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Friday, 4 November 2016

IMF, EBRD are bullish on the float

The IMF praised Egypt for the move: Managing Director Christine Lagarde was full of praise on Thursday, saying, “This is a welcome move given the economic circumstances … The way in which it is handled is welcomed and it’s a decision clearly that the Egyptian authorities have matured and deliberated and are putting in place for the Egyptian economy and for the Egyptian currency." Echoing a similar sentiment, the Fund’s mission chief for Egypt, Chris Jarvis, who led talks with Cairo for the USD 12 bn extended fund facility, said “this will make more foreign exchange available. The flexible exchange rate regime, where the exchange rate is determined by market forces, will improve Egypt’s external competitiveness, support exports and tourism and attract foreign investment.”

The EBRD also issued an official statement welcoming the decision. It says the move “will help reduce foreign exchange shortages which have been impairing the private sector’s ability to import production inputs, to plan and to repatriate profits. In addition it will increase the economy’s flexibility in response to external shocks, strengthen Egypt’s official reserve position and boost investor confidence. The decision on interest rates will help mitigate inflationary implications of the currency move. The devaluation of the EGP will also improve the competitiveness of Egypt’s exports and unlock private sector activity which has been hampered by the lack of foreign exchange availability.”

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