Egypt's central bank governor criticizes IMF

CAIRO Wed Oct 23, 2013 6:10am EDT

The International Monetary Fund (IMF) logo is seen at the IMF headquarters building during the 2013 Spring Meeting of the International Monetary Fund and World Bank in Washington, April 18, 2013. REUTERS/Yuri Gripas

The International Monetary Fund (IMF) logo is seen at the IMF headquarters building during the 2013 Spring Meeting of the International Monetary Fund and World Bank in Washington, April 18, 2013.

Credit: Reuters/Yuri Gripas

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CAIRO (Reuters) - Egypt's central bank governor has criticized the International Monetary Fund for acting in a "totally unacceptable way" during negotiations over a critical $4.8 billion euro loan earlier this year, a state newspaper reported.

Months of talks between Islamist President Mohamed Mursi's government and the IMF failed to produce an agreement before the army toppled Mursi on July 3.

The IMF loan is widely viewed as necessary to convince foreign donors and investors that Egypt's economy, which has been battered by political turmoil, is on the right track.

Central Bank governor Hisham Ramez, who was involved in the talks, said that "some figures" in the IMF had dealt inappropriately with Egypt, without giving details, according to Al-Ahram newspaper.

Al-Ahram released Ramez's comments in advance of an interview expected to air on Wednesday night on an Egyptian television station.

Ramez could not be reached for comment on Wednesday.

Earlier this month IMF chief Christine Lagarde said the Fund was ready to work with Egypt to help stabilize the country's economy, citing discussions that have been ongoing for the past year and a half.

The IMF had been negotiating the critically needed loan with Egypt before the military removed Mursi from office.

Mursi's Muslim Brotherhood has been weakened by a security crackdown but Egypt remains unstable. Political upheaval and attacks by al Qaeda-inspired militant groups have hammered tourism and investment.

The current army-backed cabinet as a whole seems to be in little rush to resume talks with the IMF about the loan, which would require economic reform commitments that the government might find politically risky.

Egypt has received pledges of aid from several Gulf countries, including Kuwait and Saudi Arabia, that is expected to help the most populous Arab state avoid a balance of payments crisis and overcome fuel shortages that partly caused a wave of public anger against Mursi.

The cash injections are keeping the economy afloat but analysts say the government still needs a long-term plan to ensure financial stability.

Foreign reserves dipped to dangerously low levels in the months before Mursi's ouster but have begun to recover, boosted by the billions sent by Gulf Arab allies.

Ramez said foreign reserves stand at $18.9 billion, up $190 million from last month's figures announced on October 3.

The country has run through more than $20 billion in reserves, borrowed billions from abroad and delayed payments to oil companies to support its currency since its popular uprising in 2011 that resulted in the overthrow of former President Hosni Mubarak.

(Reporting By Maggie Fick; Editing by Michael Georgy and Susan Fenton)

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