Egypt has been engaged for several weeks in ‘unofficial talks’ with the International Monetary Fund for a USD 7.1 bn facility, sources in Cairo and Washington DC tell Al Shorouk. That said: The newspaper cites sources close to the talks as suggesting that a facility in the USD 5.8 bn range is more likely and question whether Egypt can implement the preconditions for the facility in time to close it before year’s end. Those conditions include cuts to the subsidy programs for fuel, electricity, drinking water and public transportation. We have also previously reported that the value-added tax is likely among the preconditions. A member of the Cabinet economic group, speaking on condition of anonymity, said in June that Egypt was in talks for a USD 5 bn facility, prompting Central Bank of Egypt Governor Tarek Amer to say Egypt could draw as much as USD 10 bn if it were to seek assistance.

Al Borsa reported last night that IMF mission chief in Egypt Chris Jarvis said any assistance package for Egypt would be a function of both need and the country’s special drawing rights (SDR) under the IMF system. The IMF’s 14th general review of quotas in January saw Egypt’s SDR raised to USD 2.037 bn from USD 943.7 mn the year before.