Senior bankers said that Egypt resorting to borrowing from the International Monetary Fund (IMF) is the best alternative compared to borrowing from other sources.
The government announced last Wednesday its intention to borrow $12bn from the IMF within a loan package to finance its economic programme.
The IMF mission started a two-week visit to Egypt on Saturday to discuss the economic programme with the government.
Elsayed Elkosayer, chairperson of the Principal Bank for Development and Agricultural Credit (PBDAC), said that the government “did well” by resorting to the IMF loan, adding that Egypt is in dire need of the loan, considering the suffering economy.
He noted that an IMF loan is the best solution for Egypt, justifying his stance with the institution’s potentially low interest rate, compared to other institutions or revenue of any bonds that could be put forward on the international market.
“This loan will have several benefits,” he pointed out. “It will be a proof of trust in the Egyptian economy by the IMF—which will encourage investors to return to Egypt—and will increase the foreign exchange reserves to strengthen the Central Bank of Egypt’s (CBE) control over the exchange market, and could have a positive effect on the price of the Egyptian pound against the US dollar.”
Elkosayer said that Egypt is a founding member of the IMF, signalling its right to obtain loans at any time.
He pointed out that the conditions set by the IMF for the loan will not be unfair, as some believe, saying that they will be beneficial for the economy. “Egypt is capable of implementing those conditions,” he added.
According to one of the leaders of a state-owned bank, the return of negotiations between Egypt and the IMF came at a perfect time, adding that the loan will contribute to fixing the dysfunction from which Egypt is suffering.
He noted that the economy reform programme is very important and that negotiations with the IMF are a golden opportunity to implement it.
The banker predicted an agreement to be signed between the IMF and Egypt on the loan, as the latter is seeking to strengthen the exchange rate of the Egyptian pound against the US dollar on the parallel market.