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Egypt awaits IMF help amid FX shortage
October 16, 2016, 9:28 am

The IMF has set a number of conditions including floating the EGP in order to receive $12 billion in loans [Xinhua]

The IMF has set a number of conditions including floating the EGP in order to receive $12 billion in loans [Xinhua]

Egypt is reportedly weeks away from securing the first installment of its much-anticipated $12 billion loan from the International Monetary Fund as its currency continues to fall in the parallel market.

Managing Director Christine Lagarde told reporters last week that “[Egypt has] almost completed” the actions required for the IMF board to review the loan accord.

The board is expected to arrive in Cairo some time in early November to finalize a set of conditions that require Egypt’s compliance.

The conditions include a host of economic reforms as well as confidence-building measures to help mitigate the debilitating impact of a foreign-currency shortage.

One such stipulation is acquiring up to $6 billion from bilateral creditors.

On Wednesday, local media reported that Egypt’s central bank has already received a $2 billion deposit from Saudi Arabia citing a source from the Central Bank who spoke under the condition of anonymity.

The IMF deal is also contingent on the elimination of subsidies and the floatation of the Egyptian pound.

Analysts in Cairo have braced themselves for news of further devaluation now for weeks, however the Central Bank continued to hold the pound steady against the dollar at its weekly auction.

Tensions ran high recently after Saudi oil giant Aramco informed the Egyptian General Petroleum Corporation, Egypt’s state oil company, that it would halt the supply of refined oil products reportedly after Cairo’s UN Security Council vote on Syria.

Egyptian President Abdel Fattah Al-Sisi staunchly denied those claims to the state-run MENA news agency.

This also comes as Egyptian banks place tighter restrictions on their customers regarding the use and transfer of foreign currency.

HSBC notified customers that as of October 17, a limit of $100 per month will be placed on all customer cards tied to local currency accounts being used overseas.

Similar limits have also been placed on customer cards tied to foreign currency accounts.

On Sunday, the Egyptian pound fell to 15.6 against the US dollar. It remained 8.88 in the official exchange.

By Nadine Awadalla in Cairo, Egypt with inputs from Agencies