CAIRO: The International Monetary Fund wrapped up a mission to Egypt saying the country faced economic challenges but gave no word on whether the interim government had made a fresh request for IMF funds, it said in a statement on Thursday.
Egypt’s Finance Minister Hazem El-Beblawi has said Egypt was open to IMF funding but had not made any formal request for aid since turning down a financing package in June.
Egypt turned down more than $3 billion from the IMF in June, a decision widely believed to be due to opposition from the army, which is currently in charge of the interim government and which has been wary of building up debts.
The IMF mission, which visited Cairo from Oct. 26 to Nov. 3 to take stock of recent economic developments and assess financing needs, said there were challenges.
"Egypt’s medium-term economic potential is promising. However, maintaining macroeconomic stability and social cohesion amidst modest short-term growth prospects and a weakening external environment remains challenging," the mission said in a statement.
It said it welcomed the authorities’ efforts to implement a home-grown strategy for growth and job creation, adding the IMF "looked forward to continuing to engage" with the Egyptian authorities.
Egypt’s economy suffered after an uprising that unseated Hosni Mubarak in February as tourism and investment were hit and it continues to be affected by uncertainty about the shape of a future government.
The country’s foreign reserves slid by $1.93 billion last month, their worst drop since April, as investors dumped more treasury bills and other assets because of uncertainty over the political transition to civilian rule.
El-Beblawi had said Egypt would need to seek external help to fund its budget, which has grown as a result of the uprising after the government accepted demands for pay rises from public sector workers and agreed to higher subsidies on some goods.
The government forecasts a budget deficit of 8.6 percent of GDP in 2011/12 but economists say that figure is optimistic.
A Reuters poll in September forecast Egypt’s economy would grow by just 1.3 percent this financial year ending June 2012 and 3.6 percent in the following year. That is well short of the 6 percent plus growth that economists say Egypt needs to start creating enough jobs for its expanding population of 80 million.
