The International Monetary Fund has resolved all “major political issues” with Egypt during their discussions on a new lending program, and is expected to meet again on Saturday, IMF Managing Director Kristalina Georgieva said on Friday.
At a press conference, the IMF chief said the two sides were still working on smaller technicalities, adding that these were “not trivial matters and involved interest rate policies. Egyptian exchange”.
Negotiations with the IMF on the Extended Financing 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 IMF approval for a three-year, $12 billion loan deal that involved currency devaluation and sweeping reforms.
Hany Genena, an economist and assistant professor at the American University in Cairo (AUC), told Daily News Egypt earlier that reaching an agreement with the IMF brings many positives.
“The most important thing is to provide a direct source of funding through the first immediate tranche that Egypt will receive after the agreement,” he explained.
Genena added that the deal would allow Egypt to reissue international bonds to ensure its return to global markets.
He pointed out that the structural reforms agreed with the fund through the extended credit program are an important element for the Egyptian economy.
He stressed the need for Egypt to adhere to the post-loan prescription of the reform to maintain the results of the reform for a long period to ensure that it does not have to resort to borrowing again. Genena stressed the need to move pricing mechanisms, whether for US dollars or petroleum products, from fixed to free.
Furthermore, he explained that Egypt’s previous experience in controlling the EGP exchange had a negative impact on the economy, not on the terms of the IMF loan, especially since it led to speculative money entering the Egyptian economy instead of real investment opportunities.