CAIRO: the interim government of Egypt acknowledged plans on Sunday to sign a loan agreement worth $3.2 billion with the International Monetary Fund. According to state media less than a year the government of Egypt had refused the offer of a loan from the international lender which led to downward spiral of the economic trend.
Egypt had turned down the loan last year, saying it did not want to further increase its foreign debt, citing concerns that it would burden the next government with such a large debt that it would amount to an infringement of Egyptian sovereignty; but re-evaluated the same as its economy nose-dived and much of the promises of aid from Arab and other donors did not fall through.
Egypt’s foreign reserves have plummeted from a high of $36 billion, prior to the revolution, to around $10 billion in late January, as the government has spent vast amounts to bolster the currency, which has come under mounting pressure.
The $3.2 billion loan will definitely help to ease the financial crunch that Egypt is currently facing. Egypt is still reeling from a year of economic crisis and social unrest after the ouster of former Egyptian politician and military commander Hosni Mubarak a year ago.
Frequent street clashes between protesters and security forces have killed more than 100 people since October and battered and burned many parts of downtown Cairo, leaving it separated by concrete ramparts and coils of barbed wire.
The most widely circulating Egyptian daily newspaper the Al Ahram reported on Sunday that The loan will be payed out in three stages over the next year at an interest rate of 1.2 percent ,. The foremost part, around $1 billion, will be disbursed as soon as Egypt signs the agreement.
The state managed daily also went on to say that Egypt was negotiating to borrow $1 billion from the World Bank, in part to make up for financial support pledged by Gulf Arab nations more than a year ago.
The tourism business, which has been boosting the economy through the years, has been on a down spiral since the revolution, and a rise in anti-American sentiment in the state-owned media appears likely to keep tourists at bay.