Egypt has not asked for loans from the International Monetary Fund since 1993. But the economy is in such difficult conditions that Cairo needs fresh capital. So today Egyptian President Mohammed Morsi has formally asked the number one of the International Monetary Fund, Christine Lagarde, for aid of 4,8 billion dollars. The IMF had already granted Egypt a 3,2 billion loan but the negotiations had not been successful as the measures requested by Washington, the usual recipe for austerity, were too unpopular for a newborn government. It could still take months to establish the conditions and receive approval from the Washington board, but Lagarde's visit to Cairo seems to have gone well.
Cairo's problems are different. Compared to just before the fall of Mubarak, foreign reserves have halved, falling below the threshold of 15 billion dollars with the Egyptian Central Bank which started selling US currency to strengthen the local currency. The Government is facing a balance of payments crisis and high interest rates, with local banks taking on all the short and medium-term loans of the insolvent state. Many analysts believe that imminent financial help is needed to avoid a devaluation. A deficit/GDP ratio of 2012% is expected for the 2013-7,9 fiscal year, while public debt reached 227 billion dollars. To make the situation worse they add corruption and poverty: in a country of 80 million inhabitants, 40% live below the poverty line.
The Minister of Economy, Momtaz El-Said, in recent weeks has declared that Egypt has asked the government of United States 500 million dollars to support state coffers. Furthermore that the'Saudi Arabia approved aid of 1,5 billion and that too Qatar will deposit 2 billion dollars at the Central Bank of Egypt.
