Egypt and the International Monetary Fund made very good progress in talks on Sunday, an IMF official said, after meeting with government officials seeking a $4.8 billion IMF loan to help relieve a currency and budget crisis.
The IMF has said Egypt needs to take bold, immediate action. Egypt agreed an IMF loan in principle last November but requested a delay during violent unrest the following month. "We've had very good progress, and we had very constructive discussions," Masood Ahmed, director of the IMF's Middle East and Central Asia Department, told reporters after meeting Prime Minister Hisham Kandil in Cairo.
Both sides agreed on the need to support a national programme that addresses Egypt's economic challenges, he said.
"The IMF is fully committed to working with the Egyptian authorities in the coming weeks to try to reach an agreement on such a programme," he said, adding that the next step would be technical work over the coming days.
The fund has raised the possibility of interim funding for Egypt, which would give it access to emergency aid of around $750 million while it negotiates a full-fledged program. But Egypt's cabinet made clear last week it does not want to sign any emergency loan and that any IMF agreement would be within the framework of the country's economic program.
Egypt's government faces daunting economic and political problems two years after the overthrow of Hosni Mubarak.
Street unrest and feuds with the opposition have sapped confidence and foreign reserves slid to critical levels. The fiscal deficit is reaching unaffordable levels and Egypt's pound has fallen more than 8 percent against the dollar this year.
A senior U.S diplomat said last week it was "absolutely essential" Egypt sealed an IMF deal as fast as possible because of shortages of foreign exchange, diesel and raw materials.
The IMF found Egypt's latest economic proposal unsatisfactory, the diplomat said, describing the process up to that point as "exceedingly rocky."