(CAIRO) — Waning tourism and growing debt is threatening the Egyptian economy, and now the post-Mubarak government is asking the International Monetary Fund for help to the tune of nearly $5 billion.
In a meeting Wednesday with IMF chief Christine Lagarde, Egyptian President Mohammed Mursi requested a $4.8 billion loan to help jumpstart the country’s economy.
Since the civil rebellion last year that eventually led to the ousting of former President Hosni Mubarak, Egypt’s foreign reserves have tumbled far below levels seen before the revolution, BBC News reports. Now, according to experts, it will take an urgent response with financial aid to steer clear of currency devaluation, reports BBC.
Egypt’s predicted budget deficit for the 2012-13 fiscal year is 7.9 percent of its GDP, BBC reports. The country has $33.8 billion in debt owed to foreign nations, while its domestic debt stands at $193 billion.
After 18 months and two stalled attempts to obtain financial help from the IMF, Prime Minister Hisham Qandil hopes to secure a loan deal by the end of this year. Previous attempts had been delayed as Egypt’s new government wrangled budget control from the military. The IMF insisted that any loan disbursement would have to have broad political support.
On Wednesday, Lagarde indicated the conditions were right for negations.
“We have perfectly competent authorities to negotiate with and we don’t see any obstacle to the negotiation that will begin very shortly,” she told reporters Wednesday, The Wall Street Journal reports.
Though few details about the loan’s projected size or terms have been made public, Qandil said after Wednesday’s meeting that he is expecting a five year loan from the IMF at 1.1-percent interest and a grace period of 39 months, the BBC reports.
Still, The Wall Street Journal reports that many economists say currency devaluation is inevitable for Egypt, regardless of the loan’s size or conditions. Mohsin Khan, a fellow at the Rafik Hariri Center for the Middle East, told the Journal that the IMF will put “tremendous pressure” on the central bank to allow adjustments to the exchange rate.
Copyright 2012 ABC News Radio
Schams Elwazer, Mohammed Tawfeeq and Tim Hume, CNN
Madison Park and Steve Almasy, CNN
Kareem Khadder, CNN
Ray Sanchez, CNN