* Egypt urgently needs bold action, says IMF
* No decision yet on bridging finance - Egyptian source
* Qatar says no more funding yet
* Top energy officials fired over supply problems
* Egyptians call on government to admit financial woes
By Marwa Awad and Yasmine Saleh
CAIRO, March 11 Egypt is studying an IMF offer
of a bridging loan, a finance ministry source said on Monday, as
Cairo tries to weather a currency and budget crisis deepened by
political uncertainty and violence on the streets of its cities.
In Washington, the International Monetary Fund said Egypt
needed bold and ambitious action to tackle its economic problems
urgently and it could get temporary IMF funding while it
negotiated a long-delayed full loan programme.
Egypt's Islamist government faces daunting problems two
years after the fall of Hosni Mubarak. Violent protests and
feuding with the opposition have ravaged economic confidence,
sending its currency down sharply - even though the central bank
has spent almost two thirds of the dollar reserves left by
Mubarak in trying to prop the Egyptian pound up.
President Mohamed Mursi has seemed reluctant to accept
reform and austerity measures that would come with a full IMF
deal before parliamentary elections. However, the budget deficit
is also soaring and his options for foreign help are narrowing,
especially as Cairo's wealthy benefactor, Qatar, signalled on
Monday it was not yet ready to offer any more money.
In Cairo, the finance ministry source said short-term
funding under the IMF's "Rapid Financing Instrument" programme
was on the table. "We are studying the possibility of a
temporary loan but no decision has been made yet," he told
Reuters, requesting anonymity.
On Sunday, Planning Minister Ashraf al-Araby said Egypt did
not need stop-gap funding. "The cure for the budget deficit
needs broad structural measures and the help we are requesting
from the IMF is not quick fixes," he said.
Al-Araby did not say explicitly whether the IMF had offered
such funding, which would come with fewer of the unpalatable
conditions that would accompany a full deal. Egypt agreed a $4.8
billion loan in principle with the IMF last November but
requested a delay during violent unrest the following month.
Analysts have speculated Mursi could turn to Qatar, which
has already helped out with soft loans and deposits at the
Egyptian central bank since the 2011 uprising.
However, Qatari Finance Minister Youssef Kamal dashed any
hopes that more funds were on their way soon. "We already
announced $5 billion," he told Reuters. Asked whether Doha
expected to provide more, he replied: "Not yet."
Qatar reveals few details of its financial transactions and
it is unclear if the $5 billion in help for Cairo it has
announced has been fully disbursed.
Egypt also faces political chaos. Last month Mursi called
parliamentary elections to start in April, only for a court to
cancel his decree. Now no one knows when voting will begin.
"THIS CRITICAL TIME"
In Washington, IMF spokeswoman Wafa Amr said the Rapid
Financing Instrument was designed to provide rapid, but limited,
assistance to member countries facing urgent balance of payments
needs. "Use of the RFI could be an option if there is a need for
interim financing while a strong medium-term policy programme is
being put in place," Amr told Reuters.
"Ultimately, this is a decision the authorities will have to
take," she said, adding: "The IMF remains fully committed to
supporting Egypt at this critical time."
The stop-gap measure could amount to about $750 million.
However, the sum is dwarfed by the budget deficit, which is
growing rapidly as a slide in the Egyptian pound pushes up the
cost of subsidising energy and food, much of which has to be
imported using scarce dollars.
In its reform programme, the government targeted a deficit
for this financial year of 189.7 billion Egyptian pounds ($28
billion) or 10.9 percent of annual economic output. Even this
assumes economic reforms are made, and the deficit would hit
12.3 percent of GDP without such action, it forecast.
Qatar's money so far has failed to reverse a slide in its
foreign currency reserves to $13.5 billion at the end of
February - enough to cover little more than two months' imports.
In a sign of economic stress, Petroleum Minister Osama Kamal
dismissed the head of state-owned Misr Petroleum and a top
official in the petroleum authority on Sunday, blaming them for
a crisis in distributing diesel used by buses and trucks.
The state news agency MENA reported that Kamal had ordered
the supply of an extra million litres of diesel to military-run
filling stations, aiming to ease shortages which have been
dragging on for months.
International traders say Egypt has cut back on planned oil
imports, cancelling one crude purchase tender and reducing the
size of another for gasoil. "They need oil but they have no
money," said one trader last week.
Tensions are rising on the streets of Egyptian cities, with
protests and violence frequently erupting over a variety of
grievances. Behind the immediate causes lies a general malaise
as Egyptians struggle with falling living standards.
EGYPTIANS DEMAND HONESTY
Egyptians want Mursi's government to be more honest with its
people. "This is a failed government that is unable to face up
to its problems and challenges, and that is why it finds it so
difficult to confess them to the people," said Ahmed Mohamed, a
70-year-old retired private company employee.
"Soon it will have to admit the problems when it can no
longer buy the fuel. Given the recent economic signs, this stage
will come soon," he told Reuters on a street in downtown Cairo.
Inflation jumped to 8.2 percent in the year to February from
6.3 percent the previous month, with an even greater rise in
food and drink prices particularly hurting the poor.
The central bank succeeded in bringing the fall in currency
reserves almost to halt last month, but only by rationing the
supply of dollars to commercial banks.
This is crippling small and medium-sized private businesses,
which are forced to buy dollars on the black market at exchange
rates that often wipe out their profits. Long-term economic
damage is likely unless currency supplies improve rapidly.