Egypt intends to accept a funding package of US$3.2 billion from the International Monetary Fund (IMF) it had rejected earlier this year, said Finance Minister Hazem al-Beblawy, explaining that Egypt will accept the funding because of an increase in local government debt.
Beblawy told Al-Masry Al-Youm that Egypt needs to diversify its debt and decrease its dependence on domestic borrowing ever since treasury bills have jumped to high levels.
"The government seeks to reduce dependence on domestic borrowing since north coast revenue reached high levels that required attention. Borrowing from abroad has low interest rates and is repaid over a long period of time. Moreover, this need has become a reality," Beblawy said.
Beblawy had earlier said that the returns on treasury bills increased in recent auctions. He noted that local lenders had nearly reached the maximum allowed amount to lend to the government and can no longer continue to cover the budget deficit.
Last June, the government rejected a $3.2 billion loan package from the IMF and said it would depend on local funding sources, explaining that the Supreme Council of the Armed Forces was not keen to increase Egypt's foreign debt.
Egypt's budget deficit is expected to reach 8.6 percent of GDP in fiscal year 2011-2012.
Translated from the Arabic Edition
