Egypt will “deplete” its precious foreign exchange reserves unless it devalues the pound again, International Monetary Fund Executive Director Kristalina Georgieva said Thursday.
In an interview with Bloomberg, Georgieva praised the other steps taken by Egypt, the second largest borrower from the IMF after Argentina, to correct the course of its crisis economy.
Egypt has devalued its currency three times since early 2022, and the pound has lost nearly half of its value against the dollar.
Georgieva said, “Egypt is delaying the inevitable by refraining from doing so (devaluation of the currency) again, and the longer it waits, the worse it becomes.”
Last December, the IMF approved a loan worth three billion dollars within the framework of the “Extended Fund Facility” for Egypt, which is under strong financial pressure since long-term problems were exposed due to the economic repercussions of the war in Ukraine.
The provision of payments under the 46-month program is subject to eight reviews. The first review was scheduled to take place in March, but it did not take place amid reports that the Fund was dissatisfied with the progress Egypt had made in meeting the terms of the agreement.
Egypt pledged to adopt a flexible exchange rate when it reached the loan agreement with the International Monetary Fund late last year, but the official rate has remained almost unchanged for about six months at about 30.93 pounds to the dollar. The pound is trading at about 40 or 41 pounds to the dollar on the black market.
In June, Egyptian President Abdel Fattah El-Sisi appeared to rule out further devaluation of the currency in the near term, saying such a move could harm national security and citizens.
The Egyptian Ministry of Finance said last month that Egypt had agreed with the International Monetary Fund to merge the first and second reviews at a single time, which is expected to be determined before the end of 2023.
It is noteworthy that Egypt’s foreign currency reserves have continued to rise at a limited pace since October 2022, in light of the scarcity of hard currency, reaching $34.970 billion at the end of September.
2023-10-05 17:32:33
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