Correction: Egypt-Economy story

Correction: Egypt-Economy story

Associated Press

CAIRO (AP) -- In an April 16 story about Egypt's economy and request for an IMF loan, The Associated Press misspelled the last name of an economic expert. The correct spelling is Halime, not Haline.

A corrected version of the story is below:

IMF leaves Egypt after hearing from opposition

IMF team leaves Egypt without broad backing from opposition for government's economic plan


Associated Press

CAIRO (AP) -- A team from the International Monetary Fund left Egypt without getting broad backing from the opposition for a government economic plan aimed at getting a key $4.8 billion loan, political blocs said Tuesday.

Egypt's main factions say they agree in principle on the need for the loan, seen as a lifeline for the country's battered economy, but there are concerns over unrest if painful austerity measures linked to it are not backed by political consensus.

The IMF said in a statement that its delegation met with a range of political figures and Cabinet officials during the nearly two week-long visit that ended late Monday. In previous, shorter trips, the IMF has only focused on meeting with government officials.

The country's political polarization has further delayed reaching agreement around the deal.

Finance Minister El-Morsi Hegazi, who will meet with officials in Washington D.C. this weekend for annual IMF and World Bank meetings, said the government's meetings with the international lender were "fruitful."

But opposition groups including liberals, socialists and ultraconservative Islamists said the government was not being transparent about economic measures that it said could hurt Egypt's poor. They also accused the IMF of trying to curry support for President Mohammed Morsi's reform program.

Egypt's economy has been hard hit by the two years of turmoil that followed the ouster of longtime President Hosni Mubarak. The government is confident that the $4.8 billion IMF loan would not only cover part of its huge deficit, but also signal to investors that Egypt is again a safe bet after two years of turmoil that started with the 2011 uprising that unseated longtime President Hosni Mubarak.

Most in Egypt appear to agree that the country needs the IMF loan to unlock around $15 billion of aid and investment. It would help prop-up foreign reserves that were at $13.4 billion last month, down more than two-thirds of what they were prior to the uprising.

But in Egypt, where half of the country's 85 million people live at or below the poverty line of $2 a day and rely on government subsidies of wheat and fuel for survival, many are balking at the measures that might be necessary to secure the loan.

The opposition as well as bankers say measures by Egypt's central bank to regulate the devaluation of the local currency are linked to IMF conditions. The pound has lost 11 percent of its value against the U.S. dollar since early December, sparking concerns of wider inflation.

Opposition spokesmen from several groups said that they could not approve the plan because neither the government nor the IMF would fully disclose its details.

The Nour Party, an ultraconservative Islamist group that is the second-largest force in parliament behind Morsi's Muslim Brotherhood, said that the government has not made clear how it plans to spend the money, and criticized the IMF for "interfering" in Egypt's internal affairs.

"It is our right to know what the international requirements are that will be imposed on the country, which is requesting a loan, and if all countries requesting loans also face such meddling in so many details," the party said in a statement after the meeting.

The Congress Party of former presidential candidate and Arab League chief Amr Moussa also had reservations.

"They should have talked to people about what steps they are taking to get this loan ... and consult and ask for advice," said spokesman Ahmed Kamel, adding that the money should not be used "to put out (budgetary) fires."

Mohammed Gouda, a member of the Muslim Brotherhood's economic committee, dismissed the complaints and said discussion of reforms is taking place in parliament.

"But how can the government announce plans that are still being discussed and hashed out?" he said. "The plans change daily and publicizing them will create confusion."

An IMF official contacted for response referred The Associated Press to the lender's statement, which said that the "mission made progress" during its meetings.

"All sides concurred on the need to protect the vulnerable sectors of society when implementing reform measure," the statement said.

The IMF said the government intends to take "further actions" that tackle the country's fiscal deficit, specifically mentioning austerity measures that have begun to take shape targeting energy subsidies.

Meanwhile, a new government study Tuesday found that unemployment reached 12.7 percent last year, up from 12 percent in 2011. The budget deficit is expected to widen by more than $1.7 billion to reach $28.6 billion, according to state-run media.

Egypt has a long history of unrest over planned or implemented economic reforms perceived to hit the poor, notably the 1977 Bread Riots. Many Egyptians also feel that, with parliamentary elections scheduled for some time later this year, the president's party may be reluctant to push forward with painful subsidy cuts that may hurt them at the polls.

Expert Farah Halime, of the Rebel Economy blog, says the IMF wants reforms to appear as part of a homegrown plan.

"According to (my) meetings with IMF representatives and EU reps that work closely with IMF, the bottom line is there must be a political consensus," she said.


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