Egypt and the International Monetary Fund yesterday signed an agreement for a loan of $ 3 billion. According to Egyptian Finance Minister Samir Radwan funds will be used to restore the country’s economy. “Egypt has finalized negotiations with the IMF and signed an agreement to revive the Egyptian economy,” said Radwan a press conference in the Egyptian capital Cairo. In his words amounts of the loan will be disbursed within 12 months, the interest rate will be 1.5 percent. The Egyptian economy suffered severely in popular unrest in late January and early February this year. Only by the revolution on January 25, “now the country’s reserves in gold and foreign currency decreased by $ 8 billion to 28 billion dollars by the end of the year can almost melt. The budget deficit rose to 11% and $ 2 billion. Many industrial plants and not currently operating at full capacity due to ongoing strikes and unemployment exceeded 10%. Because of recent events FDI in the country dried up and the reduced flow of tourists has led to losses of 2.2 billion dollars for the budget. At present the capacity of the hotel is filled to no more than 20%, with most of the tourists are Egyptians.
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France and Germany intend to launch a new project for economic cooperation and assistance within the euro area. This would include the creation of a European Monetary Fund, resembling the structure of the International Monetary Fund, said senior government sources quoted by the FT. Intentions are to create rules and tools for preventing the occurrence of instability in the whole euro area from the problems of a single country. Right now this is the situation with Greece, whose budgetary problems negatively affect the whole community. The first beginnings of that plan were announced by the finance minister of Germany Wolfgang Schäuble, who announced the intention to create a fund similar to the IMF. “I support greater coordination of economic policies within the EU and the euro area,” Schäuble said in an interview with German newspaper Welt am Sonntag. If France and Germany fail to reach agreement, which has lobbied for some time Paris, they probably will create the basis for the most radical reform of the euro in 1999 onwards. At present, neither Germany nor France Greece supported the proposal to have recourse to the IMF. This is another argument for establishing a European support fund, which, however, is unlikely to happen fast enough to help Athens, indicated by the FT.
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