* IMF offered stop-gap fund
* Egypt wants $4.8 billion as part of full IMF programme
* No date set for IMF negotiations
By Marwa Awad
CAIRO, March 12 Egypt said on Tuesday it would
not sign any "emergency" loan with the International Monetary
Fund, ruling out stop-gap funding to tide it over as it
struggles with a soaring budget deficit and falling currency
Egypt has been seeking a full $4.8 billion from the IMF
instead in order to stave off a balance of payments crisis, but
securing the aid would involve a commitment to austerity
measures that are likely to lead to unrest at a time when
President Mohamed Mursi is already struggling to maintain law
The IMF said on Monday that Egypt had the option of using
the Rapid Financing Instrument, a lending facility designed to
provide rapid and limited assistance to member countries.
Analysts say such short-term funding would be a useful
compromise for the government while it negotiates an IMF standby
loan programme and could help the country scrape through until
after parliamentary elections.
Cabinet spokesman Alaa el-Hadidi said on Tuesday, however,
that Egypt was not interested in this option and that any loan
agreement would be within the framework of the country's
"There will not be a fast or emergency loan," Hadidi told
reporters, adding that no timing had been set yet for an IMF
mission to visit Egypt to reopen negotiations on a full loan.
"There is no agreement yet over the arrival of the mission,
and we are waiting for them," he said.
Earlier, Planning and International Cooperation Minister
Ashraf al-Araby said an IMF mission was expected to come to
Cairo in the coming days.
Finance Minister Al-Mursi Al-Sayed Hegazy also said on
Tuesday that Egypt had rejected a bridge loan due to heightened
risks in the local economy, state news agency MENA reported.
The emergency funds on offer could amount to about $750
million, which is roughly 50 percent Egypt's quota share, which
determines how much the IMF can lend.
Without an emergency loan, Egypt has very few places it can
turn to for external funding, economists say.
"There is little option to get external support besides the
IMF, especially now that Qatar said it will not give Egypt money
for now," Economist Mohamed Abu Basha at EFG Hermes said.
Egypt has put on hold the most sensitive reforms, such as
reducing fuel subsidies, he said, noting a lack of political
consensus. Cairo might be able to finance its domestic budget
deficit through issuing treasury bills and bonds to last it
through this fiscal year, but other problems loom.
"Externally there is trouble, given that we only have $13.5
billion in foreign currency, and given the diminishing value of
the Egyptian pound," he said.
Last month President Mursi called for elections to be held
between April and June, but a court later cancelled his decree,
throwing the electoral process into limbo and raising doubts
that Cairo could secure prompt IMF aid.
Economists say Egypt, two years after overthrowing former
authoritarian President Hosni Mubarak, is risking a full-blown
economic crisis. Foreign currency reserves have fallen to little
more than a third of their levels before the 2011 revolution,
forcing the central bank to ration dollars.
The Egyptian pound has lost more than 8 percent of its value
against the U.S. dollar since the end of December as concern
deepens about the economy, which is being undermined by
political instability and unrest. Like unemployment, officially
at 13 percent, food and fuel prices have risen.
"The problem with Egypt is that it cannot implement the
economic reform programme without facing a backlash,"
independent economist Osama Mourad said.
The IMF said on Monday that Egypt needs to take bold and
ambitious policy action to address its economic problems without
further delay and said it was up to Cairo to decide whether it
wanted to tap stop-gap funding.
While the emergency funding is not nearly enough to plug the
funding gap, analysts have said it could also help unleash
additional loans from allies in the region, including benefactor
Qatar, which said on Monday it had no immediate plans to lend
Egypt more money.