International Monetary Fund has resolved all “big policy issues” with Egypt during their discussions on a new loan programme, and are scheduled to meet again on Saturday, IMF Managing Director Kristalina Georgieva said Friday.
In a press conference, the IMF Chief said the two sides were still working on smaller technical details, adding that these were “not trivial matters and involved Egyptian exchange rate policies.”
The negotiations with the IMF over the Extended Fund Facility started in March. One of the stumbling blocks in the talks was the exchange rate of the Egyptian Pound against the US dollar.
In November 2016, Egypt successfully secured the IMF approval for a three-year $12bn loan agreement that involved a currency devaluation and sweeping reforms.
Hany Genena, economist and adjunct professor at the American University in Cairo (AUC), told Daily News Egypt earlier that reaching an agreement with the IMF brings with it numerous positives.
“Foremost of which is providing a direct source of financing through the first immediate tranche that Egypt will receive after the agreement,” he explained.
Genena added that the agreement would allow Egypt to re-issue international bonds to ensure its return to global markets.
He stressed that the structural reforms agreed with the fund through the extended credit programme are an important element for the Egyptian economy.
He pointed out the need for Egypt to adhere to the post-loan prescription of reform to maintain the results of the reform for a long period to ensure that it does not resort to borrowing again. Genena pointed out the necessity of shifting pricing mechanisms, whether for US dollars or petroleum products, from fixed to free.
Moreover, he explained that Egypt’s previous experience in controlling the EGP exchange has negatively impacted the economy, not the conditions of the IMF’s loan, especially as it led to the entry of hot money into the Egyptian economy instead of real investment opportunities.