IMF downplays inflationary risk as Egypt seeks to finalize loan

Egypt is unlikely to see a jump in inflation from measures to ease a foreign-exchange shortage because import prices already reflect the black market rate, a senior International Monetary Fund official said in an interview carried by Bloomberg.

“If you look at what’s happening to prices today, already many prices are reflecting the parallel market rate,” Masood Ahmed, head of the IMF’s Middle East and Central Asia department, said in an interview in Dubai on Tuesday. “It’s not obvious to me there is going to be a big additional impact on prices.”

Ahmed said he hopes the IMF’s Executive Board would be able to consider the loan request later this month or in November. He said there was “no deadline” for Egypt to implement the reforms.

“But the more important point is that delays on important areas they’re trying to address, such as the problem they have in the foreign-exchange market, would have a high cost on the economy,” he said.

Finance Minister Amr El-Garhy suggested on Monday that authorities will not use funds from the IMF and other creditors to finance imports and defend the currency, echoing similar comments made by Egypt’s central bank Governor Tarek Amer in July

Source: MENA