International Monetary Fund (IMF) officials proposed to amend the conditions tied to Egypt’s request to borrow US$3 billion in June on the sidelines of annual IMF and World Bank meetings in Washington, DC, but Finance Minister Hazem al-Beblawy rejected the new terms.
Beblawy told Al-Masry Al-Youm that if the Egyptian government agrees to take out a loan from the IMF, it will do so under previously agreed-upon conditions.
According to the new proposal, Egypt would take a loan of US$3 billion with a 1.5 percent interest rate. The loan would then be paid off over a span of 39 months.
The ruling Supreme Council of the Armed Forces (SCAF) previously refused to borrow from the IMF, with the government saying it will finance its budget deficit – which currently stands at LE134 billion for the fiscal year 2011/2012 – with local Arab funds.
Mahmoud Abdel Rahman, an investments expert, said the government will regardless likely resort to foreign borrowing, as labor protests for better financial compensation are expected to exacerbate the budget deficit.
The Egyptian government is examining alternatives to local borrowing given the high rates of interest rates on the practice, said Sherif Samy, an expert on direct investments. Foreign borrowing should not be problematic if managed carefully, he added.
A delegation from the IMF will visit Egypt soon to discuss several issues, including future borrowing, Beblawy added.
Translated from the Arabic Edition
