Egypt Says $4.8 Billion IMF Loan Agreement Likely In Two Weeks; Funds Sought To Boost Economy

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Egyptian protest against IMF
An Egyptian protester holds a loaf of state subsidized bread during a demonstration against the International Monetary Fund (IMF) delegation visit, in Cairo on April 3, 2013

Egypt's planning minister said Thursday the government expects to reach a final agreement with the International Monetary Fund (IMF) over a $4.8 billion loan within two weeks, the state news agency MENA reported.

Planning Minister Ashraf Al Araby said Egypt had not requested an increase in the amount of the loan, which is sought to help boost the country's economy, struggling to recover from a political turmoil since last year's uprising that led to the fall of former President Hosni Mubarak.

An IMF delegation arrived in Egypt Wednesday and is expected to stay until April 15, Reuters news agency reported.

To negotiate an agreement, Egypt’s government may have to agree to economic reforms including tax rises and cuts to fuel and bread subsidies, to reduce its high budget deficit and improve overseas investor confidence in its economy.

The Egyptian pound has lost a tenth of its value since the start of 2013.

The country has been hit with inflation, leading to the government cutting back on fuel and food imports, sparking protests.

Egypt's net international reserves fell to $13.5 billion in February from $35.6 billion at the beginning of 2011.

Al Araby said Tuesday that the country planned to boost its foreign reserves to $16 billion by the end of June, according to a Reuters report.

Egypt’s Finance Minister, Al Morsi Al Sayed Hegazy, told Al Arabiya television that he was negotiating a loan worth $465 million with the Arab Monetary Fund.

The IMF had reached a preliminary agreement with Egypt over the loan in November last year, but this was subsequently cancelled by the IMF following conflict between Islamist backers of President Mohamed Morsi and their opponents.

The ongoing negotiations with IMF have sparked protests in Egypt, with former presidential candidate Khaled Ali filing a lawsuit with the prosecutor’s office against Morsi and others over the loan request, according to a statement by the Egyptian Center for Economic and Social Rights, which Ali heads, Al Arabiya news site reported.

Those against the IMF loan say the deal will only benefit the rich and it should be stopped, while the proponents say the loan is critical to revive the economy.

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