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IMF loan is delayed as Egyptian crisis deepens

A VITAL $4.8 billion (£3bn) International Monetary Fund (IMF) loan to Egypt will be delayed until next month, its finance minister said yesterday, intensifying the political crisis gripping the Arab world's most populous nation.

UNREST: Tensions are running high throughout the country.
UNREST: Tensions are running high throughout the country.

As rival factions gathered in Cairo and Alexandria for a new round of demonstrations, Finance Minister Mumtaz al Said said the delay in the loan agreement was intended to allow time to explain a heavily-criticised package of economic austerity measures to the Egyptian people.

The announcement came after President Mohamed Mursi on Monday backed down on planned tax increases, seen as key for the loan to go ahead. Opposition groups had greeted the tax package, which had included duties on alcoholic drinks, cigarettes and a range of goods and services, with furious criticism.

"Of course the delay will have some economic impact, but we are discussing necessary measures [to address that] during the coming period," the minister said, adding: "I am optimistic ... everything will be well, God willing."

Prime Minister Hisham Kandil said Egypt had requested the loan be delayed by a month. "The challenges are economic not political and must be dealt with aside from politics," he said.

Mr Kandil said the reforms would not hurt the poor. Bread, sugar and rice would not be touched, but cigarettes and cooking oil would go up and fines would be imposed for public littering. In a bid to rebuild consensus, he said there would be a national dialogue about the economic programme next week.

In Washington, the IMF said Egypt had asked for the loan to be postponed "in light of the unfolding developments on the ground". The fund stood ready to consult with Egypt on resuming discussions on the stand-by loan, a spokeswoman said.

On the streets of the capital, tensions ran high after nine people were hurt when gunmen fired at protesters camping in Tahrir Square, according to witnesses and Egyptian media.

The opposition has called for a major demonstration it hopes will force President Mursi to postpone a referendum on a new constitution.

Outside the presidential palace, dozens of protesters succeeded in pushing down two giant concrete blocks forming a small part of a wall blocking access to the site.

Thousands of flag-waving Islamist Mursi supporters, who want the vote to go ahead as planned on Saturday, assembled at a nearby mosque, setting the stage for further street confrontations in a crisis that has divided the nation of 83 million.

In Egypt's second city of Alexandria, thousands of rival demonstrators gathered at separate venues. Mr Mursi's backers chanted: "The people want implementation of Islamic law", while his opponents shouted: "The people want to bring down the regime."

The upheaval following the fall of Hosni Mubarak last year is causing concern in the West, in particular the United States, which has given Cairo billions of dollars in military and other aid since Egypt made peace with Israel in 1979.

The turmoil has also placed a strain on the economy, sending foreign currency reserves down to about $15 billion, less than half of what they were before the revolt two years ago as the government has sought to defend the pound.

l Anyone arrested by the military during Egypt's referendum on a new constitution will face civil rather than military courts, the presidency said yesterday after the army was given powers of arrest during the vote period.

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