IMF’s Lagarde says keen to engage with Egypt on economy

The International Monetary Fund is ready to work with Egyptian authorities to help stabilize the country’s economy, IMF chief Christine Lagarde said on Thursday, citing discussions that have been ongoing for the past year and a half.

“We are keen and ready to engage with the Egyptian authorities in order to help the country and the people of Egypt stabilize the situation, address the economic difficulties that it’s facing,” Lagarde said in a news conference.

“We believe that it has to be a cooperation between the Egyptian authorities on the one hand, us, the donors, whoever is participating and is keen to stabilize the financial and economic situation of the country,” she said.

At a separate briefing on Thursday, Nemat Shafik, deputy managing director at the IMF, suggested the IMF would be open to a joint Egypt program with Gulf countries, which have already stepped in with billions of dollars in aid.

“We would be happy to have a partnership with the Gulf on the transition,” she said.

The IMF had been negotiating a critically needed $4.8 billion loan with Egypt before the military removal of elected President Mohamed Mursi in early July.

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

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

But IMF loan, with its attendant conditions, is widely viewed as necessary to convince foreign donors and investors that Egypt’s economy is on the right track.

The IMF is currently in the midst of several joint programs with the European Commission and European Central Bank to support indebted countries in the euro zone.

The IMF’s involvement was seen as critical to lend credibility to the programs, but the so-called “troika” of lenders has also clashed at times over what measures would be necessary and politically feasible to help countries such as Greece.