The International Monetary Fund (IMF) said it is “making good progress” in technical discussions with Egypt over a much-debated $4.8bn loan.
“We’re making good progress in our technical discussions with the Egyptian authorities and we look forward to the resolution of the remaining technical issues, which would enable us to conclude the negotiations successfully,” Gerry Rice, communications director at the IMF, said in a statement last Thursday.
The statement comea a few weeks ahead of planned protests for 30 June and amid an already-ailing economy one year into President Mohamed Morsi’s tenure.
Egypt is currently grappling with an EGP 184.4bn budget deficit, the largest in the Middle East. The government has been vying for nearly two years to meet conditions set forth by the international lender in order to receive the loan, including adopting a set of economic policies such as rationing fuel subsidies and raising taxes.
“We are receiving data and information all the time from the Egyptian authorities. As I said, there’s good progress on that front, and in our technical discussions,” Rice said.
A recent IMF report noted: “It will be important for policymakers to move quickly on designing and implementing effective structural reforms to build a dynamic and inclusive economy that generates the vast number of jobs needed.”
According to the report: “Promoting private-sector growth and international trade, as well as attracting foreign direct investment inflows, will be key components of success. Financial assistance and technical expertise from external partners, including Transition Fund projects, can make a big difference in this endeavour.”
In a seminar on the transitioning political economies in the Middle East which included IMF Deputy Managing Director Nemat Shafik along with other experts, panelists agreed that reform is a must, but lacked consensus on the timing of implementing economic reforms. Though some agreed that economic reforms and political transition should coincide, others thought that the political transition should occur before economic reforms.
“Reforms could take a generation to be implemented,” said Ishac Diwan, director for Africa and the Middle East at Harvard University’s Centre for International Development.
“We continue to work closely with the Egyptian authorities, with the objective of reaching an agreement on an IMF Stand-By Arrangement to support the authorities’ national economic programme,” Rice said during a press briefing two weeks ago. “At this stage, we are waiting for the authorities to revise and update their economic programme.
“We have not discussed nor scheduled a new mission, but staff is working closely with the authorities building on the work that was advanced in the field during the April mission. It’s too early to venture when that work will be completed.”