Egypt‘s bid to secure a $4.8 billion loan from the International Monetary Fund (IMF) is winning guarded support from some of President Mohamed Mursi’s liberal opponents that could make it easier to secure the deal.
An IMF mission visiting Cairo for talks with the government is also meeting ruling and opposition parties to broaden support for a long-delayed deal seen as vital to supporting an economy in deep crisis, a diplomatic source said.
The Islamist-led administration hopes to conclude the agreement next week, unlocking billions of dollars in additional support, boosting investor confidence and helping the state deal with a currency crisis and an unaffordable budget deficit.
The IMF has given no indication of chances of a deal, and some economists say it could take much longer, given government reluctance to implement tax increases and cut fuel subsidies. The mission is expected to conclude on Monday or Tuesday.
While some of Mursi‘s opponents, notably among leftists, oppose an IMF deal, other sections of the opposition believe it is necessary to salvage the economy from two years of turmoil that followed ex-President Hosni Mubarak‘s removal from power.
“We are looking at the supreme interest of the country and not at narrow party interests, and on the basis of this, we support this loan,” said Motaz Salah, spokesman for the liberal Wafd Party.
“We will give our view in our meeting with the head of the IMF mission on Monday,” he said. “But we need to see the conditions, the measures that will accompany it.”
Mursi and his Islamist backers in the Muslim Brotherhood have been in conflict with much of the opposition since last year. Tension has led to street violence.
While the opposition continues to press Mursi to take a more inclusive approach by reshuffling the cabinet and replacing his public prosecutor, some opponents share the government’s view that the country is in dire need of IMF support right away.
Amr Moussa, a former Arab League Secretary General defeated in last year’s presidential election, told the IMF mission at a meeting on Wednesday that Egypt needed the loan as soon as possible, said Ahmed Kamel, spokesman for his Congress Party.
“We understand that we have increasing problems with the energy sector, and growing debts,” he said.
A dearth of hard currency has caused shortages of imported fuel and power cuts are expected to worsen as summer approaches and air conditioning units are switched on.
The government has been seeking support from Arab states: Qatar and Libya offered $5 billion in additional financial backing this week. But an IMF deal is still seen as vital to winning investor confidence.
Mursi is off to Moscow next week and may seek Russian oil and grain on favourable payment terms, market sources say.
The government reached a deal with the IMF in November only to postpone ratification weeks later because of unrest in Cairo. An agreement is expected to bring with it austerity measures such as tax increases and steps to cut fuel and food subsidies.
The IMF mission will meet leftist politician Hamdeen Sabahi on Saturday, said Heba Yassin, spokeswoman for his party, the Popular Current. Sabahi’s party had rejected what it sees as unfair conditions that would accompany an IMF deal, such as tax hikes, she said. It rejects any “violation” of the economy.
The diplomatic source said the IMF wanted to convince politicians a programme would boost growth and protect the poor.
The IMF is also due to meet the Nour Party, a hardline Islamist group which believes an IMF loan must be approved by Egypt’s top Muslim clerics because it will require the state to pay interest – something deemed as impermissible in Islam.
The government says it discussed its economic reform plans as part of a “society dialogue” earlier this year.
But critics say it fell short. Amr Hamzawy, a liberal, told the IMF the government had failed to show any transparency.