IMF team to meet Egyptian leaders to discuss loan

Reuters, CAIRO

Mon, Jan 07, 2013 - Page 15

A senior IMF official is set to meet with Egyptian leaders today to discuss the US$4.8 billion loan agreement that was postponed last month at Cairo’s behest because of political turmoil in the country.

The IMF’s Middle East and Central Asia Director, Masood Ahmed, will visit Cairo to meet with Egyptian officials to discuss recent economic developments and “possible IMF support for Egypt in facing these challenges,” the IMF said in a statement released on Saturday in Washington.

Major state-run Egyptian newspaper Akhbar Al-Youm reported that he would meet with Egyptian President Mohamed Mursi, Prime Minister Hisham Kandil, some ministers and the central bank governor.

Separately, Egypt’s government has sworn in 10 new ministers in a shuffle of the Cabinet aimed at better handling of the struggling economy. The top posts that changed hands yesterday were the minister of the interior — which handles the police — and the minister of finance.

The IMF loan is seen as crucial to easing Egypt’s budget deficit and an economic slump caused by the turmoil that followed the popular uprising that ousted former Egyptian president Hosni Mubarak in February 2011.

Egyptians began the new year in an atmosphere of growing anxiety, with few expecting any quick solutions as political infighting continues before a parliamentary election expected to get underway within two months.

Egypt’s currency has lost about 10 percent against the US dollar since the start of 2011.

However, about a third of that plunge has come in the past week alone since the central bank began auctioning US$75 million a day out of its reserves on Dec. 30.

Egypt’s pound slid by 0.5 percent yesterday at the central bank’s fifth auction of foreign currency, with all US$60 million on offer sold to banks at a cut-off price of 6.4185 pounds, the central bank said.

Thursday’s cut-off price was 6.3860 pounds to the US dollar. The weakening is in line with the central bank’s interbank trading band, which it narrowed on Wednesday to plus or minus 0.5 percent from the previous 1 percent.

Egyptians have rushed to buy dollars for fear of a messy devaluation, and banks have been forced to impose limits on dollar withdrawals to prevent a run on deposits.

Additional reporting by AP