Kerry stresses economic reform in Egypt

Secretary of State John Kerry is hoping Egypt will agree to a major international loan in exchange for tax increases and cuts to energy subsidies, a senior U.S. official said Saturday.

Kerry is visiting Egypt for the first time as the top U.S. diplomat. The country has been mired in economic and political troubles since its former president, Hosni Mubarak, was forced out two years ago.

A “firm economic foundation” for Egypt will be the central topic of Kerry’s visit, the U.S. official told reporters on condition of anonymity.

{mosads}”In order for there to be agreement on doing the kinds of economic reforms that would be required under [a loan] deal there has to be a basic political … agreement among all of the various players in Egypt,” the official said.

The International Monetary Fund (IMF) is offering Egypt a $4.8 billion loan to shore up its finances.

Egyptian leaders came close to agreeing to the loan last November, but drew back after proposed tax increases drew protests.

Now, Cairo has indicated that it would like to reopen talks with the IMF. The goal is a final deal by April, according to reports.

On Saturday, the U.S. official suggested that Egypt’s fractious political environment could stand in the way of an IMF loan agreement.

Left-leaning opposition groups have declared they will not participate in next month’s parliamentary elections.

Kerry met with several opposition leaders on Saturday, and was not expected to explicitly tell them to abandon the boycott.

But, said the U.S. official, “if [the groups] want to assure that their views are taken account, the only way to do that is to participate. That they can’t sit aside and just assume that somehow by magic that all of this is going to happen.”

Following his meeting with the opposition, Kerry attended a roundtable with local business leaders where he promised U.S. help in making Egypt “an economically successful, democratic nation.”

“To attract capital, to bring money back here that will invest, to give business the confidence to be able to move forward, there has to be a sense of security and there has to be a sense of economic and political viability,” Kerry said.

“There are some very specific things that we need to do,” he told the businesspeople. “They are only things that we can do … knowing that Egypt is going to make the right fundamental economic decisions with respect to the IMF and that it stands ready to provide the foundation for sustainable and inclusive growth.”

–This report was originally published at 9:37 a.m. and last updated at 4:31 p.m.