EFG-Hermes: Egypt Will Not Get IMF Loan Before Q4/13

Cash-strapped Egypt will not obtain the International Monetary Fund’s long-awaited US$ 4.8 billion loan before the fourth quarter of 2013, EFG-Hermes Research said on Monday.

The delay in receiving IMF’s loan will add more pressures on the country’s domestic currency which is in fact going through a severe decline driven by the current economic woes, Hermes added.

In its recent research, EFG-Hermes Research further noted that to get the IMF’s financial support, Egypt has to adopt a number of austerity measures, highly controversial to citizens. That implies tax hikes and politically risky cuts in the generous system of state subsidies for fuel and food, including bread.

EFG-Hermes explained that the state of not reaching a final agreement between Egypt and the International lender during last week talks would later reflect more unrelenting pressures on the country’s economy.

“We see limited chances for an IMF deal in the short term, expecting it instead in Q4/13. To that end, we expect the EGP to come under renewed pressure towards mid-2013, if not earlier. The government has done little in implementing meaningful fiscal reforms thus far. The draft budget of FY2013/14 shows an unrealistic timeline for reforms, where the government expects to take a number of inflation-generating reform initiatives in less than eight months. We revise our economic forecasts for Egypt on page 13,” Hermes stated