IMF discussions on Egypt's loan 'progressing well': Spokesman

Things are "progressing well" in terms of the discussions about the $12 billion International Monetary Fund loan programme for Egypt, IMF spokesman Gerry Rice said at a press briefing in Washington on Thursday, adding that the IMF board meeting to approve the deal will take place in the coming weeks. Egypt and the IMF reached a staff-level agreement in mid-August on a $12 billion fund facility over three years which is awaiting the approval by the fund's executive board. In an interview with Reuters on Thursday, IMF Managing Director Christine Lagarde said that in the next several days the fund will be discussing with senior officials from a number of countries the topic of contributing about $5 billion to $6 billion in bilateral financing to support Egypt. "The fact that Egypt has now reached an agreement with the IMF is an indication that they are taking their economic restructuring, their economic objectives seriously, and that should encourage either friendly neighbouring countries or other bilateral partners to actually participate in the funding," Lagarde said in the interview. "There is the [IMF] financing and there is also the additional financing required from others to complete the financing plan; $4 billion from the IMF and $5 to $6 billion from others that the Egyptian authorities are seeking to mobilise and we are working with them to help secure this," Rice said during the briefing. The IMF has endorsed Egypt's fiscal reform programme, which the government embarked on in 2014 in an attempt to curb the growing state budget deficit -- estimated at 11.5 percent of GDP in 2015/16. The programme has included cutting subsidies and the introduction of new taxes, such as a value-added tax, to be implemented this year. On Monday, Egypt’s parliament gave final approval to the implementation of the long-delayed VAT at a rate of 13 percent for the current fiscal year. Hany Genena, head of research at Beltone Financial, told Ahram Online in August that adoption of some reform policies such as the VAT would pave the way for the IMF's executive board's approval of the loan programme. Now that parliament has ratified the VAT, the likelihood of a full final agreement with the IMF is greater. Egypt, which relies heavily on imports, particularly of foodstuffs, has been suffering a severe shortage of US dollars in recent years due to a scarcity of foreign tourists and investors, scared off by political unrest, security problems and militant attacks.