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The International Monetary Fund has once again postponed negotations on a long-awaited US$4.8 billion loan to Egypt, said a government source.
The loan, along with other loans and grants from various countries and financial institutions that are contingent on the approval of the IMF loan, are needed to bridge a budget deficit that is expected to hit LE200 billion this fiscal year.
The IMF would grant the loan if the government immediately implements reform measures, such as reducing commodity subsidies and providing guarantees that the loan enjoys a community consensus, the source added.
Economy analyst Amr Hassanein warned that without the loan, Egypt’s credit rating could take another hit.
“This would widen the deficit and deplete our foreign cash reserves,” he said.
“Reserves fell to US$13.6 billion as a result of paying the Paris Club debt, and the periodic injection of dollars in the market by the Central Bank for more than three weeks,” Hassanein explained.
He added that cash reserves are less than what is officially announced.
“Half of the reserves the government cannot dispose of, as US$7 billion are allocated to repay foreign suppliers of petroleum materials,” Hassanein explained.
Edited translation from Al-Masry Al-Youm