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Egypt PM hopes for IMF agreement by end of month

Egypt has indicated it needs support to prop up state coffers weakened by the popular uprising
By Reuters
Tue 09 Oct 2012 12:47 PM

Prime Minister Hisham Kandil said on Tuesday that Egypt would invite the International Monetary Fund to visit for talks about a loan facility at the end of October and said he hoped to reach an agreement "by that time".

Egypt, which has launched negotiations for a $4.8 billion IMF loan but has also indicated it may want more, urgently needs support to prop up state coffers weakened by turmoil since the popular uprising last year that ousted President Hosni Mubarak.

Kandil also told a conference in Cairo that the government aimed for 4 percent growth in the 2012/13 fiscal year, compared to previous forecast of 4 to 4.5 percent, and said a five-year plan envisaged hitting an annual growth rate of 7.5 percent.

"We are negotiating with the IMF. Our people are travelling to Tokyo to attend the joint IMF/World Bank meeting this week," Kandil told a conference.

"They are inviting the IMF to come for official negotiations by the end of this month. We are hoping to reach an agreement by that time," Kandil said.

The IMF wants Egypt to put a programme in place to narrow a budget deficit that has mushroomed to 11 percent of gross domestic product since the uprising. Egypt has said it is working on its programme but insists it will be "home grown".

One part of that programme is likely to be a restructuring of subsidies on petroleum products, which eat up about 25 percent of total government spending.

Analysts say measures to reduce energy subsidies are certain to be unpopular among many Egyptians, some of whom joined the uprising last year because of economic grievances.

Kandil has previously said that a series of measures are needed to ensure that subsidies reach those who deserve them most.

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