CAIRO, (Reuters) – Egypt will discuss financing from the International Monetary Fund with IMF officials this week with an open mind, a minister said on Monday, after Egypt turned down a $3.2 billion deal offered by the Washington-based institution in the summer.
Planning Minister Faiza Abu el-Naga also said Egypt was continuing negotiations with Gulf states and others, including the European Bank for Reconstruction and Development (EBRD), for other financial support.
Egypt’s economy was battered by the uprising that ousted President Hosni Mubarak and investors remain wary because of ongoing uncertainty as the transition from military rule to an elected civilian government has dragged.
Consultancy firm Geopolicity said in a report that Egypt’s uprising had cost the economy $9.97 billion up to September.
“With the IMF we’re open, there are no taboos actually but we’re looking at what is really in the interest of the country and will take our decision accordingly,” Abu el-Naga said on the sidelines of a conference arranged by the EBRD in Cairo.
She said a mission from the IMF, which offered preferential terms in its last package, was arriving on Monday.
“I confirmed that there are no conditionalities in what the IMF is offering and the decision in the end is ours,” she said.
When Egypt turned down an IMF facility over the summer the finance minister, who has since left office, said the army had not wanted to build up debts.
Economists have said Egypt would most likely have to return to the IMF. Such a facility could provide reassurance to other possible lenders.
Egypt is also discussing financing with Gulf Arab states. Qatar and Saudi Arabia have so far given $500 million each in budget support. Gulf states have offered billions of dollars more in project financing and other support.
“We are negotiating with Qatar, with the United Arab Emirates, with Saudi Arabia on the rest of the financial package that aims at actually funding some developmental projects,” she said.
The EBRD said in a statement it was able to offer up to 1 billion euros a year to Egypt, though this had not been agreed.
Abu el-Naga said EBRD funds would largely target small and medim-sized enterprises and the private sector, adding there was still “some time” to go before any deal would be reached.
She said the G8 group of nations had pledged $70 billion to Egypt, Tunisia, Jordan and Morocco.
“Egypt, as the biggest country in terms of population, could … could get around half that amount … But no decision has been taken yet,” she said.
“Our goal is to decrease and lighten our external debt,” she said.
Abu el-Naga said Egypt planned to eliminate subsidies to energy-intensive industries, a plan discussed even before Mubarak was ousted. That would help to ease pressure on state finances.
“Very soon you will see this will be implemented — eliminating energy subsidies for energy-intensive industries. There are five major industries that are actually energy-intensive,” she said without elaborating.
Economists have said that carrying out government pledges to rein in energy subsidies will be a challenge for the cabinet as many Egyptians have sky-high aspirations about improving living standards after their uprising.