New government to approach IMF soon, finance aide says

Egypt will approach the International Monetary Fund and other financial institutions to help get its economy back on track once President Mohamed Morsy appoints a government, a financial adviser who helped draw up his manifesto said.

The popular uprising last year plunged the economy into crisis, chasing away tourists and foreign investors and prompting government employees to strike for higher wages.

Morsy was sworn in on Saturday as the country’s first Islamist, civilian and freely elected president and will begin working to form a new government in the coming days.

“We intend to approach the IMF again,” said Amr Abu Zeid, development finance adviser to the Muslim Brotherhood’s Freedom and Justice Party, which Morsy led until he became head of state.

“Give him one week or two weeks, so at least he has a cabinet ... I believe these issues will not go further until they have a cabinet at least,” he told Reuters.

Abu Zeid is financial adviser to the FJP and helped draw up the Brotherhood’s Renaissance Project, its economic program.

The army-backed interim government kept control over the economy since the overthrow of Hosni Mubarak in February 2011 through a series of short-term measures that include financing a burgeoning budget deficit by borrowing short-term from local banks at high interest rates and by draining the country’s foreign reserves.

The ruling military council rejected an agreement that Egypt negotiated with the IMF in mid-2011, then resumed talks for a US$3.2 billion loan early this year.

The economy contracted by 4.3 percent in the first quarter of 2011 and stagnated in the following three quarters.

“We are going back. We will negotiate with the IMF, with the World Bank, with the Islamic Development Bank, with anybody who wants to help. We are very open to this,” Abu Zeid said.