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Egypt expects to sign deal for $3.2B IMF loan soon

CAIRO — Egypt's transitional government announced plans Sunday to sign a loan agreement with the International Monetary Fund worth $3.2 billion, less than a year after abruptly turning its back on a loan from the international lender, according to state media.

The $3.2 billion loan will throw a much needed financial lifeline to Egypt, a country reeling from a year of economic crisis and social unrest following the ouster of President Hosni Mubarak.

The deal bears a striking resemblance to one Egypt's military rulers negotiated, and abruptly rejected, last spring, citing concerns that it would saddle future governments with such a large debt that it would amount to a violation of Egyptian sovereignty.

Those objections appear to have been eclipsed by the country's mounting economic troubles, which have grown increasingly dire as persistent social unrest has led to a collapse of the tourism industry and the flight of foreign investors. Since October, seemingly monthly street clashes between protesters and security forces have killed more than 100 people and battered and burned much of downtown Cairo, leaving it divided by concrete walls and coils of razor wire.

The loan will be disbursed in three stages over the next 12 months at an interest rate of 1.2 percent, the state-run newspaper Al Ahram reported Sunday. The first installment, around $1 billion, will be delivered once Egypt signs the agreement in March.

The newspaper also reported that Egypt was negotiating a $1 billion loan from the World Bank, in part to make up for economic assistance pledged by Arab nations more than a year ago that never materialized.

Egypt's military rulers may also be concerned about the possible loss of more than $1.5 billion of U.S. aid over a dispute with the United States that has driven relations between the allies to a 30-year low.

Authorities have accused several nonprofit groups, including four supported by the United States, of operating without proper licenses and illegally receiving millions of dollars of U.S. assistance in the last several years. Criminal charges have been brought against 43 employees of the groups, including 19 Americans.

Egypt expects to sign deal for $3.2B IMF loan soon 02/19/12 [Last modified: Monday, February 20, 2012 12:00am]
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