Is Egypt getting closer to taking IMF funds?
This account from Ahram Online certainly suggests that Egypt may need IMF funds after all: Looking for finance, Egypt presented a detailed paper on its short and medium-term economic plans to the G8 summit in Marseille on Friday. "The paper includes the financial needs of the Egyptian economy as well as the action plan of ...
This account from Ahram Online certainly suggests that Egypt may need IMF funds after all:
This account from Ahram Online certainly suggests that Egypt may need IMF funds after all:
Looking for finance, Egypt presented a detailed paper on its short and medium-term economic plans to the G8 summit in Marseille on Friday.
"The paper includes the financial needs of the Egyptian economy as well as the action plan of the government to satisfy citizens’ ambitions and the policies needed to restore growth rates." said Hani Qadri Demyan, assistant to Egypt’s minister of finance, in a press release.
According to the minister himself, Hazem El-Beblawi, Egypt is facing a temporary lack of liquidity as a result of a sharp drop in foreign and local investment and a general slowdown in economic activity.
Early in the summer, Egyptian officials told the IMF they wouldn’t need its assistance, in part because of vocal opposition to Fund conditions and in part because of the perception that the IMF and other institutions had propped up the previous government. That decision has left local and regional financing as the principal methods of shoring up the country’s funding gap. This Bloomberg piece contends that it’s a losing strategy:
Egypt’s increased reliance on local lenders to finance its budget shortfall may stifle any economic recovery by reducing the incentive of banks to lend to companies.
The Arab country’s local-currency borrowing costs have surged to the highest levels in almost three years as foreign investors dumped the debt following the uprising that ousted President Hosni Mubarak in February. The country’s interim government rejected international loans to fund this year’s budget deficit, leaving local banks to shoulder the burden.
I checked in with IMF officials and was told the situation remains as before: the IMF stands ready to assist but has not been asked. Unless promised loans from Saudi Arabia and the United Arab Emirates materialize soon, I’d guess Egypt’s stance will change in the near future.
David Bosco is a professor at Indiana University’s Hamilton Lugar School of Global and International Studies. He is the author of The Poseidon Project: The Struggle to Govern the World’s Oceans. Twitter: @multilateralist
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