IMF wants pound value to drop against US dollar, says official

The International Monetary Fund has criticized the Central Bank of Egypt for its delay in allowing the Egyptian pound’s value to fall against the US dollar, a senior Egyptian government official said Tuesday.

The official, speaking on condition of anonymity, said Masood Ahmed, the IMF director for the Middle East region, and Andreas Bauer, the executive director for the region, told Prime Minister Hesham Qandil, the ministers of finance and planning, and the governor of the Central Bank that the pound’s exchange rate is still higher than its real market value.

The IMF officials also said they were skeptical of the government's ability to reduce the budget deficit in an agreed-upon time period.

Furthermore, they requested that the Egyptian government end political division in the country. Bauer in particular was surprised that the government is still being criticized by the Freedom and Justice Party, the ruling party from which the president himself came.

The Egyptian official said negotiations on the loan are back to square one and that the IMF delegation is leaving Egypt to return after a month.

The official’s comments contradict Ahmed, who said earlier today that his talks on Monday with Egyptian President Mohamed Morsy, Qandil and other officials have been fruitful.

Ahmed said Egyptian officials “expressed their firm commitment to articulate and implement a homegrown macroeconomic program that enjoys broad support and addresses these [economic] challenges.”

Morsy had received Ahmed at his presidential office on Monday for talks over a US$4.8 billion loan Egypt had requested from the fund to nourish its flailing economy and bridge a widening budget gap expected to reach LE200 billion. The approval of the loan would encourage other donors to proceed with intended financial packages to Egypt.

Edited translation from Al-Masry Al-Youm

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