Egypt has rejected an offer of a $750 million rescue loan from the International Monetary Fund, the finance minister said Tuesday, ruling out a fallback on emergency measures.
The emergency credit offer came after delays in finalizing a $4.8 billion loan from the IMF to bolster Egypt's battered economy and help counter a growing budget deficit.
Negotiations over the larger loan have been stalled during political turmoil in Egypt, which has often deteriorated into violent clashes between protesters and police and widespread unrest in the form of labor and police strikes. The two years of unrest have contributed to a severe economic downturn.
Finance Minister El-Morsi Hegazy said Egypt has started implementing a full economic reform program, entitling it to a larger loan from the IMF, instead of emergency measures. Hegazy insisted that Egypt's economy is on the path to recovery.
The stopgap loan, part of the body's Rapid Financing Instrument, would not have been a substitute for Egypt's multibillion dollar loan request.
The government has invited the IMF back to the country this month to resume talks, but no date has been set. An IMF official said late last month in Washington that the body received Egypt's revised economic program, which it was studying.
On Tuesday, an IMF official would not comment on the minister's rejection of the rescue loan offer.
“We are in discussion with the authorities on how best to support Egypt, including on the timing of the next staff visit,” IMF spokeswoman Wafa Amr said in an email.
Over the past months, Egypt's foreign currency reserves have sharply dropped to a critical level of $13.5 billion, down from $36 billion in January 2011, before the popular uprising that forced longtime President Hosni Mubarak out of office.
Egyptians have been hit by shortages of diesel fuel and rising prices of some basic commodities. Also, the government plans to implement hikes in some taxes as well as reduce fuel subsidies, part of its economic reform plans.
Egypt declines $750 million IMF rescue loan