VENTURES AFRICA  – Egypt reached a preliminary pact with the International Monetary Fund (IMF) for a $4.8 billion loan, it was announced on Wednesday.

This has been seen as a vital step to supporting the nation’s finances and a stamp of approval to the government’s economic recovery programme.

Last year, investors abandoned Egypt during the political turmoil that followed the overthrow of former president Hosni Mubarak and they have been praying that the IMF support the government financially.

Reuters said Egypt’s benchmark index pared losses on the news and the cost of insuring Egyptian debt against default fell.

“We have a preliminary agreement with the technical team of the IMF,” the news agency quoted planning and international cooperation minister, Ashraf al-Araby, as saying.

Egypt said the deal included agreement to rein in Egypt’s budget deficit with measures including tax changes targeting the wealthy.

The government also said there will be more careful spending on subsidies intended to help the poor.

The government has repeatedly said its programme would protect the poor, many of whom rely heavily on subsidised food and other essentials.

The rebellion that overthrew Mubarak was prompted by calls for social justice and political freedom.

Egypt needs economic growth to revive to the pace of 6 percent or more that it was achieving in the years before Mubarak’s overthrow

In order to ease widespread unemployment among the young, Egypt needs economic growth to revive to the pace of 6 percent or more that it was achieving in the years before Mubarak’s overthrow.

Growth slipped to just over 2 percent in the year to June 30.