Egypt govt invites IMF to resume loan talks

Egypt govt invites IMF to resume loan talks

An IMF deal would help Egypt stave off a budget and balance of payments crisis

August 4, 2012 6:55 by Reuters

Egypt invited officials from the International Monetary Fund (IMF) to visit to resume talks on a $3.2 billion loan, the state’s finance minister Mumtaz al-Saeed told reporters on Saturday.

An IMF deal would help Egypt stave off a budget and balance of payments crisis and add credibility to economic reforms needed to restore the confidence of investors who fled the country after the state’s popular uprising of last year.

“We have offered an invitation to the IMF delegation to visit Egypt in the coming period,” Saeed said without specifying when exactly the visit will take place.

“And there is a probability that the head of the IMF would also come in the visit,” he added.

Saeed, who was selected to remain in his post in the new cabinet sworn in last Thursday, also said he expected a growth rate of 3.5-4 percent in 2012-2013 fiscal year. Egypt’s fiscal year starts on July 1.

Egypt’s former interim government had previously forecasted 4 to 4.5 percent growth in the economy 2012-2013 fiscal year.

Saeed’s comments came after the first meeting of the state’s first permanent government since the overthrow of former president Hosni Mubarak by last year’s revolt.

Hisham Kandil, the first prime minister named by Egypt’s newly elected Islamist President Mohamed Mursi has drawn on bureaucrats and Islamists for the new cabinet, disappointing those who wanted a more inclusive government able to achieve the revolution’s demands for democracy and prosperity.

“The economic file was the first file that the government saw it should give all the needed attention,” a cabinet statement said adding that its first meeting discussed means to reduce the state’s deficit and bring back the flow of investment to the country.

The state’s 2012-13 budget showed a 12.5 percent rise in deficit. Egypt’s borrowing costs have soared since the overthrow of Mubarak on Feb. 11 of last year, which sent the economy into a tailspin, drove investors away and left local banks taking almost the entire burden of lending to the state.