Egypt ‘almost completed’ prior actions necessary for loan approval, says IMF head

Sunday 09-10-2016 01:20 PM

Christine Lagarde

CAIRO, Oct. 9 (Aswat Masriya) – Egypt has “almost completed” prior actions necessary for the International Monetary Fund’s board to formally approve a $12 billion loan, IMF Managing Director Christine Lagarde said in a press conference Saturday.

Lagarde said that several prior actions need to be completed before the IMF board can meet and approve the loan.

“To my knowledge, these prior actions are almost completed,” she said.

Lagarde explained that there is “still a little bit of implementation” to be completed before the IMF board can meet with regards to both exchange rate and to subsidies.

In August, the IMF reached a staff-level agreement with Egypt for a $12 billion three-year funding facility to support a government reform programme.

“The Egyptian authorities and Egyptian mission … identified areas for growth and necessary reforms to unleash the potential of the Egyptian economy,” Lagarde said on Saturday.

She explained that the first tranche can be released once the board has met, reviewed and approved the proposal.

On Friday, Masood Ahmed, director of the IMF's Middle East department, said that the fund’s initial loan payment to Egypt will be about $2.5 billion, adding that he hoped to secure board approval for the program within the next month.

Last week, the central bank kept the Egyptian pound steady against the dollar at Tuesday’s weekly auction of foreign currency, confounding expectations of an imminent devaluation.

In March, the Central Bank of Egypt devalued the pound by about 14 percent to reach EGP 8.78 against the dollar in an effort to close the gap between the official and parallel rate. 

Speculation over another devaluation has been growing since CBE Governor Tarek Amer told local newspapers in July that fixing the pound at an artificial rate was a grave mistake, saying that this policy doesn’t reflect the true value of the pound against the dollar.

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