Wednesday, 8 June 2011

IMF`S - $3bn - FUNDING TO EGYPT


The International Monetary Fund (IMF) has agreed a $3bn (£1.8bn) loan deal with the interim government in Egypt.

The IMF praised the government's attempts to stabilise the economy since the uprising that toppled President Hosni Mubarak in February.

The uprising scared away tourists and investors and cut tax revenues, which has left the government short of cash.

The deal must still be approved by the IMF's board and Egypt's cabinet and military council.

Last week, the government approved its 2011-12 budget, which raised spending by a quarter.
Much of the increased spending went on helping low-income households.

The growing gap between rich and poor was one of the factors that sparked the protests in February.

The IMF praised the budget, saying it went, "in the right direction of supporting economic recovery, generating jobs and assisting low income households, while maintaining macroeconomic stability".

The IMF is to grant the loan over 12 months for the fiscal year 2011-2012 starting from July, and the agreement is regarded as the corner stone of enhancing the country's economic growth.

Egyptian Finance Minister Samir Radwan, said in a press conference that the interest rate of the loan is 1.5 percent, which is lower than the usual rate that was 7 percent according to the market price and the situation in Egypt.

He added that the 3-billion-dollar loan is to decrease the budget deficit of next fiscal year that reached 164 billion Egyptian pounds, or nearly 11 percent of the GDP.

In a statement issued on Sunday, the IMF said that the loan is part of the international support pledges for Egypt in a bid to promote economic growth led by the private sector.
The IMF said its financial and monetary policies target boosting the economic stability via increasing the reserve of foreign currency to avoid any sudden crises.
Egypt estimate the funds needed to rebuild his country after the riots to overthrow the government some time ago to reach USD11 billion.

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