WASHINGTON (Reuters) - Egypt has requested help from the International Monetary Fund to help bridge a gap in government funding that will total $10 billion to $12 billion through mid-2012, the IMF said on Thursday.
Struggling with a decline in revenues from tourism in the wake of mass protests earlier this year, Cairo is turning to international donors and lenders for help to fund recovery.
“They’ve approached bilateral and multilateral partners, including the IMF, to provide the financial support for what is their homegrown program,” IMF spokeswoman Caroline Atkinson said.
She said an IMF team will soon visit Cairo to begin discussions on any lending arrangement but didn’t put a figure on how much help the global lender might put up.
“The size and scope of fund support will be defined as discussions progress,” Atkinson said.
Late in April, Egyptian Finance Minister Samir Radwan told reporters that Egypt was seeking $3 billion to $4 billion from the IMF. He said Egypt’s budget deficit was likely to top 10 percent of its total national output in the coming fiscal year and it had to borrow to cover the gap.
Tourism and investment from abroad dried up during and after the mass protests that toppled the country’s long-time leader Hosni Mubarak in February. That has left the government facing revenue shortages just when it is trying to as respond to demands for more jobs and for higher wages.
Egypt’s economy contracted by an estimated seven percent in the January-March quarter and was expected to grow just two percent in the current fiscal year to June.
“Economic growth is unfortunately going down,” Radwan told reporters last month. “Our estimate is two percent this year...next year it is about four percent.”
The IMF has projected Egypt’s economic growth will fall to one percent this year, a steep decline from a 5.1 percent expansion during 2010.
Egypt also is expected to seek to increase its existing loans from wealthy nations nearer home, including from the Kuwait Fund for Arab Economic Development.