Egypt is working to finalize its economic reform program before inviting the International Monetary Fund (IMF) to Cairo to finalize a vital $4.8 billion loan deal, the finance minister said on Thursday.
The loan agreement – seen as vital to supporting Egypt’s state finances and boosting investor confidence – was agreed in principle in November. But the government delayed final approval in December when it canceled austerity measures during violent protests against President Mohamed Mursi’s rule.
“Egypt’s talks with the IMF are still ongoing,” Finance Minister Al-Mursi Al-Sayed Hegazy told the state news agency MENA. Egypt had yet to invite the IMF’s delegation to return, “awaiting the government to finalize the economic and social reform program”, he said.
Egypt’s prime minister Hisham Kandil had met with the IMF Managing Director Christine Lagarde at the World Economic Forum at Davos earlier this month and said an IMF mission would return to Cairo within weeks.
Securing the IMF loan is seen as a vital step towards stabilizing the economy, both by providing a cash injection to bolster reserves and by offering an IMF seal of approval on the government’s reform plan that would reassure investors.
The Egyptian pound has lost 7.5 percent of its value against the dollar since the central bank began auctions at the end of December to try to preserve foreign reserves, which now barely cover three months of imports. The currency has hit a series of record lows.
Fitch Ratings on Wednesday cut Egypt’s sovereign credit rating one notch to B from B-plus, citing a wider budget deficit and instability caused by the country’s political transition.