Central Bank of Egypt to convene amidst ongoing pound decline

The Central Bank of Egypt (CBE)’s Monetary Policy Committee (MPC) is scheduled to convene on Thursday amid the ongoing depreciation of the Egyptian pound and discussions with the International Monetary Fund (IMF) to revive their agreement. The gap between the official and parallel markets’ exchange rates for the currency against the U.S. dollar has widened, with the rate reaching approximately EGP30.85 in banks and up to EGP68 in the parallel market on Monday.

Reports are circulating that Egypt has reached a “preliminary formula” with the IMF for a modified loan program. This formula includes an urgent devaluation of the pound and an increase in the program’s value from the current $3 billion to $7 billion or more, along with an extension of the program’s duration. This formula is expected to be presented to the political leadership. The Arab World Press disclosed that this agreement was reached during a meeting between Prime Minister Mostafa Madbouly, the IMF delegation, Central Bank Governor Hassan Abdalla, and Finance Minister Mohamed Maait.

The urgent devaluation of the pound is seen as a crucial step to prevent a widening gap between the official and parallel exchange rates. The official stated that this decision would be presented to the political leadership for consideration. The IMF delegation has expressed support for the government’s efforts to address the trade balance deficit through its debt policies. However, they have requested that national projects prioritize decreasing opportunities for external debt without generating sufficient dollar income from their operation.