IMF delegation arrives in Egypt for bailout package talks

Cairo: A delegation from the International Monetary Fund arrived in Egypt on Saturday, responding to a request for a multibillion dollar bailout for the country’s flagging economy.

Cairo airport officials said the IMF mission chief for Egypt, Christopher Jarvis, led the team that would meet officials later in the day from the Finance Ministry and the Central Bank. The officials spoke on condition of anonymity as they were not allowed to brief reporters.

The IMF has not given any details about the request or possible funding amounts, although Egypt has said it was seeking a loan of USD 12 billion from the IMF over three years, as well as USD 7 billion from other sources.

Years of unrest since the 2011 overthrow of longtime autocrat Hosni Mubarak have taken a heavy toll on both foreign investment and tourism, which along with Suez Canal revenues and remittances from Egyptians working abroad are the primary sources of foreign currency.

Reserves fell 18.1 per cent from June to December, shrinking to USD 16.5 billion, before edging up to USD 17.546 at the end of June, according to central bank data. Egypt had USD 36 billion in reserves before the 2011 uprising.

The local currency, the pound, has been falling to new lows. The official central bank rate is 8.78 Egyptian pounds to the dollar, but the true price on Egypt’s robust black market, according to media reports, is around 12 and has even reached 13 to the dollar at times.

President Abdel-Fattah el-Sissi met with the prime minister and finance minister today to discuss economic developments, including the IMF loan, and underline how reform efforts that may come with the loan conditions must also address the plight of the poor, his office said in a statement.

Basic commodities such as bread are heavily subsidized in Egypt, and the reforms needed to meet IMF loan criteria require broad cuts to such aid.

The risk of a backlash on the street has prevented successive leaders in Egypt from making such cuts, or enacting other revenue-generating policies such as levying further sales tax.