Egypt increased its application for International Monetary Fund loans to $4.8 billion as President Mohamed Mursi held talks with the IMF chief.
Christine Lagarde, the Washington-based fund’s managing director, met Mursi in Cairo to discuss the framework for the loan. Egypt officially raised its request today after asking for $3.2 billion more than a year ago, Mursi spokesman Yasser Ali said in an interview.
Approval of the IMF loan has been stalled amid political infighting as the fund requested broad consensus among Egypt’s parties on an economic program. The instability and violence that followed last year’s revolt against Hosni Mubarak have held back a recovery as tourists and investors stayed away.
Finance Minister Momtaz el-Saieed told the state-run al-Ahram newspaper that the IMF isn’t imposing conditions and that devaluing the Egyptian pound isn’t under consideration. He told the financial daily al-Borsa that Egypt would withdraw the funds in a lump sum and use them to finance a budget deficit and boost foreign currency reserves.
Egypt’s international reserves have declined by around 60 percent since the start of 2011, to $14.4 billion last month. The pound is projected to lose about 20 percent of its value in the coming year, according to forward contracts.
Egyptian officials, including el-Saieed, have said the IMF loans will help Egypt attract other funding. Borrowing costs on domestic bond markets have risen by about half since the start of last year’s uprising.