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Lagarde on IMF loan: No discussions over details

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Presidential spokesman Yasser Ali: Morsy has officially requested to increase loan from $3.2 billion to $4.8 billion

By Islam Serour

The Managing Director of the International Monetary Fund (IMF), Christine Lagarde met yesterday with President Morsy, the new cabinet’s economic group, followed by a press conference with Prime Minister Hesham Qandil.

The purpose of the visit, which came upon an invitation from the Egyptian government,was to refresh negotiations over IMF loan, and reveal the government’s social and economic programmes necessary to qualify for such loan.

Presidential spokesman Yasser Ali told Reuters that president Morsy has officially requested to increase the loan from $3.2 billion to $4.8 billion. However, Lagardestated during the press conference that there have been no discussions over the details of the loan,its conditions, or theactual amount. Lagrade expressed admiration of the reform programme proposed by the Egyptian government.

“We have disclosed the main features of our strategy to reduce budget and policy to boost investment,” Qandil stated during the conference.

Lagarde told reporters that the IMF believes that the Egyptian social and economic programme would successfully bring about a more stable environment that enhances confidence in the Egyptian economy. Lagarde added that stability is a crucialpre-conditionfor qualifying for loan, adding that stability would allow the Egyptian government to obtain more loans from other international lending institutions.

“The IMF is a partner who seeks to support both the Egyptian authorities and the Egyptian people,” Lagarde noted.

Reports circulated that the IMF demanded of Egypt to lift food and fuel subsidies as a pre-condition for the loan.
MomtazEl-Saeed, Minister of Finance, stressed that cutting subsidies will not harm low-income citizens, and that it targets creating a more efficient mechanism to deliver subsidies and financial assistance to those in need.

Qandil stressed that adopting any strategy with regard to cutting government spending is an Egyptian decision.
In the same respect, Lagarde told reporters that the IMF is a partner to the Egyptian government, that the IMF loan is a part and parcel of the government new economic approach.

Lagarde is is leaving behind a team from the IMF that will resume the discussions with the government. After which, the IMF team is to fly to Washington to disclose the Egyptian government’s propositions, and then back to Egypt.

Negotiations over the IMF loan were halted due to lack of political consensus over the social and economic reform programme proposed last February by Ganzouri’scabinet.. Abdullah Shehata, the Presidential economic advisor and the head of the economic committee at the Freedom and Justice Party (FJP), told the press that the new programme is more focused on social justice.

In this regard, Lagardenoted that new talks with Morsy and the Egyptian Cabinet represent a fresh start for negotiating the IMF loan.
“The situation has significantly changed in Egypt; there is a democratically elected president who has a future, a vision and a strategy that obviously requires that we understand that it’sa journey the country is about to embarks on,” stated Lagarde during the press conference.

The reform programme proposed by Ganzouri’s government suggested increasing sales tax, levies on property, alcohol and cigarettes. However, the programme was rejected by the now-dissolved parliament.


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