IMF confirms $7bn bailout talks with Egypt

Posted on July 26, 2016

The International Monetary Fund has confirmed that it is in talks with Egypt over a $7bn rescue package, after years of on-off talks since the Arab Spring upended the country’s economy.

Egypt’s cabinet earlier on Tuesday said in a statement that it was close to reaching a three-year bailout agreement with the IMF to plug funding gaps, after three months of discrete talks. Here is a statement from Egypt’s government cabinet, via Reuters, reports Robin Wigglesworth in New York.

“The prime minister stressed the need to cooperate with the IMF through the support program to enhance international confidence in the economy and attract foreign investment, and therefore achieve monetary and financial stability… targeting $7 billion annually to fund the program over three years.”

In a statement to journalists, the IMF confirmed that talks were talking place. Masood Ahmed, director of the Middle East and Central Asia department at the IMF said:

The Egyptian authorities have asked the IMF to provide financial support for their economic program. We welcome this request, and look forward to discussing policies which can help Egypt meet its economic challenges. Our goals are to help Egypt return to economic stability and to support strong, sustainable and job-rich growth.

An IMF delegation led by Chris Jarvis is on the way to Cairo now, and will start a two-week visit on July 30. The IMF said that it would “communicate on the outcome when it concludes”.

Various Egyptian governments have held talks with the IMF about an aid package since the 2011 protests ousted former president Hosni Mubarak.

There have been various attempts at staving off potentially painful reforms that would be demanded — especially since president Abdel Fattah al-Sisi ousted the post-revolutionary Islamist government in 2013 — but many economists have long speculated that an international aid programme was nearly inevitable.

The Egyptian pound has lost almost half its value against the dollar since 2011 (and the unofficial black market value is even lower), and the economy and the government’s finances have been deteriorating. Charlie Roberson, chief economist at Renaissance Capital, said earlier on Tuesday – before the news broke – that Egypt was “currently heading in the wrong direction”.

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