Tuesday, Apr 02, 2013

(This story was originally published Monday.)

By Leila Hatoum

DUBAI--Egypt plans to pitch an amended economic plan to an International Monetary Fund technical committee due to arrive in Cairo Wednesday for a two-week round of negotiations over a long-awaited $4.8 billion loan, Egyptian officials told Dow Jones late Monday.

The country has a "newly amended national financial and socioeconomic reform program that will be presented to the IMF," said Ashraf al-Arabi, Egypt's planning and international cooperation minister, adding he was positive his country would reach a "staff-level agreement with the IMF regarding the loan," based on that plan.

Part of the intended economic changes Egypt plans to enforce include the use of smartcards to ration fuel subsidies. "Any consumption outside the ration would be subsidy-free. We started with the gas, and plan to introduce fuel rations as of July 1st," Mr. Arabi said.

The country also plans to reduce its budget deficit of 185 billion Egyptian pounds ($27 billion), or 10.8% of gross domestic product, to 9.4% of GDP in 2014 and 8.5% of GDP in 2015, he added.

Egypt, which is suffering from dwindling foreign investments and depleted reserves reaching $13.5 billion last month and can barely cover two months of imports, expects a final decision on getting the IMF loan by the end of April during a spring meeting in Washington between April 18 and April 20, its finance minister, al-Morsi Hegazi, told Dow Jones on the sidelines of a regional financial event late Monday.

The country's security and political instability have added more pressure as its economic woes have caused foreign investors to wait for the picture to get clearer.

However, despite a dire need for foreign currency, Mr. Hegazi said the IMF loan would be symbolic rather than having a significant direct impact on the country's finances, adding his country is in need of an economic solution rather than a financial one.

"The IMF's loan won't have a great impact. The $4.8 billion will be paid over several years and we need much more than that. However, it is significant in the sense that it would mirror the IMF's trust in our economy and that would encourage foreign investments," Mr. Hegazi said.

The North African Arab state will also be asking Arab funds and financial institutions for financial support, Mr. Hegazi said to Dow Jones.

"We are here [in Dubai] to discuss the raising of capital of Arab funds and financial institutions, and we will ask those institutions for support. As for countries, we want them to know that Egypt's economy is strong and welcoming to all investments," Mr. Hegazi said in response to a question on whether Egypt would ask for financial aid from Arab countries and regional funds.

Egypt needs the economic support of its Arab counterparts in terms of investments and trust in its economy, the minister added.

Write to Leila Hatoum at leila.hatoum@dowjones.com

(END) Dow Jones Newswires

02-04-13 0407GMT