The markets aren’t convinced that the IMF program is a cure for Egypt’s woes: Egyptian bonds have sold off and the cost of insuring the country’s debt has risen in the days since the government agreed a USD 3 bn rescue package with the IMF as investors adopt a wait-and-see approach and rising US interest rates squeeze emerging-market assets. Policymakers hoped a move to a floating exchange rate and fresh backing from the IMF would restore market confidence in our external position, but instead Egypt’s bonds are nursing losses and five-year credit default swaps are trading deeper in distressed territory, Bloomberg writes.

Refresher: Egypt and the IMF announced a staff-level agreement for a USD 3 bn extended fund facility at the end of October after the central bank allowed the EGP to fall against the USD in what it said was a move to a “durably flexible” exchange rate. The agreement is expected to unlock another USD 5 bn in financing from other international lenders. Policymakers expect the IMF executive board to approve the facility at a December meeting.

Show don’t tell: “Egypt remains a ‘show me’ story,” an analyst at Columbia Threadneedle Investments told the outlet. “The IMF involvement is a nice policy anchor but does not by itself fix any of the external funding issues as program success is very much contingent on execution of the privatization and foreign-direct-investment agenda, of which investors remain skeptical given previous disappointments.” Bloomberg had earlier quoted Tellimer expressing similar concerns.

The program is at the low end of what was expected, disappointing some analysts who had estimated that the country could need as much as USD 15 bn to shore up its position. Deutsche Bank says Egypt needs USD 28 bn to cover debt repayments until the end of 2023 and requires another USD 20 bn for 2024, though it has just USD 33 bn in foreign reserves.

Goldman did warn that it could take a while to get investors on side: “The funding being made available in the program is unlikely, in our view, to immediately allay investor concerns regarding Egypt’s medium-term external financing outlook. We therefore do not expect market access to be restored in the immediate term,” Goldman Sachs MENA economist Farouk Soussa wrote in a note following the devaluation last month.