(AFP Photo)
By: Nada Badawi
An anonymous official from the Ministry of Finance revealed last Thursday that the International Monetary Fund (IMF) is “not satisfied with Egypt’s amended economic and social reform program submitted last week” , Al Youm 7’s website reported.
He said that the economic reform programme, which introduced a set of austerity measures such as tax hikes on a range of goods and services, is not sufficient to qualify Egypt for the proposed $4.8bn IMF loan.
The source said that the programme does not generate enough revenues or promote growth, which leaves Egypt’s budget deficit in further distress.
“The IMF’s comments should come as no surprise since the country is embroiled in ongoing political and social turmoil,” he said.
The official also highlighted lack of public and political support for the loan, which is a required condition from the IMF in order to approve the loan.
“The IMF has not confirmed when it will visit Cairo, despite claims from authorities that a delegation is scheduled to arrive within weeks.”
The leaked news raises concerns of further negotiations over the loan, a move which Morsi’s government said was “a needed step” for the country to emerge from the current economic crisis.
Officials, however, have not publicly announced whether the leaked information is true or not.
The government’s economic reform programme aims to resuce the nation’s budget deficit from 11% to 10.4% by the end of the current fiscal year.
Sales taxes were imposed last December on cement, steel, soft drinks, cigarettes, alcohol, and others.
Last February, the government announced a 50% increase in the price of subsidised fuel, which sparked protests by workers and led to factories operating inefficiently.
Economy expert Sherif El-Khereiby criticised the government these moves: “The current government has proved to be inept in proposing any viable economic programmes so far.”
Last month, Minister of Investment Ossama Saleh announced that Egypt will invite the IMF delegation in early March to resume negotiations over the $4.8bn loan.
The IMF negotiations come amid political unrest where the country’s foreign currency reserves fell from $36bn on the eve of the 25 January Revolution to $13.6bn in 2013.
US Secretary of State John Kerry, who visited Egypt last week, urged Morsi to strike the deal with the IMF, adding that this would open the door for Egypt to receive more US aid.
Negotiations over the loan were postponed a number of times due to the political upheaval in the country.
