Egypt asks IMF to delay $4.8bn loan Egypt has asked the International Monetary Fund to postpone a crucial $4.8bn loan, depriving the ailing economy of a financial lifeline as the country's political crisis continues. Mumtaz al-Saeed, the finance minister, said on Tuesday that the loan would be delayed by a month to give the government time to explain to the people a package of austerity measures that was announced on Sunday and withdrawn hours later after a public outcry. The postponement is a blow to an economy still struggling with the effects of almost two years of turmoil as the government tries to bring the deficit under control. It will also add to the intense pressure on the Egyptian pound, which has edged down in recent days, and will hamper the restoration of business confidence because an IMF agreement is seen as a vote of confidence in the country's economic plan. The decision came as supporters and opponents of Mohamed Morsi, the president, held mass night-time rallies in Cairo ahead of a referendum on Saturday on a disputed constitution. Opponents of Mr Morsi say they are determined to maintain their protest campaign until he agrees to postpone the referendum. In an unexpected move, Egypt's defence minister - who is also head of the armed forces - invited politicians from both sides as well as prominent national figures to a gathering on Wednesday, sparking off speculation that the military might be seeking a renewed political role. We will not speak about politics nor about the referendum. Tomorrow we will sit together as Egyptians," said Abdel Fattah al-Sisi. An aide to Mr Morsi said he would attend the meeting. "There will be no talk of politics, only about our common belonging [to Egypt] and about what brings us closer, not what separates us," he said. Opposition leaders said they had yet to decide if they would go. On the delay of the IMF loan, Wafa Amr, a spokeswoman for the Fund, said: "In light of the unfolding developments on the ground, the Egyptian authorities have asked to postpone their request for a standby arrangement with the IMF." Egypt had reached an initial agreement with the IMF last month on both the loan and an accompanying programme of economic reforms, though the deal awaited formal ratification by the IMF's executive board. The agreement was hailed as a lifeline after the depletion of more than half of the country's foreign reserves, which now stand at $15bn, just above the critical three-months" import level. Analysts say the decision means that when Egypt goes back to the Fund it will have to renegotiate the terms of the deal because its macroeconomic outlook will have changed. "The agreement was based on particular targets to be met before going to the IMF board and plans for meeting other targets in the future," said Alia Moubayed, senior economist at Barclays. Given the worsening economic and investment climate, achieving these targets is not any more feasible, so they will have to set new ones. The austerity decree, signed by the president and published on Sunday, gave details of increases in sales tax on a range of items, such as cigarettes, alcoholic drinks, mobile telephone calls and cement. The measure was part of fiscal reforms agreed with the IMF to help to reduce the country's 11 per cent deficit. But the tax hikes provoked strong criticism, giving the president's opponents more ammunition to portray him as insensitive and all too ready to add to the burdens of his long-suffering population. Even Mr Morsi's Freedom and Justice Party voiced its opposition to the increases. After they were withdrawn, the president ordered a "social dialogue" to be initiated to secure public approval. "In an environment like this it becomes almost impossible to pass any controversial decisions given that they aim mainly at reducing the ballooning government deficit," said Wael Ziada, head of research at EFG-Hermes, the regional investment bank. Ms Moubayed said a delay that did not exceed January "should be manageable" but beyond that pressures on the currency might intensify. The authorities may then need to secure additional support from bilateral donors and issue more foreign currency paper, which is not a sustainable way to restore macroeconomic stability. On Tuesday night tens of thousands of protesters marched on the presidential palace, chanting "go, go, go" and demanding a postponement of the constitutional referendum. Muslim Brotherhood supporters flooded the streets in a neighbouring district after Islamist leaders asked them to turn out in their millions to demonstrate their backing for the president. An IMF statement said it stood ready to "consult with the authorities on the resumption of discussions regarding the standby arrangement" and that "once these discussions have been completed the next steps can be determined accordingly."