Egypt urgently needs a massive cash injection and should strike a deal with the International Monetary Fund as soon as possible to reassure investors, said John Kerry, chairman of the US Senate Foreign Relations Committee.
Speaking after meeting military and civilian leaders in Cairo, Kerry said he was hopeful that Egypt would emerge as a strong democracy following the unrest and uncertainty that has followed the toppling of Hosni Mubarak in February.
But he said the main priority should be to strengthen the economy. “The most significant challenge right now is the economic challenge,” Kerry told reporters at the weekend.
“It is very important for Egypt to work with the IMF and undertake to come to an agreement with the IMF for an immediate infusion of money,” he said.
Kerry added that Field Marshall Mohamed Hussein Tantawi, who heads the military council temporarily governing Egypt, had indicated that there were “compelling reasons” for outside help given the state of Egyptian foreign reserves.
Egypt negotiated a $3.2 billion facility with the IMF earlier this year, only to turn it down in the summer. Since then it has sent conflicting messages about whether Egypt still wants the funds, even as the economy flails.
Foreign reserves have plunged from $36 billion at the end of 2010 to about $20 billion at the end of November in the wake of the uprising that unseated Mubarak and the subsequent political turmoil that sent investors and tourists packing. Kerry said millions of jobs needed to be created in the Arab world’s most populous state and a sense of security re-established to attract foreign direct investment.
“Everything could be lost if there is not a focus on the economic reality,” he said.