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IMF wants Egypt to reform ahead of bailout review: report | IMF

Bloomberg reported that the IMF wants Cairo to privatize state assets and allow flexibility in its currency.

The IMF wants Egypt to implement more of the reforms promised in Cairo ahead of its first review of the country’s $3 billion bailout plan, according to Bloomberg.

The Washington-based bank wants Cairo to privatize certain state assets and allow flexibility for the Egyptian pound to ensure the review is successful, Bloomberg reported on Sunday, citing unnamed people familiar with the matter.

IMF Managing Director Kristalina Georgieva said last week the fund was preparing for a review, but did not say when.

Egypt needs to pass a review to get a second loan worth about $354 million.

Jihad Azul, head of the IMF’s Middle East, North Africa and Central Asia region, told a news conference last week that a flexible exchange rate would help protect Egypt’s economy from external shocks and that the state should allow the private sector to “create growth and Create more foreign currency”.

The IMF announced a deal in December to provide debt-ridden Egypt with $3 billion over nearly four years, including immediate access to $347 million.

Gulf allies including Saudi Arabia, Qatar and the United Arab Emirates have also offered support, though billions of dollars in promised investments have yet to materialise, as they seek clarity on the progress of the country’s financial reforms.

The Egyptian pound has lost half its value against the dollar since March as the Egyptian economy has been hit by rising oil and food prices due to the COVID-19 pandemic and the aftermath of the war in Ukraine.

About a third of the country’s 104 million people live in poverty, according to government figures. Many Egyptians rely on state subsidies to afford basic goods such as food.

Cairo agreed this year to sell stakes in dozens of state-owned companies and pledged to move to a flexible exchange rate as part of a deal with the International Monetary Fund, although the stability of sterling has raised questions about the government’s commitment to reform.

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