Egypt's efforts to secure a critical $4.8bn loan from the International Monetary Fund have run into fresh difficulty, possibly leading the government to seek emergency financing to avoid economic collapse.
The IMF has expressed reservations over a government economic plan needed to seal an agreement that has been in the works, for almost two years, according to people familiar with the negotiations. (...)
The IMF, however, has informed Cairo that its proposed economic reform programme is not sufficiently robust.
Masood Ahmed, director of the Middle East and Central Asia at the IMF, would not comment on the negotiations with Cairo, saying only that "the IMF view is that the programme has to have the desired impact on confidence ... [and] needs to have strong measures to address Egypt's broader economic problems".
With the prospect of an IMF agreement receding, analysts say a bridge finance package might be put together by the IMF with other donors to tide Cairo over until after the elections.Ashraf al-Araby, the planning minister, played down the idea on Sunday, adding that broad structural measures were needed.
Without a reform programme, bridging financing would in any case do little to restore investor confidence. "Any extra funds will help Egypt buy time," said Mohamed Abu Basha, Egypt economist at EFG-Hermes, the regional investment bank. "But the failure to agree an IMF programme will send a negative signal to all those investors waiting for hints of real action on the ground to reform the economy."