Foreign Reserve Drop Raises Financing Gap To US$ 16 Bln: Fakhry El-Feky
Dr. Fakhry El-Feky, former assistant to the executive director of the International Monetary Fund (IMF), stated that the fall of Egypt’s foreign reserves to US$ 13.6 billion has led to increasing the financing gap during 22 months from US$ 14.5 billion to US$ 16 billion. Accordingly, the government will need other financing resources besides the long-awaited US$ 4.8 billion loan from the International Monetary Fund (IMF) and other foreign loans in order to finance the financing gap, he added.
He warned that the fall of foreign reserves to this level pushes the country into a danger zone. The government may ask for increasing the value of the IMF loan in order to finance the financing gap and this will necessitate restarting its negotiations with IMF with a new economic reform plan, he noted.
El-Feky stated that he is against changing both the Ministry of Finance and the governor of the Central Bank of Egypt (CBE) at the meantime as the former officials have more experience to negotiate with IMF mission. He emphasized on the importance of appointing a first deputy prime minister for economic affairs to be capable of conducting effective negotiations with IMF.
The financing gap is the difference between the revenues from outside Egypt and the country’s obligations to foreign creditors and the depletion of foreign reserves means that the financing gap is widening, he explained.
El-Feky expected the IMF mission to visit Egypt soon after the latest decisions taken by the newly-appointed governor of CBE Hisham Ramez came at the expense of the mechanism implemented by the former governor Farouk El-Okdah.
IMF will object to the decisions taken Ramez which contributed to limiting the hike of the value of dollar as IMF conditions on the government not to intervene in determining the forex currency prices, he concluded.
