CAIRO (Reuters) – The IMF has delayed sending a team to Cairo to negotiate a $4.8 billion (2.9 billion pounds) loan while the Egyptian government works to complete its economic reform programme, a newspaper quoted the country’s Finance Minister as saying. Egypt was due to receive a team from the International Monetary Fund at the end of September to discuss the terms of the loan. It urgently needs the financial support to prop up state coffers that have been weakened by economic turmoil since a popular uprising last year, which ousted President Hosni Mubarak.
The government needs to complete the programme before the loan talks to demonstrate to the IMF that it is serious, the minister Mumtaz al-Saeed told al-Borsa financial daily.
The programme’s two main axes are a restructuring of subsidies and taxes, he said. The government is working diligently on studies of these and the reform programme should be finished soon, he added.
Optimism that a new, Islamist-led administration was moving fast to secure the long-delayed loan and avoid a fiscal crunch has sent the country’s stock market soaring in recent months and yields on government debt have tumbled.
The IMF is demanding Egypt put a programme in place that will narrow a budget deficit that has mushroomed to 11 percent of gross domestic product since the uprising ousted Mubarak in February 2011.
President Mohamed Mursi’s government says it wants to limit energy subsidies, which eat up about a quarter of all state spending, by targeting them more toward those who need them most.
Prime Minister Hisham Kandil said last month that the government planned to introduce a coupon or smart card system in October to ensure that the poor, rather than everyone, got subsidised butane cooking gas.
The government sells canisters of butane for 5 Egyptian pounds each, while their actual production cost is over 65 pounds.
Al-Borsa quoted Mumtaz as saying the IMF team would not return until well after the IMF’s annual meeting in Tokyo. That meeting takes place on October 9-14.
The government is also lobbying hard to kick-start inward investment that has stagnated since the uprising.
Neither the minister nor an IMF spokeswoman in Washington was immediately available for comment.