‘Egypt to approach IMF soon’

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IMFLogo REUTERS The International Monetary Fund (IMF) logo.

Egypt will approach the International Monetary Fund (IMF) and other financial institutions to help get its economy back on track once new President Mohamed Mursi appoints a government, a financial adviser who helped draw up his manifesto said.

A popular uprising last year plunged the economy into crisis, chasing away tourists and foreign investors and prompting government employees to strike for higher wages.

Mursi was sworn in on Saturday as Egypt's first Islamist, civilian and freely elected president and will begin working to form a new government in the coming days.

“We intend to approach the IMF again,” said Amr Abu-Zeid, development finance adviser to the Muslim Brotherhood's Freedom and Justice Party (FJP), which Mursi led until he became head of state.

“Give him one week or two weeks, so at least he has a cabinet... I believe these issues will not go further until they have a cabinet at least,” he told Reuters.

Abu-Zeid is financial adviser to the FJP and helped draw up the Brotherhood's Nahda, or Renaissance, economic programme.

But an FJP economics official cautioned that the final decision on whether to approach the IMF would be made by Mursi and his government once it was formed.

“We have not taken a decision towards the IMF yet. The decision will be taken by the government and by Mursi. No decision will be taken for a week or two, probably not before two weeks,” said Ahmed al-Naggar, who is a member of the FJP's economics committee.

“Our position has been clear all along. We have no objection to an agreement with the IMF, but only after looking at all the alternatives,” Naggar said.

The country's army-backed interim government kept the economy under the cosh since the overthrow of Hosni Mubarak in February 2011 through a series of short-term measures that include financing a burgeoning budget deficit by borrowing short term from local banks at high interest rates and by draining the country's foreign reserves.

The military council that took power from Mubarak rejected an agreement that Egypt negotiated with the IMF in mid-2011, then resumed talks for a $3.2 billion loan early this year.

The economy contracted by 4.3 percent in the first quarter of 2011 and stagnated in the following three quarters.

“We are going back. We will negotiate with the IMF, with the World Bank, with the Islamic Development Bank, with anybody who wants to help. We are very open to this,” Abu-Zeid said. - Reuters


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