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Mon 25 Feb 2013 05:20 PM

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Egypt, IMF to resume loan talks early March

Country has previously been in talks with fund over US$4.8bn loan

Egypt, IMF to resume loan talks early March
(AFP/Getty Images)

Egypt will resume talks with the International Monetary Fund on financial aid early next month, the country's investment minister Osama Saleh said on Monday.

"There have been pledges of international and regional support to Egypt and most of these are in progress," Saleh said in a speech at a financial conference. "Negotiations with the IMF over the US$4.8bn loan will resume in early March."

Saleh said an agreement with the IMF had almost been in place in December but that a change in public opinion meant it collapsed.

"We don't see any reasons why the Egyptian people should reject the programme. They will eventually realise that the benefits they will get will outweigh the load they will carry."

In a wide-ranging talk on Egypt's economic crisis and efforts to resolve it, Saleh said authorities intended to raise money partly by imposing a 10 percent capital gains tax on initial public offers of shares.

"We should get the EFSA (Egyptian Financial Supervisory Authority) approval within days and then will send it to parliament for approval."

Companies set up as part of major projects, around the Suez Canal and the Upper Egypt Development Corridor, will have to sell shares to the public as a condition of being established, he said.

A law allowing the government to issue sukuk (Islamic bonds) is expected to be passed within a few days, while talks are underway between the investment ministry and the central bank on ways to provide soft loans to small and medium-sized companies, he added.

Saleh estimated that Egypt's gross domestic product would grow between 3 and 3.5 percent in the current fiscal year through June 30. He said that in five years time, Egypt hoped to be posting annual GDP growth of 7-7.5 percent.

The government's budget deficit is currently around 10.8-10.9 percent of GDP, he said.

Saleh said Egypt was hoping to absorb investment of EGP276bn (US$41bn) this year, EGP170bn of which would come from the private sector.