New Egypt government to approach IMF soon

New Egypt government to approach IMF soon

Egypt will approach the International Monetary Fund (IMF) and other financial institutions to help get its economy back on track once new President Mohamed Mursi appoints a government, one of his financial advisers told Reuters.

July 2, 2012 3:45 by Reuters

A popular uprising last year plunged the economy into crisis, chasing away tourists and foreign investors and prompting government employees to strike for higher wages.

Mursi was sworn in on Saturday as Egypt’s first Islamist, civilian and freely elected president and will begin working to form a new government in the coming days.

“We intend to approach the IMF again,” said Amr Abu-Zeid, development finance adviser to Mursi’s Muslim Brotherhood.

“Give him one week or two weeks, so at least he has a cabinet… I believe these issues will not go further until they have a cabinet at least.”

The country’s army-backed interim government kept the economy under the cosh since the overthrow of Hosni Mubarak in February 2011 through a series of short-term measures that include financing a burgeoning budget deficit by borrowing short term from local banks at high interest rates and by draining the country’s foreign reserves.

The military council that took power from Mubarak rejected an agreement that Egypt negotiated with the IMF in mid-2011, and then resumed talks for a $3.2 billion loan early this year.

The economy contracted by 4.3 percent in the first quarter of 2011 and stagnated in the following three quarters.

“We are going back. We will negotiate with the IMF, with the World Bank, with the Islamic Development Bank, with anybody who wants to help. We are very open to this,” Abu-Zeid said.