Egypt yesterday asked for a $4.8 billion loan from the International Monetary Fund, which stressed the need for a reform programme to deal with the country’s economic crisis.
The request was made during a visit by IMF managing director Christine Lagarde to Cairo, where she met President Mohamed Morsi and Prime Minister Hisham Qandil.
“The loan in general terms is worth US$3.2 billion. We talked about increasing it up to probably US$4.8 billion and maybe more,” Mr Qandil said. Egypt was seeking a loan agreement based on an interest rate of 1.1 per cent and a five-year repayment period following a 39-month grace period.
Ms Lagarde said in a statement: “The authorities have indicated that Egypt would like the IMF to support its economic programme financially to help the country recover and to lay the foundations for strong growth that benefits all.”
“Getting the country’s economy back on track and raising the living standards for all will not be an easy task,” she said. “The IMF will accompany Egypt as it undertakes this challenging journey.”
She also told reporters the IMF had been “very impressed ” with the strategy and ambition that Mr Morsi and his Prime Minister had laid out.
Ms Lagarde said an IMF team would visit Egypt in September to continue working with the authorities there. The IMF would be a partner to Egypt as it embarked on a journey of economic reform to restore stability, boost investor confidence and create jobs, the organisation’s chief said.
The fiscal, monetary and structural reforms would require “determination” and “political courage”.
The visit came as Mr Morsi, Egypt’s first civilian and Islamist President, moves to consolidate power after his election in June. It follows more than a year of instability since an uprising which toppled his predecessor Hosni Mubarak.
State media on Wednesday reported that Mr Morsi is to visit the United States on September 23 to attend the UN General Assembly in New York and hold talks with “senior officials” in Washington.
Egypt ’s economy has been hard-hit by the 2011 uprising, a fall in tourism revenues, slump in foreign investment, decline in foreign currency reserves and widening of the budget deficit.
Tourism, one of the main sources of revenue and a job provider for 10 per cent of the population, is making a recovery but security concerns have kept foreign investors at bay.
Meanwhile, central bank reserves have plunged from US$36 billion at the start of January 2011 to US$14.4 billion, threatening to curtail Egypt’s ability to import basic goods such as wheat and refined oil products primarily.