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Banking

Egypt: Egypt reopens talks with IMF

Dire economic data all round; But doubts persist on conditionality and future burdens

An IMF delegation visited Cairo in mid-January after Egypt’s interim government requested a $3.2 billion loan to help prop up ailing state finances. The talks come seven months after the ruling military council, which has effectively been in power since the February 2011 ousting of president Hosni Mubarak, rejected an offer of similar IMF support last June. But public finances, and the broader Egyptian economy, have since weakened sharply as political and social unrest continues to rumble through the Middle East’s most populous nation. The details of any loan were not expected to be finalized until February but the facility is believed likely to run over 18 months and carry an interest rate of about 1.5%, similar to last year’s offer. According to the IMF’s Middle East and Central Asia director, Masood Ahmed, support would not be tied to any external conditions but rather based around home-grown measures. “All we want is a two-year reform programme that is approved by all political forces and that succeeds in reducing the budget deficit,” he told the local press in January.

Recent Egyptian central bank figures show an alarming decline in the state’s financial position. The overall balance of payments deficit stood at $2.4

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