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The IMF Dam

Billions of dollars of financing earmarked for Egypt is mounting up behind an IMF dam.

Until Egypt agrees a final deal with the International Monetary Fund for a $4.8 billion loan package, none of the estimated $14.5 billion in additional financial support and aid will be released.

The effect of the delay on signing the loan are far-reaching, and are now affecting Egypt’s ability to finance a faltering energy subsidy system.

US banking giants, JP Morgan and Morgan Stanley, are holding off on as much as $1.7 billion to $2 billion of financing for Egypt’s state-run oil company the Egyptian General Petroleum Authority until the IMF loan is set in stone, Egypt’s Al Mal newspaper has reported (Arabic).

The financing, which was first announced in December, was partly to help EGPC cover dues to foreign oil partners and sustain imports of petroleum products.  EGPC is in billions of dollars of debt partly because it has kept up an inefficient subsidy system that imports fuel at international prices but distributes to the public at very discounted prices. 

Other loans that are contingent on the IMF loan include: $6.3 billion in EU aid, $500 million from the African Development Bank, $1 billion from the US. The remainder is coming from the World Bank and other smaller lenders.

The reality is that without the IMF loan, investors and financiers will have little confidence in Egypt.

With the nation’s credit rating also now on par with Greece, investors are unlikely to make bold moves into Egypt without some reassurance that the country is recovering.



2 Comments


  • H Khalil
    Posted January 22, 2013 at 10:33 am | Permalink

    is this really “REBEL”-Economy??

  • Farah
    Posted January 22, 2013 at 11:02 am | Permalink

    Hi there,
    The name “Rebel Economy” comes from the phrase picked up after the Libyan revolution, when the rebels confronted challenges when rebuilding the financial and economic structure.
    The blog follows a similar premise – how does Egypt and other countries in the Arab world rebuild their economy after revolutions and uprisings. I have written extensively on the IMF loan and why I think it’s in Egypt’s best interest. Please have a look through the website and you will see various facets of the debate published, including alternatives to the loan, the Sharia-compliance of the loan, why the IMF has a reputation for instilling austerity measures and why we should be careful of this.
    I’m not an activist but a keen reporter and observer of the developments.
    Thanks
    Farah



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