IMF's Georgieva says talks to boost Egypt's loan program in 'last stretch'

The International Monetary Fund and Egypt are in the "very last stretch" of negotiations to augment the country's $3 billion IMF loan program to ease pressures from the war in Gaza, IMF Managing Director Kristalina Georgieva said on Thursday.

The International Monetary Fund and Egypt are in the "very last stretch" of negotiations to augment the country's $3 billion IMF loan program to ease pressures from the war in Gaza, IMF Managing Director Kristalina Georgieva said on Thursday. Georgieva told reporters at IMF headquarters in Washington that a staff negotiating mission to Cairo has been extended to work out details to implement reforms agreed by Egypt, including for its central bank to move over time to inflation targeting in setting monetary policy.

"We are in this very last stretch when we are working on the details of implementation and both sides -- the Egyptians and us -- want to get that right," Georgieva said. She declined to comment on negotiations over IMF demands that Egypt allow market forces to determine the exchange rate for its pound currency. Disbursements on the IMF loan were put on hold last year after Egypt instead fixed the pound against the dollar.

Separately, Egypt's central bank on Thursday raised its overnight interest rate

by 200 basis points to 22.25%, a move that some analysts said may indicate that a currency devaluation is on the way. "We recognize that the financial gap for Egypt has increased," Georgieva said, noting that Egypt in the first half of January lost Suez Canal revenues at the rate of $100 million a month -- a deficit now growing larger because more ships are avoiding the vital waterway due to the threat of attacks by Houthi militants.

Normally, Egypt earns about $700 million a month on Suez transit fees, she said, adding that Egypt's tourism has suffered much more than neighboring countries due to its proximity to Israel's attacks in Gaza. "They are losing hundreds of billions of dollars. So we are discussing also augmenting our program in light of developments over the last months," Georgieva said.