CAIRO - Egypt has demanded a loan from the International Monetary Fund (IMF) worth $3.2 billion to help ease the country's growing budget deficit, a minister said after meeting with an IMF delegation in Cairo on Monday. Minister of Planning and International Co-operation Fayza Abul Naga said the talks were “positive”, adding that the IMF delegation would be here again by the end of the month for another round of talks. Massoud Ahmed, director of the IMF's Middle East and Central Asia Department, said there were still “technical details” to be sorted out with the Egyptian Government, and the purpose of the visit was to have a look at the country's current economic situation. Egypt, which last June turned down an IMF loan of $3.2 billion, is seeking to get an IMF bailout to bridge the gap in its State budget in the fiscal year (FY) 2011/2012. The country's budget deficit is forecast to total LE134 billion, accounting for 8.6 per cent of gross domestic product (GDP), in FY 2011/2012, according to official data. Fayza said the Government will not raise the prices of petrol and diesel oil, pointing out that supply exceeds demand in the market. “A rumour of an increase in fuel price has created the crisis,” she told reporters after meeting with the IMF delegation. “The rumour is partially linked to the IMF mission, as some people think the Fund stipulates lifting fuel subsidies,” she said, adding that the Government has chartered an economic plan, aiming at creating jobs, boosting the economy and restoring investors' confidence. Subsidies account for about 35 to 40 per cent of the Government's total spending, according to official reports. Food and fuel subsidies account for nearly 60 per cent of State outlays. Egypt last month scrapped fuel subsidies for energy-intensive industries in a bid to ease its financial burden. The economy is seen to grow below 2 per cent of GDP, compared to 5 per cent the previous year. Foreign reserves at the Central Bank of Egypt (CBE) fell to $18 billion at the end of December, having stood at $36 billion at the end of December 2010; the reserves are forecast to fall to $12 billion by the end of March. Before the January 25 revolution, public debt had totalled LE1.08 trillion, according to the Central Auditing Agency. Currently, the country's debt stands at LE1.2 trillion, according to official data. Fitch Ratings forecasts a budget deficit of over 11 per cent this year. In December, Fitch downgraded Egypt's long-term foreign currency Issuer Default Rating (IDR) to 'BB-' from 'BB' and long-term local currency IDR to 'BB' from 'BB+'.
