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Sunday, 13 November 2016

The IMF Loan, and stabilizing FX rate

The International Monetary Fund will disburse around USD 4 bn to Egypt each year in two payments, each of about USD 2 bn, said the IMF mission in Egypt Chris Jarvis in an interview with Lamees El Hadidy’s “Hona El Assema” on CBC. A second payment under year one of the facility should arrive next spring, around the same time the IMF reviews Egypt’s progress in implementing its economic reform program. Jarvis said that Egypt will not make further reductions in fuel subsidies before the first IMF review, indicating that this will not be a deciding factor in disbursing the next payment.

Saudi not on the list of countries providing third-party funding: Jarvis named the World Bank, the African Development Bank and the UAE as being among those who contributed to base of third-party funding the IMF required before approving the funding. The China currency swap is also part of the funding base. Conspicuously absent: Saudi Arabia.

Jarvis also said the new FX regime will promote exports, bringing in more FX to the country and reducing borrowing from the banking system. Jarvis expects economic growth to rise to 6-7% within the coming years. You can view the full episode in Arabic here (runtime: 1:54: 21). Jarvis appears here at c. 17:43 and speaks in English.

The EGP has strengthened significantly, said Mohamed El-Etreby, Chairman of Banque Misr in an interview on Al Assema TV’s Lo’met Eish. He said USD exchange rate in Banque Misr, CIB and the National Bank of Egypt is now almost the same, hinting that this as a sign that the exchange rate is stabilizing. “It doesn’t matter where the customer exchanges his foreign currency, the most important thing is that FX has entered the Egyptian banking system,” he said. As of Saturday night, both NBE and CIB are quoting a selling rate of EGP 16.05 to the USD 1. The full interview with El-Etreby is here (runtime: 48:45)

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