CAIRO: A delegation from the International Monetary Fund (IMF) arrived in Cairo today to reengage in talks on a $3.2 billion loan package setto aid Egypt in its deepening economic crisis. Monday's talks were a “positive start,” according to Egypt's planning and international cooperation minister Faiza Abu el-Naga. “We have asked the IMF for $3.2 billion in support,” he later told reporters. IMF representatives will return to Egypt in late January in order to continue talks on the terms of the loan. Officials in Egypt have hesitated to accept the loan due to reservations about borrowing from abroad. However, as Egypt's economy continues to suffer through a period of political upheaval after the overthrow of the former Hosni Mubarak last February, authorities decided to return to the negotiating table. Loans from the Gulf States, which Egypt's military rulers had hoped to depend on in the absence of the IMF loan, have not come through as expected. Finance Minsiter Mumtaz al-Saeed announced his decision to return to talks last week. “The IMF has not formulated any special terms for aid to Egypt,” said al-Saeed, speaking to concerns that the loan package may come tethered to restricting political and economic conditions. Some fear the privatization and deregulation conditions traditionally tethered to IMF loans could revert the country back to failed Mubarak-era policies. The Supreme Council of the Armed Forces (SCAF), Egypt's interim ruling body has vacillated in its position on the loan through the appointment of three different finance ministers since rejecting the package last June. However, Egypt's economy is now in dire need of assistance. Once making up 15 percent of the nation's revenue, Egypt's tourism industry has plummeted, operating at nearly 50 percent of its capacity. Instability has scared away much foreign direct investment as well, and the country's foreign reserves have dropped 50 percent over the last year to $18.1 billion. Egypt's Central Bank announced last week that it had only sold half of the 7-year debt bonds it was selling off on behalf of the government, as investors fear that the Egyptian pound is headed for a sharp decline. Though the government announced $3.3 billion in spending cuts along with various proposed austerity measures meant to reduce government spending by three percent, some fear that this may not be enough. The United States has also discussed economic aid, including investment in a proposed industrial zone for small and medium-sized business that would provide about half a million jobs. As Egypt struggles through its transitional period, the government may fail to meet even the most basic social needs of its people. BM ShortURL: http://goo.gl/qE9oz Tags: featured, IMF loan Section: Egypt, Latest News
