International Monetary Fund (IMF) managing director Christine Lagarde said she would recommend the fund’s board approve Egypt’s $12 billion loan request.
The board will discuss the loan request on November 11, the IMF said. Lagarde’s nod of support moves the months-long process to its final stages as the nation of over 90 million faces one of the Middle East’s biggest budget deficits and inflation hovering at its highest level this decade. Egypt will receive a $2.75 billion installment next week, Deputy Finance Minister Ahmed Kouchouk said.
“Allowing the exchange rate to be determined by market forces will notably improve Egypt’s external competitiveness, address shortages of foreign currency, support exports and tourism and help attract foreign investment,” Lagarde said in an e-mailed statement.
“I will recommend that the Board approve Egypt’s request in support of this ambitious economic reform program that will help restore macroeconomic stability and bring Egypt’s economy closer to its full potential.”
The central bank decided to float the currency on November 3 to help boost dollar liquidity after a dearth in the hard currency battered business activity. It also raised interest rates by 300 basis points, while the government raised prices of subsidized fuel by as much as 47 per cent. Foreign-currency reserves fell $550 million to $19 billion in October, central bank data showed on Tuesday.
Egyptian officials have said the IMF’s accord would help restore confidence in an economy battered by years of political upheaval.
Source: Times of Oman