Egypt - IMF deal "not over" - Lagarde
Negotiations between Egypt and the International Monetary Fund are not over yet, IMF chief Christine Lagarde told reporters in Washington on Thursday, saying more work was needed on an economic programme that the government had presented to qualify for a $4.8 billion loan.
Lagarde also said that she hoped a deal would be sealed to help cash-strapped Egypt with its ongoing balance-of-payments crisis.
An IMF delegation left Cairo last week without reaching a staff-level agreement on the proposed $4.8 billion loan deal. Egyptian officials have said they plan to continue negotiations with the IMF on the sidelines of the annual Spring Talks meetings in Washington.
"We have not concluded yet. There is clearly more work to be done; numbers need to be aligned and worked on," Lagarde said in response to a question by Ahram Online.
Lagarde, who visited the country in August of last year, added that Egypt's economic programme had almost been finalised last November, but that political considerations had got in the way.
"We have been in negotiations with Egypt for quite a while now," she said. "We had a programme that was just about ready in November 2012 when political decisions were made to not put in place the fiscal decisions that were intended, which obviously made the programme redundant."
Lagarde was referring to President Mohamed Morsi's suspension of the deal amid political violence that erupted over the extent of his powers.
"I very much hope we can succeed, because I think the country is exposed to vulnerabilities. It has lost quite a bit of its [foreign currency] reserves," the IMF chief added.
Egypt's foreign currency reserves continue to dwindle in the face of rising prices of fuel and food that the government imports to feed a swelling population of more than 80 million. A slowdown in tourism and a high budget deficit have made matters worse for a country already plagued by political bickering between Islamists in power and opposition groups.
With foreign reserves currently sitting at $13.4 billion, Egypt has managed to bring in aid from neighbouring Arab countries such as Qatar and Libya to prop up its finances, but observers say such stop-gap financing is only good for the short term.
Egyptian officials are struggling to present the IMF with a robust reform programme to qualify for the loan. A lack of clarity regarding the reform programme – by which the government hopes to gradually phase out energy subsidies – is a major sticking point in the negotiations, according to an Egyptian official close to the talks.
With parliamentary elections due in October, the government is reluctant to implement any austerity measures that risk impacting its popularity.
- All talk: Why a GCC union does not matter for Arab countries' economies
- Aiding 'Um al-Dunya' or themselves? The Gulf's war over Egypt's economy
- What Arab Spring? The Middle East is undergoing a quiet revolution that is truly transforming the region
- An Economic Remedy for Jordan?
- Is Hamas on the verge of bankruptcy?