monetary Fund (IMF), even after signing the loan agreement, as Egypt may withdraw less than it currently seeks if it received another grants or loans from other financial institutions or if it attracted more local or foreign investments.
Egypt previously did the same thing by not withdrawing the total value of foreign loans as the main reason of seeking such loans is sending a message to foreign investors that the country’s economy is strong and supported by international financial institutions, Al Araby noted. This will regain the confidence of investors in the Egyptian market, attract more investments and raise the country’s credit rating.
The IMF conditioned that the loan conditions shall be clearly announced for Egyptians after agreeing with the financial institution over the loan. If IMF agreed to increase the value of the loan from EGP 3.2 billion to EGP 4.8 billion, the lender will not impose additional conditions on Egypt.
The Egyptian Cabinet is still negotiating with IMF over the economic reform program. Negotiations with IMF will be resumed by the middle of next September. If the economic reform program succeeded in boosting the Egyptian economy, the country will not withdraw the total value of the loan.
The economic reform program will be implemented whether Egypt received the loan or not. The impact of loans and grants offered to Egypt will appear by the end of FY 2012/2013.
