CAIRO: A new aid package from the European Union to be delivered to Egypt is partially tied to the country's request for a loan from the International Monetary Fund (IMF), officials said this week. According to Egypt's state-run media, half of the 1.2 billion euro deal will be released to Egypt, which has been struggling with financial pitfalls and a bumbling economy since a popular uprising ousted the former regime in January 2011. The EU said that the other half of the aid deal will depend on an agreement with the IMF on a $4.8 billion loan that Cairo has requested. Reports said that an IMF delegation is remaining in Egypt in order to work with the government on proposed reforms. The Egyptian government hopes that the new aid deals and the loan will help the country overcome a struggling economy that has also seen unemployment rise dramatically in the past two years. But many in the country, including rights groups and NGOs have called for the IMF loan to be cancelled, citing a lack of transparency over the deal. Bernandino Leon, the EU's special representative for the southern Mediterranean region, was quoted by the Associated Press as saying that “part of the 1.2 billion euro package can be released as budget deficit relief, but 500 million euros is linked to the IMF.” The loan deal is seen as vital to assist Egypt in being able to avoid a budget and balance of payments crisis as well as deliver more credibility to economic reforms to boost the ability to attract investors. Earlier this fall, IMF officials hinted that a loan agreement would not be made this year, sparking worries that Egypt's economic crisis could widen. According to a report by Bloomberg business news agency, “the IMF requires approval from the biggest party in parliament," the official said, speaking on the condition of anonymity because of the sensitivity of the talks. “It's disappointing, but at least it's been announced against the stabilization of reserves," Richard Fox, London- based head of Middle East and Africa Sovereigns at Fitch Ratings, said by phone to Bloomberg. “If they can maintain reserve levels and continue progress toward political transition it's not the end of the world. Still, the fact that things have been pushed back yet again isn't positive." Egypt's state-owned al-Ahram newspaper had reported that a deal was to be signed in June, but the IMF had urged certain procedures were needed in order for the loan to be granted. Masood Ahmed, IMF director for the Middle East and North Africa, said in late May that Egypt still needed to do “some technical work" to finalize its economic program. Masood has claimed there are three important steps that Egypt should take if it wants to go further in the loan procedure with the IMF, referring to the economic program, political support and alternative financial sources. “I think that process (of getting political support) is advancing but I do not think we are at the point yet where we could move forward." “There's still more work to be done to close down those three areas," he said, referring the three important steps to secure the loan.
