The International Monetary Fund said on Sunday it would continue talks with Egypt aimed at agreeing possible financial aid after meeting with government officials seeking a $4.8 billion loan to relieve a currency and budget crisis.
The IMF has said Egypt needs to take bold, immediate action to address its economic problems and has raised the possibility of stop-gap funding to tide it through until after parliamentary elections. Egypt, however, has made clear it wants a full loan.
The country agreed to an IMF loan in principle last November but requested a delay during violent street unrest. Since then it has sought to reopen loan talks with the IMF.
“We’ve had very good progress, and we had very constructive discussions,” Masood Ahmed, director of the IMF’s Middle East and Central Asia department, told reporters after meeting Prime Minister Hisham Kandil in Cairo.
Both sides agreed on the need to support a national program that addresses Egypt’s economic challenges, he said, and in a later statement he welcomed the authorities’ determination to move forward with an economic reform program.
“We agreed that our discussions would continue diligently over the coming weeks with the aim of reaching agreement on possible financial support from the IMF,” he said.
Kandil told Ahmed that Egypt’s amended economic reform program took a more gradual approach to lowering the budget deficit than the version used in last November’s agreement, “in light of preserving growth rates, employment and protecting the poor,” an Egyptian government statement said.
Ahmed also met central bank Governor Hisham Ramez, Finance Minister Al-Mursi Al-Sayed Hegazy and Planning Minister Ashraf Al-Araby.
Egypt’s government faces daunting economic and political problems two years after the overthrow of Hosni Mubarak.
Street violence and feuds with the opposition have sapped confidence and foreign reserves have slid to critical levels. The fiscal deficit is reaching unaffordable levels and Egypt’s pound has fallen more than 8 percent against the dollar this year.
Last month, President Mohammed Mursi called for elections to be held between April and June, but a court later cancelled his decree, throwing the electoral process into limbo.
Analysts say the IMF may be reluctant to offer funding while no one knows when the elections will be held.
A senior U.S. diplomat said last week it was “absolutely essential” Egypt sealed an IMF deal as fast as possible because of shortages of foreign exchange, diesel and raw materials.
The IMF had found Egypt’s latest economic proposal unsatisfactory, the diplomat said, describing the process up to that point as “exceedingly rocky.”
The United States said earlier this month it would give Egypt $250 million in aid after Mursi promised to take the painful economic reforms needed to secure an IMF loan.