IMF: Egypt economic measures seen possible benchmarks

The International Monetary Fund (IMF) said on Tuesday it was still discussing with Egyptian authorities the timing of the IMF mission’s visit, adding that economic measures the government had published in June represent possible benchmarks for funding. “We are still discussing with the authorities the exact timing of a mission,” the IMF said in a statement released to Reuters. The IMF said last week it was looking forward to sending a mission to Cairo this month, but Egyptian officials said the visit has been delayed for “a few weeks.” In response to queries that the IMF imposed measures on Egypt, the fund said any funding arrangement “should include benchmarks and quantitative targets taken from the government’s own economic plan and carries broad political support.” The IMF said that measures published on the Ministry of Finance’s website in June “were under consideration by the government at certain stages in their economic program,” and “thus represent possible benchmarks for an IMF arrangement.” “As we have repeatedly indicated, the IMF continues to stand ready to support a program that is designed and fully owned by the Egyptian authorities and carries broad political support,” it added. The statement followed an announcement by Finance Minister Mumtaz al-Saeed saying that Egypt would maintain its budget deficit at 134 billion Egyptian pounds ($22.22 billion), or 8.6 percent of gross domestic product, in the financial year ending in June 2012. “We are committed to maintaining the budget deficit so that it does not exceed 134 billion Egyptian pounds, that is 8.6 percent of the gross domestic product (GDP) for this financial year,” al-Saeed said in a statement after a cabinet meeting. A senior army official had said in early December that Egypt’s deficit would climb to 167 billion pounds in 2011-12, roughly equivalent to 11 percent of GDP. A state newspaper reported on Sunday that the government plans to raise natural gas and electricity prices paid by heavy industries by 33 percent this month to help cap the deficit. Egypt, whose economy was battered by the uprising that unseated Hosni Mubarak in February, turned down a $3 billion IMF facility in June last year, saying it did not need the funds. The ruling military generals have also been reluctant to take on debt without a popular mandate. But ministers have indicated Egypt may be prepared to return to the negotiating table, as economists warn the country risks a full-blown currency and budget crisis unless it can secure up to $15 billion of funding from abroad. Al-Saeed said it will also review custom duties to help narrow the deficit, without “contravening Egypt’s signed agreement with the World Trade Organization.” The WTO exists to support freer world trade. Yields on Egyptian treasury bills have soared to multiyear highs as the government leans more heavily on local banks for fresh liquidity in the absence of foreign debt investors. The IMF’s visit was postponed at the request of the Egyptian government because of its busy agenda, local newspapers said on Tuesday. The IMF said its staff has remained “in close contact with the authorities since its last visit in early November on how to address Egypt’s economic challenges, and how the Fund can provide support.” Its visit to Cairo had already been delayed from mid-December because of security concerns