jackass does his thing

Egypt deal with IMF of paramount importance, says Jackass
Reuters, Mar 2 2013

Jackass Kerry told Egyptian and USAian executives in Cairo on Saturday:

It is paramount, essential, urgent that the Egyptian economy get stronger, that it gets back on its feet. It’s clear to us that the IMF arrangement needs to be reached, that we need to give the market that confidence. I’m certain that US cooperation with Egypt can only happen if Cairo makes the right fundamental choices regarding the IMF.

Egypt’s foreign currency reserves have fallen to not much more than a third of their level before the 2011 revolution and the Egyptian pound has lost more than 8% against the dollar since the end of last year. Energy subsidies soak up about 20% of the government budget. The deficit is expected to soar to 12.3% of GDP this financial year unless the government takes urgent action on reform. A senior US official said earlier Saturday, as Kerry flew to Cairo:

If Cairo could agree on a $4.8b loan from the IMF, that would bring in other funds from the US, EU and Arab countries. Kerry will say Egypt needs to increase tax revenues and reduce energy subsidies. His basic message is it’s very important to the new Egypt for there to be a firm economic foundation. In order for there to be agreement on doing the kinds of economic reforms that would be required under an IMF deal there has to be a basic political agreement among all of the various players in Egypt. What they need to do is things like increasing tax revenues, reducing energy subsidies, making clear what the approval process will be in the upper house of parliament for an IMF agreement, that kind of thing. Kerry will stress the need for agreement across the political spectrum on reforms and winning approval in the upper house. He won’t explicitly tell the opposition parties to renounce their boycott of the election to the lower house, but if they want to engage, if they want to assure that their views are taken account, the only way to do that is to participate. They can’t sit aside and just assume that somehow by magic that all of this is going to happen. They’ve got to participate.

Egypt said on Thursday it would invite a team from the IMF to reopen talks on the loan and the investment minister expressed hope that a deal could be done by the end of April. The loan was agreed in principle last November but put on hold at Cairo’s request during street violence the following month in protest at a planned rise in taxes. While the tax rise was withdrawn, Morsi is likely to face violent protests on the streets as any cuts in subsidies demanded by the IMF will push up living costs. Hopes for political consensus seem slim. Liberal and leftist opposition parties have announced a boycott of parliamentary elections, scheduled for April to June, over a new constitution produced by an MB-dominated lower house and over other grievances. Kerry is due to meet opposition leaders on Saturday but the list of participants is missing many senior figures, including Hamdin Sabahi, who came a close third in presidential elections last year, and Mohamed ElBaradei. Sabahi and ElBaradei rejected invitations to come. Activists in the Nile Delta city of Mansoura said a 14-year-old protester was killed when an armored police vehicle crushed him to death during violent anti-Morsi protests before dawn on Friday. In Port Said, a police vehicle ran over 5 people Friday afternoon after protesters marching along a main street refused to allow the car through.

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