Public debt swelled, IMF loan pivotal, says finance minister

Public debt swelled, IMF loan pivotal, says finance minister

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Wed, 12/09/2012 - 19:54

Finance Minister Momtaz al-Saeed told the Shura Council on Wednesday that Egypt is in desperate need of the International Monetary Fund loan, and that the public debt has swelled.

The minister also said the government has been unable to collect LE60 billion for years. “These are either disputed taxes or differences in land prices,” he explained.

“We tried to borrow from local banks, but interest rates are 15 percent, ten times that of the IMF,” he added. “We need the loan to offset the budget deficit and stop the depletion of our cash reserve.”

Meanwhile, a senior EU official told Reuters that Egypt needs more than US$10 billion to save its economy, adding that the EU is supporting the IMF loan and willing to provide additional financial support, which would be the highlight of President Mohamed Morsy’s discussions in Brussels.

The official, however, ruled that the EU would agree to establish a joint free zone with Egypt.

Lionel Johns, director of the American Chamber of Commerce in Washington, said US investors are lobbying for the United States to drop $3.2 billion in debt that Egypt owes Washington, and for the EU to drop another debt of $7 billion to the Paris Club.

But Gamal Moharam of the Egyptian-American Chamber of Commerce said Egypt does not need debt relief. “Our foreign debt stands at US$33.4 billion only,” he said. “It is still within safe limits.”

Edited translation from Al-Masry Al-Youm