Egypt needs to gather political support and find more financial sources to meet a funding gap of $12 billion, aside from securing a $3.2 billion loan from the International Monetary fund, an official has said.
“There is still more work to be done to close down those three areas, and from our point of view, we are happy to work and support that process as we can, but also we are ready to then, as soon as the pillars are there for that programme to move forward relatively quickly.”
Masood Ahmed, IMF Director for the Middle East said Egypt still needed to work on finalizing its economic program.
“I think that process (of getting political support) is advancing, but I don't think we are at the point yet where we could move forward, and as soon as that point is there, we on our side will be ready to move forward.”
Egypt requested a $3.2 billion loan program earlier this year, which it is discussing with the IMF, but it was opposed by the Muslim Brotherhood’s Freedom and Justice Party.
The country’s economy, of $236 billion GDP, has been affected by 18 months of political chaos following the Jan. 25, 2011 uprising.
Egypt’s parliament strongly rejected the army-led Cabinet’s plan to cut state spending last week, dampening the government’s attempts to secure IMF assistance to avoid a potential fiscal crisis and currency devaluation.
“Egypt does have a pressing economic and financial challenges and that's why we believe that it is important to move forward now to finalize the content of the programme and to get the support for it and to help mobilise the financing for it.”
The country’s finance minister also said that the government expected the IMF’s aid to flow starting this month.
The Fund insists that any finance agreement is supported by the Egyptian government and political partners ahead of elections later this month, ensuring the deal would surpass the political transition following the polls.
Egypt expected Saudi Arabia to deposit $1 billion at the country’s central bank by the end of last month as part of a $2.7 billion package to support Egypt’s dwindling finances.
The country’s foreign reserves have fallen from more than $20 billion to $15 billion within a year of political instability after the ouster of Hosni Mubarak last February.
Egypt risks a sovereign debt crisis and a balance of payments crisis this year. The government’s borrowing costs have been increasing as investors withdraw, leaving the country to rely on local banks to finance its budget deficit.