News Column

IMF in Talks with Egypt as Currency Crisis Bites Into Foreign Reserves

Jan. 8, 2013

A senior IMF official met Egypt's government yesterday to discuss a vital $ 4.8 billion loan as the state battles to contain a currency crisis set off by political turmoil that is depleting its foreign reserves.

The IMF's Middle East and Central Asia director, Masood Ahmed, met Prime Minister Hisham Kandil at the start of a visit coinciding with a sharp decline in the value of the Egyptian pound, which has hit a series of record lows against the dollar.

"At this stage, the putative $ 4.8 billion IMF deal is the only thing standing between Egypt and a disorderly economic deterioration," HSBC said in a note issued yesterday. "The fact that Mr. Ahmed is making the trip to Cairo is positive."

Before the visit, the International Monetary Fund had said Ahmed would discuss recent economic developments and "possible IMF support for Egypt in facing these challenges." Egyptian state media said the IMF team would stay for several days.

"We will attend many meetings with the Egyptian government today. The technical team will come later," Ahmed said after the meeting attended by Egypt's newly sworn-in finance minister, a little-known academic who is an expert on Islamic economics.

The pound has lost more than 4 percent of its dollar value since Dec. 30, when the central bank introduced a new system for selling foreign currency to try to stem the fall in foreign reserves. The pound's slide has raised concern about inflation in the food-importing country that could ignite further unrest.

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Source: (c) 2013 the Arab News (Jeddah, Saudi Arabia)