Egypt eyes the completion of a key IMF review

Egypt kept its interest rates at a record high for the fifth straight meeting even as it weighed the impact of subsidy cuts. The country is also eyeing a closure to the International Monetary Fund's review for a bailout.

The monetary policy committee of Egypt's central bank said that the deposit rate and lending rate would remain unchanged at 27.25 per cent and 28.25 per cent, respectively. Authorities are being cautious following an 8 percentage point increase in interest rates in two stages earlier this year. This comes after an average 9.2 per cent increase in the fuel price in October.

Subsidy cuts to enhance government finances are the goal of an IMF-backed reform package, which includes fuel price hikes. Inflation in Egypt has started to mirror the country's third fuel adjustment in 2024. the real picture will be clearer once the December data is revealed.

The IMF said negotiations had made "substantial progress" but added more meetings would be scheduled in the coming days. Egyptian Prime Minister Mostafa Madbouly said the discussions with the IMF were "positive," and the lender's evaluation would be completed within the next two days.

Meanwhile, a widespread sell-off in developing markets and rising demand for dollars has caused the Egyptian pound to fall to its lowest level since a devaluation in March. The pound hit a low of 49.8 to the dollar, its worst level since Egypt allowed it to fall over 40 per cent to entice international investment and end its economic crisis.