CAIRO: IMF approval of Egypt’s request for nearly $5 billion in aid would come as a vital boon to its reeling economy but President Mohamed Morsi must at the same time enact tough reforms, analysts say.

An economic slump following the February 2011 ouster of Hosni Mubarak aggravated the main problems inherited from his regime: budget-draining subsidies, extreme social inequality, corruption and poor energy infrastructure.

A chief concern is the decline in central bank reserves which have plunged from $36 billion at the start of January 2011 to $14.4 billion, threatening Egypt’s ability to import basic goods such as wheat and refined oil products.

The budget deficit is projected to increase by 12.5 percent over the fiscal year from July 2012 to July 2013, to about $22.5 billion, official figures show.

Tourism, one of the main sources of revenue and a job provider for 10 percent of the population, has made a modest recovery but security concerns still keep the bulk of visitors at bay.

“Much-needed” support from international lenders “could weaken if the Egyptian authorities are unable to effectively address ongoing economic, fiscal and external challenges,” Standard and Poor’s warned on Thursday.

News: Daily Sun/Bangladesh/27-Aug-12