Egypt and the International Monetary Fund agreed to postpone a decision on a $4.8 billion loan that had been scheduled for discussion by the fund’s board next week, Egyptian Finance Minister Momtaz el-Saieed said.
“The IMF board was supposed to review Egypt’s request Dec. 19 and it has been agreed with the fund that this be delayed to the following session, most likely mid-January,” el-Saieed said by phone from Cairo. “We have an Egyptian economic and social program, and it seems that some have misunderstood the measures, so the president decided to give more time for social dialogue to stress that the measures won’t harm people with limited income.”
Egyptian officials have said the IMF loan is necessary to boost investors’ confidence, secure more funds and help an economy struggling since last year’s uprising. President Mohamed Mursi this week suspended tax increases on some goods to give more time for societal dialogue, and one of his aides said the proposals had sparked public anger.
“The delay is alarming given Egypt’s current economic woes and means that political uncertainty could lead to further delays,” Mona Mansour, chief economist at Cairo-based investment bank CI Capital Holdings, said by phone. “This will add further pressure on reserves and further depreciation of the Egyptian pound is expected.”
The pound, subject to a managed float, retreated 0.1 percent to 6.1529 per dollar at the close in Cairo, bringing its loss since Nov. 22 to 1 percent. That matches its loss for the year to that date.
El-Saieed said the delay won’t affect the loan decision. An IMF spokeswoman wasn’t immediately available for comment.
Egypt reached a preliminary agreement last month with an IMF team on the loan. That came amid opposition by activists saying the deal lacked transparency and may compromise the country’s economic independence.