New Egyptian government to approach IMF

Egypt will approach the International Monetary Fund and other financial institutions to help get its economy back on track once new President Mohamed Mursi appoints a government, a financial adviser said. A popular uprising last year plunged the economy into crisis, chasing away tourists and foreign investors, prompting government employees to strike for higher wages. Mursi was sworn in Saturday as Egypt’s first freely elected president, and will begin forming a government in the coming days. “We intend to approach the IMF again,” said Amr Abu-Zeid, development finance adviser to the Muslim Brotherhood’s Freedom and Justice Party, which Mursi led until he became head of state. “Give him one week or two weeks, so at least he has a Cabinet ... I believe these issues will not go further until they have a Cabinet,” he said. The country’s army-backed interim government kept the economy under the cosh since the overthrow of Hosni Mubarak in February 2011 through a series of short-term measures that included financing a burgeoning budget deficit by borrowing short term from local banks at high interest rates. The military council that took power from Mubarak rejected an agreement negotiated with the IMF in mid-2011, then resumed talks for a $3.2 billion loan early this year. The economy contracted by 4.3 percent in the first quarter of 2011 and stagnated in the following three quarters. The Daily Star