The IMF is urging Egypt to adopt a more flexible exchange rate policy as part of talks for a USD 12 bn assistance package, according to government sources close to the negotiations. The request came up during a meeting of the Coordination Council yesterday chaired by Prime Minister Sherif Ismail. A cabinet spokesman said the meeting discussed in part strategies to make FX available for imports in the short term, but provided no detail on what these strategies were or how receptive the government would be to floating currency..

(If you’re new to the term, the Coordination Council is the body through which cabinet and the central bank coordinate fiscal and monetary policy. Members include Allianz advisor turned public intellectual Mohamed El-Erian, CBE Governor Farouk El-Okdah, presidential economic advisor Abla Abdellatif, the ministers of finance, investment, and trade and industry, as well as the governor of the CBE and members of his senior staff.)

Other key points during the IMF talks have so-far included the need to set a clear timetable for implementation of reforms and the grace period for the repayment of the first tranche of the facility. Sources note the IMF will (naturally enough) make disbursement of the second and third tranches of the package conditional on the progress Egypt makes with the reform agenda. Talks also focused on Egypt’s foreign obligations and arrears, and reports also suggest the IMF believes Egypt could make better use of international debt markets to finance the budget deficit, noting that Egypt’s foreign debt remains at very manageable levels.

As we noted yesterday, Egypt is already looking for international institutions to arrange a USD 2-3 bn Eurobond in September or October and has plans for a second USD 3 bn bond issuance before the year is out.

Floating state-owned enterprises was also on the agenda, and Investment Minister Dalia Khorshid confirmed during a meeting with President Abdel Fattah El Sisi that the petroleum and banking sectors will be the first up for IPO, Al Masry Al Youm reports. A committee made up of the ministers of investment, finance and the deputy head of the Central Bank of Egypt is drawing up a list of companies to be listed. Notably absent from the committee was the Public Enterprise Minister, who is charged with restructuring state-owned companies, but had been against the IPOs. Khorshid had also updated the president on the investment council she is setting up, which would be charged with setting the government’s investment priorities. We’ll be looking for more news on that front in the days ahead.