Egypt will invite an IMF technical team to reopen negotiations on a $4.8 billion loan deal, the state newspaper al-Ahram reported, as the country’s foreign currency reserves slide to worryingly low levels.
Al-Ahram’s website quoted planning minister Ashraf al-Araby as saying he expected the team to arrive within 10 days.
Egypt reached an initial agreement on the loan in November but postponed final ratification following political unrest in Cairo, which led the government to put off tax increases needed to rein in the budget deficit, Reuters reports.
“Today, Thursday, a formal invitation will be sent to the technical delegation of the International Monetary Fund to come to Cairo to negotiate over the $4.8 billion loan to Egypt,” al-Ahram quoted al-Araby, who is Planning and International Cooperation Minister, as saying.
The paper also quoted him as saying he expected the delegation to arrive to Cairo “within 10 days”.
Egypt’s new Islamist administration, led by President Mohamed Mursi, is facing an economic crisis. Fitch Ratings said on Wednesday that extended voting in parliamentary elections, due to start in late April and last till late June, could delay the IMF loan agreement until the third quarter.
Cairo needs to shore up its finances after two years of political turmoil since the uprising that toppled former president Hosni Mubarak in February 2011, driving away tourists and investors. The Egyptian pound has lost 8.2 percent against the dollar since the end of last year.
Foreign reserves have fallen to $13.6 billion – less than the $15 billion needed to cover three months’ worth of imports – and the budget deficit is forecast to hit 12.3 percent of GDP by the end of June unless economic reforms are implemented.
The deficit rose by more than a third in the seven months to the end of January from the same period a year earlier, figures released on Wednesday showed.
An IMF deal would unlock billions of dollars more of financial support from foreign states and international bodies, but will also imply austerity measures.
In a summary of its new plans for the economy released this week, the government said it aimed to increase the foreign currency reserves to $19 billion by the end of June, but it did not say how. The plan will form the basis of talks with the IMF.
A summary of the revised plan called for a levy on stock market transactions and a flat 25 percent tax on Egyptian companies, but did not spell out plans for cutting subsidy spending or detail other tax increases.
The government aims to raise 450 million Egyptian pounds ($66.8 million) a year from the stock exchange tax, Hani Qadri, Egypt’s deputy minister of finance said at a press conference.
The government is targeting a deficit for this financial year of 189.7 billion Egyptian pounds ($28 billion), or 10.9 percent of total economic output.