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Egypt homing in on 3.7 billion euro IMF loan

Egypt homing in on 3.7 billion euro IMF loan
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Egypt is closing to sealing a 3.7 billion euro loan from the International Monetary Fund.

After years of political turmoil and plunging foreign currency reserves, the country is now struggling to buy wheat and fuel.

But Cairo must convince the IMF it can boost growth and slash the budget deficit.

One Egyptian man told euronews, “Investors are afraid to put their money in the Egyptian street, for fear of not being able to recover it. Egypt doesn’t need an international loan, but the security to restimulate the economy”.

The Egyptian government now has to tread the fine line of pleasing the global lender whilst implementing politically risky austerity measures.

But they also know that Egypt needs a return to long-term economic security.

Economy expert Dr. Hamde Abdelazimm believes securing the loan would pave the way to reassuring other creditor countries. “The loan isn’t an aim in itself, but the results which belong to this loan, that’s to say the promises from the U.S and European Union to cancel Egyptian debt. Both countries have each promised to cancel close to 400 million euros, after the IMF approves a programme of economic reform”.

The danger for the government is that any tax hikes or cuts in state subsidies for fuel and even bread could lead to civil unrest.

And this thorny issue leaves some sceptical that any agreement will be reached with the IMF ahead of parliamentary elections later this year.

International aid for the Egyptian treasury is a painful remedy that’s needed to save Egypt’s ailing economy. But this cure would result in a negative impact, reflected in the higher prices that would inevitably hit the the people on the street.