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Egypt doesn't need IMF loan at current time: Finance minister Ahmed Galal says Egypt does not need a $4.8 billion loan from the International Monetary Fund because the country's financial situation has changed
Finance Minister Ahmed Galal has said Egypt does not need a loan from the International Monetary Fund (IMF) at the current time, Al-Ahram Arabic news website reported on Wednesday. His comments came after IMF managing director Christine Lagarde said last week that the institution was strongly committed to working with the new Egyptian authorities and proposed to send a mission to Cairo if requested. Galal said Egypt appreciated Lagarde's comments and would cooperate with the IMF to implement a value-added tax to replace the current sales tax. Two years of negotiations over a $4.8 billion loan have passed without an agreement between the two sides, mainly because of the reluctance of successive Egyptian governments to impose reforms that would squeeze living standards, such as lifting fuel subsidies and raising taxes. Galal explained that Egypt did not need the loan because the need for cash and to assert its credibility among international investors through an IMF agreement no longer existed. Since Mohamed Morsi was ousted in July, Egypt has turned increasingly to friendly Arab states for economic assistance, receiving pledges of $12 billion in loans, grants and fuel shipments from Saudi Arabia, the United Arab Emirates and Kuwait, of which $7 billion has been delivered. As for investor trust, Galal said it would be regained via the transitional roadmap and a stimulus plan to create jobs and revitalise the economy. In August, Galal announced the government would spend $3.2 billion on labour-intensive projects and services to help the poor. There are also plans to build roads and railways, water and sewage treatment plants, low-income housing and to extend natural gas supplies to homes and utilities in industrial areas, especially in Upper Egypt. Economic activity in Egypt has slowed since the popular uprising that toppled Hosni Mubarak in 2011, with sectors such as tourism and real estate being the hardest hit. The IMF has praised Egypt's stimulus plan and welcomed support for the cash-strapped country from friendly Arab states, but said introducing much needed reforms to restructure the economy remained a challenge for the government. Since Morsi's ouster, the interim authorities have been following a transitional roadmap to return the country to democracy. The roadmap entails amending the 2012 constitution and organising presidential and parliamentary elections. http://english.ahram.org.eg/News/84110.aspx