São Paulo – The International Monetary Fund (IMF) reported this Thursday (27) that Egypt has been making “good progress” in terms of the reforms required for the country to receive a USD 12 billion loan from the organization throughout a three-year term. “The reforms are headed in the right direction, should continue, should be implemented, and we’re planning to support the government in that”, said the Fund’s spokesman, Gerry Rice, according to information from Kuwaiti agency news Kuna.
Egypt’s government and the IMF signed an agreement on the loan in August, but ratification by the Fund’s board is still needed for the funds to be cleared. According to Rice, a date hasn’t been defined yet for this formalization by the board. He added that the fact that the reforms are progressing doesn’t mean that the implementation process will be easy. “They’re difficult. There’s going to be disagreement and differences and maybe even protests,” he said.
Among the measures already approved, Rice highlighted the approval of next fiscal year’s budget, the approval of a Value Added Tax (VAT), a plan on energy subsidies and the central bank’s commitment to gradually move to a more flexible exchange rate.
For the IMF loan to come through, Egypt also needs more USD 5 billion to USD 6 billion in “additional funding,” amount that should be provided by Saudi Arabia and China, according to Rice.
Despite persisting on the cuts of energy subsidies, the spokesman emphasized that the Fund did not tied the loan to a cut on food subsidies. “There’s been some reporting and some speculation around that. I want to be clear on that. The IMF program does not call for any cuts in food subsidies,” he said.
*Translated by Sérgio Kakitani
