WASHINGTON – Egyptian President Mohamed Morsi is unlikely to find the political support needed to win a full-fledged International Monetary Fund bailout before elections begin in April, but he might be able to secure temporary IMF aid. Emergency aid would see the country through a four-stage election starting on April 22, while sending a signal to financial markets about Egypt's commitment to economic reforms and IMF support for the North African country, analysts said. Cairo has indicated it wants to reopen talks with the IMF on a $4.8 billion loan, which was agreed in principle last November but suspended at the government's request after violent street protests erupted the following month. Political turmoil has frightened away foreign investors and tourists, a major source of foreign currency needed to pay for wheat and fuel imports, leaving the economy in a state of near collapse. “An interim agreement would be a compromise between domestic political issues and the international community,” said Ibrahim Saif, an economist at the Carnegie Middle East Center in Beirut. “It would send a message that Egypt is willing to take measures and convey a message to Egyptians that we're not succumbing totally to the IMF.” With confidence in Egypt at a low, foreign currency reserve being drained and the budget deficit widening, Saif said an interim IMF deal would help avert the economy going over an “economic cliff.” “I cannot see (Morsi) signing a full agreement with the IMF now, but I can see him having an interim agreement, something that politically makes sense, but will send some hints regarding the future,” Saif added. The IMF could provide emergency aid through a rarely tapped rapid financing instrument designed for countries suffering from urgent balance of payment needs that are unable to immediately agree on a more-stringent IMF program. It would come with relatively few strings attached, which would play to Morsi's concerns over politically difficult reforms ahead of elections. Any financing under this loan facility is limited to 50 percent of a member country's IMF quota share, which determines how much the fund can lend. Egypt's access would be about $750 million. While the amount is not nearly enough to plug Egypt's funding gap, analysts said it would help unleash additional loans from allies in the region such as Qatar, which has already ponied up aid for the country. — Reuters
