As a prerequisite for the approval of the $12bn loan by the International Monetary Fund’s (IMF) executive board, Egypt must come up with $6bn by the end of the month, and IMF Middle East and Central Asia Development director Masood Ahmed hopes that Egypt will be able to fulfil this requirement.
Masood said in a press conference on Friday, that the fund supports Egypt’s negotiations with Saudi Arabia and China, along with the G7 countries, to provide bilateral financing which will contribute to Egypt’s management of the IMF economic reforms.
Egypt has received an expert level approval from the IMF to borrow $12bn; however, the final decision is down to the IMF’s executive board.
The IMF’s executive board awaits the provision of $6bn for Egypt to secure its financing gap during the first year of the programme. “I hope that Egypt provides funding for its financing gap.” said Masood.
According to the director, Egypt is required to decide on procedures to rebalance the exchange market by leaving the Egyptian pound subject to the forces of supply and demand, which means devaluating the local currency—something Egypt is wrestling with currently.
Tarek Amer governor of the Central Bank of Egypt (CBE) said in previous statements: “I would not be happy to maintain the pound and the non-operation factories, we are talking about reducing [the pound], not floating it—but its timing will be decided according to the CBE’s vision.”
The economic reform programme will be subject to a six-month review by the fund, and provision of the second and third batches will be linked to the extent of progress accomplished by the Egyptian government.
He said that the first batch of the loan that will be obtained by Egypt is roughly $2.5bn, and that the decision concerning it will be resolved by the IMF’s executive board in early November.
