Egypt to resume IMF loan talks as reserves dwindle

Trader An Egyptian trader at the Cairo stock exchange watches market movements

Egypt will soon resume talks with the International Monetary Fund over a crucial $4.8bn (£3bn) loan to shore up the economy, the prime minister says.

Talks were suspended because of political turmoil over a new constitution.

PM Hisham Qandil was speaking as the Egyptian pound reportedly fell to a record low against the US dollar.

The central bank said the country's foreign reserves have dropped to "critical" levels.

Talks with the IMF were derailed amid large rallies organised by opponents of President Mohammed Morsi and his largely Islamist supporters, some of which turned violent. The constitution was approved by a referendum last week.

"We hope that there will not be any fundamental changes in our plan with the IMF because we will summon them in January so we resume discussions to go forward in the matter of the loan," Mr Qandil said.

Egypt is grappling with a crippling budget deficit and dwindling foreign reserves. The central bank has spent more than $20bn in foreign reserves to support the pound since a revolution against former President Hosni Mubarak in 2011.

Currency regime

The Egyptian pound hit a new low on Sunday of about 6.30 to the US dollar in unofficial trading after the central bank introduced a new currency regime, dealers told Reuters. The previous low for the pound was in October 2004 and was about 6.26 to the dollar.

Over the weekend, the central bank announced regular currency auctions, with the bank offering $75m at the maiden auction on Sunday.

The auctions are meant to slow the depletion of the country's foreign reserves.

The central bank also forbid corporate clients from withdrawing more than $30,000 in cash per day and announced it would charge individuals who buy foreign currencies an administrative fee of 1-2%, bankers said.

On Saturday, the central bank said its reserves, which stood at about $15bn at the end of November, had fallen to a critical level.

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