By Dalibor Rohac of the Cato Institute
In the weeks leading to the Annual Meetings of the International Monetary Fund (IMF) and the World Bank last weekend, Christine Lagarde, the managing director of the Fund, has been making a lot of headlines. She announced that the IMF would push for more gender equality in labour markets around the world, suggested that the IMF could help protect the planet from environmental damage by promoting reforms of energy subsidies, and urged European countries to move towards a fiscal union in order to help eurozone limit the severity of future financial crises.
That is a lot of ground to cover. While each of these proposals should be discussed on its own merit, jointly they are symptomatic of the spectacular mission creep that characterises the past 40 years of the organisation’s existence. Read more
Tough times in Egypt: on top of all the political turmoil, the latest manufacturing index has fallen off a cliff to its second-lowest since the numbers began.
The Markit/HSBC purchasing managers’ index came in at a lowly 41.7 in July, down from 47.5 in June (50 marks the border between expansion and contraction) The longer the political uncertainly goes on, the harder it will be for Egypt to recover. Read more
Egypt’s Mohamed Morsi is set to make a key televised address on Wednesday ahead of planned political protests against his presidency. But the markets have already voted – and it looks grim.
The 5-year CDS rose another 13 points to hit an all time high of 821.255, suggesting that investors are braced for protests, unrest and uncertainty. Read more
Egypt and the IMF have repeatedly failed to reach agreement over a $4.8bn loan over the last 18 months. But the consensus among analysts, echoed by Egypt and the IMF, has been that, sooner or later, a deal will be done.
But recent developments have cast a very different light on the on-off negotiations. It’s time to ask: could Egypt get by without the IMF? Read more
For Tunisia, the deal is done. But as far as the bigger, trickier north African question goes, there are merely encouraging words.
On Saturday, the IMF concluded terms with the Tunisian government on a crucial loan. Meanwhile for Egypt, while talks continue in Washington on the sidelines of the IMF spring meeting, no news is a worry. Read more
As beyondbrics reported on Monday, Egypt’s talks with the IMF over a possible $4.8bn loan have faltered, again.
So what does this mean for the country? And will deal with the Fund ever materialise? Read more
A mixed bag for the IMF in north Africa in April, if early reports are anything to go by.
Egypt’s talks with the Fund over a $4.8bn (plus) deal have floundered – again. But there is better news 2,000km to the west, where Tunisia looks to have sealed a $1.78bn loan. Read more
On the face of it, for a crunch week, Egypt has had a better time than usual.
The IMF is in town for talks on a $4.8bn (or more) loan; March inflation figures showed an improvement. And to top it all, on Wednesday it was announced that Qatar was stumping up another $3bn for the country.
But dig a little more, and there are worrying signs ahead. Read more
Egypt and the IMF have restarted talks over a possible $4.8bn loan on Wednesday, after previous discussions were held up due to political violence.
The country desperately needs the loan to avert a crisis and unlock other sources of funding, and has started to make moves in the right fiscal direction. So what are the chances of a deal being done? Read more
April looks set to be a busy time for the IMF. Two crucial meetings have been put in the diary – one with Tunisia, and one with Egypt (again).
The two potential deals have a lot at stake, and not just in monetary terms. Tunisia’s possible $1.7bn loan will help shield the country from the European downturn. Egypt’s on-off $4.8bn loan is even more important, as it should unlock other sources of funding, and avert what could become a complete collapse of the economy. Read more
Now Egypt’s on-off IMF deal has reverted to “off”, the country is back in crisis territory, as far as analysts are concerned. Foreign reserves are still perilously low; elections are being kicked down the road; reforms to tax and subsidies are slow or delayed.
Add to all that the latest inflation data, and the picture is not pretty. Egypt’s statistical agency said on Sunday that urban inflation was up 8.2 per cent in February year-on-year, up from January’s 6.3 per cent. Read more
Egypt’s continued political turmoil has made its life hard in international debt markets, but its government is hoping to secure new funds by less conventional means through the issue of the country’s first sovereign Islamic bonds.
According to a Bloomberg report, the government plans to raise up to $1bn by June through sukuk sales, with one for domestic investors and one for foreign investors. Read more
A fall in Egyptian foreign exchange reserves in January might have been expected, but not this big. The drop of $1.4bn to a 15-year low of $13.6bn, announced by the central bank late on Tuesday, pushes the country closer to economic collapse.
The December foreign exchange reserve levels of $15bn were considered sufficient to cover only three months of imports – which the central bank in December called “minimum and critical levels” – and if it wasn’t already, the necessity of securing additional foreign assistance is now urgent. Read more
Two years on, and Egypt is back in crisis. Mohamed Morsi, Egypt’s Islamist president, announced a month-long state of emergency on Sunday following violence in which nearly 50 have died.
For anyone hoping for a turnaround in Egypt’s economic fortunes, it’s another big blow and one that may hurt chances of a deal with the IMF. Read more
A senior IMF official visiting Egypt this week to discuss the country’s stalled $4.8bn loan agreement has said the organisation remains committed to helping Egypt through its financial difficulties.
Masood Ahmed, head of the IMF’s Middle East and Central Asia Department said the Egyptian government had expressed “firm commitment” to implementing a “macroeconomic program that enjoys broad support”. Read more
A senior IMF official was meeting with the Egyptian government on Monday to discuss a stalled $4.8bn loan deal, as renewed political turmoil pushed the country closer to economic crisis.
Top of the mission’s mind will be whether the government still has the capacity to implement economic reform as the central bank struggles to run a managed devaluation of the Egyptian pound that risks slipping out of control. Read more
The Egyptian pound has been suffering a dramatic devaluation in recent weeks, falling to record lows as political turmoil casts doubt over the country’s economic prospects.
The slide continued on Thursday, albeit at a slower pace, with the currency reaching a record low of £6.42 to the dollar in the spot market as of 15.30 GMT, as the central bank completed its fourth successive dollar auction in a week. This adds to declines of over 3 per cent since Monday when the auctions began – the biggest falls since 2003. Read more
Increasing stress in the Egyptian economy was underlined on Thursday as the central bank cancelled a major sale of treasury bills.
The offer was supposed to raise 6bn Egyptian pounds ($969m) through 2bn pounds worth of six month bills and 4bn pounds worth of one year bills, and its cancellation sent the Egyptian pound tumbling to its lowest value since 2004. Add in the a recent ratings downgrade, and it’s a tough December for Egypt. Read more
2012 has been a year of power struggles in Egypt. Markets have been volatile in sympathy with the political turmoil and, with arguments raging over a new constitution, a $4.8bn IMF loan is on hold. Raza Agha, chief economist for Middle East and Africa at VTB Capital, explains to Rob Minto the risks of extended political uncertainty in Egypt.
“Like a train without a driver” is how one commentator described Egypt after President Mohamed Morsi’s latest policy U-turn, scrapping a planned increase in taxation. In a different vein, one joke doing the rounds in Cairo has doctors telling Morsi that, like a pregnant woman at risk of miscarriage, he should lie down for a few weeks to let his decisions take hold.
But there is a grimness to the humour. Stocks and the currency fell on Monday as the air of uncertainty became pervasive. With government supporters and the opposition preparing fresh rallies before Saturday’s controversial referendum on a new constitution, the danger of further violent unrest is rising. Read more