Egypt is about to seal with the International Monetary Fund (IMF) a deal to secure a $12 billion loan. Ahead to the meeting where the facility will be discussed next Nov. 11, Christine Lagarde, IMF Managing Director, welcomed the reforms implemented by the Egyptian government. She put an emphasis mainly on Egypt’s decision to liberalize the exchange rate of pound, and launch second phase of fuel subsidy reforms.

“Allowing the exchange rate to be determined by market forces will notably improve Egypt’s external competitiveness, address shortages of foreign currency, support exports and tourism and help attract foreign investment. Adjusting fuel prices will contribute to lower budget deficits and will free up public resources for much-needed and better targeted social spending on health, education, and growth-enhancing investments,” said Ms. Lagarde adding that she gives her approval at the meeting of IMF Executive board for the provision of the facility.

This situation is not really easy to cope with, especially for the poor. Floating the local currency resulted in costs of basic products and services rising. Also, Egypt must increase its foreign-currency reserves to have IMF’s full support. A condition which is about to be met according to the Central Bank’s governor. However, the nation first had to reach a currency-swap agreement with China.

Stocks in the Egyptian market kept jumping after decision to liberalized exchange rate of pound was announced.

EGX30, the main indicator regrouping the 30 leading capitalizations of the Cairo stock market surged 2.8% at the opening of trading today, November 9, 2016. This is its highest level in about a year. EGX70 is also soaring, at a relatively modest rate however over the past year.

Idriss Linge