Devaluation and interest-rate hikes are in the cards this year in light of the ongoing IMF talks. Bloomberg’s Ahmed Feteha spoke with economists at HSBC, EFG Hermes, CI Capital, Arqaam and Emirates NBD for a “guide to what to expect” from the negotiations. Among the highlights: Policymakers will look to deliver on a pledge to adopt a more flexible FX policy, said Reham El Desoki, senior economist at Arqaam Capital, but don’t expect parity between the EGP and USD rates: The piece forecasts EGP 9.50 to EGP 11.00 to the USD by the end of the year. EFG Hermes’ Mohamed Abu Basha expects the central bank to raise interest rates again this year: “The IMF will most likely push the central bank to slow the accommodation of fiscal needs,” he said. “In general, this program will discipline Egypt’s economic policy.”

As for the progress of the talks themselves, the IMF is expected to set an interest rate of 1.5% once all talking points have been agreed upon on the USD 12 bn loan, a source close to the negotiations tells Al Shorouk. The government also apparently plans to increase the value of its planned USD 2-3 bn Eurobond issuance in September if Egypt receives the loan.