CAIRO: Egypt is now reconsidering an International Monetary Fund (IMF) development aid deal that it previously rejected, according to Egypt's Finance Minister Hazem al-Beblawi. Egypt's economy was steadily growing before the January 25 Revolution that ousted former President Hosni Mubarak earlier this year. Since then, however, investors have withdrawn much of their capital, fearing instability. The IMF and Egypt originally discussed a US $3.2 billion package for aid, but Egypt's previous Finance Minister chose not to take the deal because the state did not was to incur more debt. “Everyone knows that the IMF has proposed a package of aid of $3.2 billion. At the time we were hesitant. Now we won't change our stand but we are changing our attitude,” said Beblawi at a press conference. “In the beginning we said we didn't like [it]. Now we don't take any stand, we are discussing and everything is taken into consideration,” he added. Beblawi met with the World Bank and the IMF in Washington last month to discuss the possibility of establishing an aid package. There are also regional aid talks underway between Egypt and oil-rich Gulf states including Saudi Arabia and the United Arab Emirates. There is an aid package on the table for US $5-7 billion. “A few days ago we were discussing a package consisting of various elements worth $3.9 billion,” Beblawi said, in regards to a deal with Saudi Arabia. The package includes financing for development projects, and would deposit capital into Egypt's central bank. It would come in addition to the $500 million Riyadh provided earlier this year. “We are also discussing a package with the UAE with a total value close to $3 billion,” he added. By the end of August, Egypt had a $25 billion reserve, but by the end of September those reserves dropped nearly one billion and now sit at $24.01 billion. The investment bank Belton Financial believes that “foreigners selling their domestic T-bill holdings in August and September 2011” could have caused the monthly loss in net international reserves during the month of September. Beblawi has said that Egypt has been looking for ways to reduce its local bank loans, but has not given any details on how they will combat a forecasted budget deficit equal to 8.6 percent of the gross domestic product by June 2012. “The Egyptian government is keen to attract more foreign investment to the Egyptian market especially in the fields of infrastructure, manufacturing industries and tourism,” a statement issued by the Finance Ministry said. Beblawi aims to increase foreign investment to 15 percent of gross domestic product in the coming year, the statement continued. The government has created a myriad of projects under the Private Partnership Projects (PPP) model. “There are more than 32 projects under study now in several ministries,” said the statement. The government is currently proposing four PPP projects, including a hospital project in Alexandria, two wastewater treatment plant projects at Sixth of October and Abu Rawash near Cairo and a road project from Sixth of October to the Rod el-Farag area. PPP may very well be an important mode for channeling donor money in Egypt to help balance their payment gap, which is forecasted to be at $11 billion at the end of the 2011/12 fiscal year. BM
