Negotiations between Egypt and the International Monetary Fund have not failed, the president’s office said on Wednesday after an IMF delegation left Cairo without agreement on a $4.8 billion loan needed to ease a severe economic crisis.
“Talk that the IMF talks failed is inaccurate as this delegation was technical and was not authorised to sign a deal with the Egyptian government and there were many positive results from the talks especially from the Egyptian government side,” presidential spokesman Omar Amer told reporters.
Egyptian ministers have said talks will continue when they visit Washington this week for the annual IMF/World Bank Spring meetings and the IMF staff mission may return to Cairo in May.
After 12 days of meeting with government officials, the central bank and political party leaders, the mission headed by Andreas Bauer left Cairo on Tuesday without concluding a staff-level agreement as they had done last November.
President Mohamed Morsi subsequently froze that deal and suspended implementation of sales tax increases that were one of the conditions for the loan, amid political violence over the extent of his powers.
The country is rapidly burning through the hard currency reserves it needs to import food to feed its 84 million people. It is suffering from falling tourism, a soaring budget deficit and an atmosphere of political confrontation that has led to periodic violent clashes on the streets.
In recent weeks, Cairo has sought support from Arab allies and key emerging powers to strengthen its financial position after foreign exchange reserves fell to $13.4 billion in March, less than needed to cover three months’ imports.
Qatar and Libya agreed last week to provide $5 billion in support. Turkish economic officials and banking sources said on Wednesday that Ankara would transfer within two months the remaining $1 billion of $2 billion it pledged last year.
Many politicians and analysts see the government struggling on for the rest of the year without an IMF loan, enduring a summer of power cuts and fuel shortages rather than risk an explosion of unrest by implementing subsidy cuts and tax rises before parliamentary elections expected to start in October.
A Moscow-based source said Morsi may discuss a possible $2 billion loan during a two-day visit to Russia beginning on Thursday. But Amer said there was no talk of a loan, although the president would discuss trade, investment and potential supplies of wheat, oil and gas.
“Egypt does not need loans and its economy will develop by the hands of its people and not by anything else,” he said.
Reuters
