Egypt is close to an agreement with the International Monetary Fund on a $4.8 billion loan that would help it fight a deepening economic crisis but is still bristling at the conditions, diplomats said. An IMF programme could help stabilise Egypt's economy in the rocky transition to democracy since the 2011 overthrow of former President Hosni Mubarak, unlocking up to $15 billion in aid and investment to improve a dismal business climate.
But diplomats and politicians say Islamist President Mohamed Mursi had still to approve required tax increases and subsidy cuts that prompted him to halt implementation of an earlier IMF deal in December, two weeks after it was agreed in principle.
"The mission said it is waiting until now for the government to present some of the roadmap related to reforming the economic system, and it is still in dialogue with the government to get acquainted with this map," Abdullah Badran of the hard-line Islamist Nour party told Reuters after meeting IMF negotiators.
Egypt's economy has deteriorated significantly since then. Tourism and investment have shrivelled due to political turmoil in the Arab world's most populous nation, where 40 percent of the 84 million citizens live on less than $2 a day.
The projected budget deficit has risen to around 11 percent in the fiscal year ending in June, foreign currency reserves have shrunk to less than needed to cover three months' imports, and the country is suffering fuel shortages.
An IMF delegation has been holding talks in Cairo since April 4 on a revised economic programme that includes a gradual reform of costly fuel subsidies that swallow 21 percent of the budget or 12 percent of gross domestic product, and an extension of sales tax to fewer items than previously planned. The country's finance minister and central bank governor have told local media the talks are going well, and diplomats said they are due to conclude, one way or another, before the IMF mission returns to Washington on Tuesday.
"We're waiting for clarity from the presidency," a diplomat briefed on the negotiations said. A spokesman for the president's office declined comment on whether Mursi had given the green light for an agreement.
Diplomats said the ruling Muslim Brotherhood was reluctant to impose unpopular tax and fuel price increases before parliamentary elections provisionally due to start in October.
Nevertheless the Brotherhood's Freedom and Justice Party is pushing through parliament new tax laws apparently linked to the IMF deal. Opposition politicians accuse the government of trying to impose its will without dialogue. While the IMF team has been in town, the government has picked up $5 billion in apparently unconditional support from Arab allies Qatar and Libya to help it over the coming months.
But Planning Minister Ashraf El-Araby warned last week that Egyptians would face worse austerity without an IMF deal. Ministers fear a long, hot summer of power cuts, and possible fuel and food shortages that could spark unrest. The state-owned Al Gomhuria daily quoted an economic source as saying the IMF deal had reached the final stages for signing.
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