May 23, 2013
IMF deal: US stresses need for Egypt consensus
Secretary of State John Kerry will stress the importance of Egypt reaching an IMF loan agreement and the need for political consensus on painful economic reforms, a senior US official said.
Kerry arrived in Egypt on his first visit to the Arab world since taking office for talks with the leaders of a country that is mired in political and economic crisis two years after the overthrow of autocrat Hosni Mubarak.
With Egypt's pound and foreign currency reserves sliding, the official said that if Cairo could agree on a $4.8 billion loan from the IMF, this would bring in other funds from the United States, European Union and Arab countries.
However, the official said Kerry believed Egypt needed to increase tax revenues and reduce energy subsidies - measures that are likely to prove highly unpopular with a people struggling during the country's crisis.
"His basic message is it's very important to the new Egypt for there to be a firm economic foundation," the official told reporters as Kerry flew to Cairo.
"In order for there to be agreement on doing the kinds of economic reforms that would be required under an IMF deal there has to be a basic political ... agreement among all of the various players in Egypt," the official said on condition of anonymity.
Egypt said on Thursday it would invite a team from the International Monetary Fund to reopen talks on the loan and the investment minister expressed hope that a deal could be done by the end of April.
The loan was agreed in principle last November but put on hold at Cairo's request during street violence the following month in protest at a planned rise in taxes.
While the tax rise was withdrawn, Islamist President Mohamed Mursi is likely to face violent protests on the streets as any cuts in subsidies demanded by the IMF which will push up living costs in a country where poverty is rife.