x Abu Dhabi, UAESunday 23 July 2017

Egypt's new government to approach IMF for economic aid

Adviser close to the new president says request could come in weeks.

CAIRO // Egypt will approach the International Monetary Fund (IMF) and other financial institutions to help get its economy back on track once the country's new president, Mohammed Morsi, appoints a cabinet, said a financial adviser who helped to draw up his manifesto.

The uprising last year plunged the economy into crisis, chasing away tourists and foreign investors and prompting government employees to go on strike for higher wages.

Mr Morsi was sworn in on Saturday as Egypt's first Islamist, civilian and freely elected president, and will begin working to form a new government in the coming days.

"We intend to approach the IMF again," said Amr Abu-Zeid, development finance adviser to the Muslim Brotherhood's Freedom and Justice Party (FJP), which Mr Morsi led until he became head of state.

"Give him one week or two weeks, so at least he has a cabinet ... I believe these issues will not go further until they have a cabinet at least," he said. Mr Abu-Zeid helped draw up the Muslim Brotherhood's Nahda - or Renaissance - economic programme. But an FJP economics official cautioned that the final decision on whether to approach the IMF would be made by Mr Morsi and his government once it was formed.

"We have not taken a decision towards the IMF yet. The decision will be taken by the government and by Morsi. No decision will be taken for a week or two, probably not before two weeks," said Ahmed Al Naggar, who is a member of the FJP's economics committee.

"Our position has been clear all along. We have no objection to an agreement with the IMF, but only after looking at all the alternatives," Mr Naggar said.

The country's army-backed interim government kept the economy under pressure since the overthrow of Hosni Mubarak in February last year through a series of short-term measures that include financing a burgeoning budget deficit by borrowing short term from local banks at high interest rates and by draining the country's foreign reserves.

The military council that took power from Mubarak rejected an agreement that Egypt negotiated with the IMF in the middle of last year, then resumed talks for a $3.2 billion (Dh11.75bn) loan this year.

The economy contracted by 4.3 per cent in the first quarter of last year and stagnated in the following three quarters.

"We are going back. We will negotiate with the IMF, with the World Bank, with the Islamic Development Bank, with anybody who wants to help. We are very open to this," Mr Abu-Zeid said.