On Sunday the Egyptian Minister of Finance, Samir Radwan, reached a final agreement with the International Monetary Fund (IMF) to borrow $3 billion at 1.5 percent interest rate. The repayment will start after three years and three months, and the entire amount will be repaid in 5 years. This agreement was created as a way of stimulating the Egyptian economy. Radwan said the loan is from the World Bank and has no conditions. The publication of all provisions of the convention will be available on the website of the Ministry of Finance. Radwan announced during a press conference held yesterday afternoon the terms of the agreement and that the program is entirely in Egypt's hands. A delegation from the IMF attended the conference. Radwan said the interest rate for the loan is very low in comparison to when Egypt borrows from abroad, usually at an average rate of 7 percent. He also said the loan will stimulate the budget for the next fiscal year, 2011/2012. This is now being discussed amongst different groups of society, given that the total deficit is 170 billion EGP (U.S. $28 billion), equivalent to 11 percent of Egypt's GDP. Radwan said bridging this deficit will be achieved through several means. First, domestic borrowing worth 112 billion EGP (U.S. $19 billion), and also 58.2 billion EGP (U.S. $10 billion) in foreign loans and grants from the United States, Saudi Arabia and the EU. Ratna Sahay, the head of mission of Egypt to the IMF, said the IMF supports the plan for the Egyptian economy and supports revolutionary change, noting that the steps taken by the government regarding the imposition of new taxes to balance the next fiscal year is in the right direction. Sahay explained that the revolution has already changed the IMF's policy towards its cooperation with Egypt. He said the program is in Egyptian hands, and that the IMF will respect Egypt's privacy in spending it. Sahay announced that the executive board of the IMF, representing 187 members, will meet to ratify the loan agreement in mid July. Egypt's access to the first installment of the loan will be around the same time, he said.
