Egypt has rejected an offer of a $750 million rescue loan from the International Monetary Fund (IMF), ruling out a fallback on emergency measures.
The emergency credit offer came after delays in finalising a $4.8 billion loan from the IMF to bolster Egypt’s battered economy and help counter a growing budget deficit.
Egyptian Finance Minister El-Morsi Hegazy said on Tuesday that his country had started implementing a full economic reform programme, entitling it to a larger loan from the IMF, instead of emergency measures. Hegazy insisted that Egypt’s economy was on the path to recovery.
An IMF official would not comment on the minister’s rejection of the rescue loan offer.
“We are in discussion with the authorities on how best to support Egypt, including on the timing of the next staff visit,” IMF spokeswoman Wafa Amr said in an email.
The stopgap loan, part of the body’s Rapid Financing Instrument, would not have been a substitute for Egypt’s multibillion dollar loan request.
The government has invited the IMF back to the country this month to resume talks, but no date has been set.
An IMF official said late last month in Washington that the body received Egypt’s revised economic programme, which it was studying.
Negotiations over the larger loan have been stalled during political turmoil in Egypt, which has often deteriorated into violent clashes between protesters and police and widespread unrest in the form of labour and police strikes.
The two years of unrest have contributed to a severe economic downturn.
Over the past months, Egypt’s foreign currency reserves have sharply dropped to a critical level of $13.5 billion, down from $36 billion in January 2011, before the popular uprising that forced longtime President Hosni Mubarak out of office.
Egyptians have been hit by shortages of diesel fuel and rising prices of some basic commodities.