IMF delegation in Cairo for loan talks | News | DW | 03.04.2013
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IMF delegation in Cairo for loan talks

A delegation from the International Monetary Fund (IMF) has arrived in Egypt to negotiate a multi-billion dollar loan. Cairo must prove that it is committed to reforms, amid ongoing political turmoil.

Cairo and the IMF are set to negotiate a 4.8-billion-dollar (3.7 billion euro) loan on Wednesday to revitalize an economy battered by two years of political upheaval and strikes.

Islamist president Mohammed Morsi's government inked a deal with the IMF last November, however its finalization was postponed due to unrest triggered by a political row over the extent of his powers.

Egyptian officials are expected to pitch an economic reform plan that revamps state energy subsidies and tax hikes, media reports said.

Authorities believe the loan will help restore investor confidence in the country, where unrest and deadly clashes between protesters and police have blocked efforts to build broad-based support for economic reform.

Egypt's foreign currency reserves have fallen critically low, threatening the country's ability to buy wheat, of which it is the world's biggest importer. In the past two years, the reserves have fallen from $36 billion to $13 billion.

On Tuesday, Finance Minister al-Mursi Hegazy described a "very difficult" financial situation where foreign reserves would cover imports for only three more months.

The government recently postponed plans to restrict the availability of state-subsidized fuel until July, and some reports say that date may be pushed back even further.

hc/jr (AFP, dpa)