CAIRO – Egypt's new Finance Minister Al-Mursi Al-Sayed Hegazy pledged to finish talks on an IMF loan to stave off a currency crisis that risks provoking more popular unrest. A senior IMF official is due in Cairo Monday to meet Egyptian leaders over the $4.8 billion loan deal, which was postponed last month to give Egypt more time to tackle political tensions before introducing unpopular austerity measures. Hegazy is an expert on Islamic finance. Political unrest over a new Islamist-tinged constitution had delayed tax increases believed to be key to the IMF deal, but in a brief statement, Hegazy said he was “completely ready to complete discussions” with the International Monetary Fund. The political conflict triggered lethal street protests last month that added to pressure on the Egyptian pound and speculators began exchanging local currency for dollars. As Hegazy spoke Sunday, the pound reached a new low, trading at 6.45 to the dollar. It has lost more than 4 percent of its value against the dollar since the central bank brought in a new system of currency auctions on Dec. 30 in an effort to preserve the country's dwindling foreign reserves. Importers have warned that the weakening currency and uncertainty about how low it will go could lead to sharp rises in the prices of imports including food. Hegazy, who replaces Mumtaaz Al-Saeed, a career bureaucrat, teaches economics at Alexandria University. In 1985, he earned a doctorate from the University of Connecticut, according to a biography provided by Alexandria University. It listed two dozen papers on Islamic economics which he had written or reviewed. The IMF signed the loan deal in November but final ratification was postponed last month at Cairo's behest because of the unrest. Fearing further public anger at the time, President Morsi cancelled tax increases believed to be part of a package of austerity measures agreed as part of the IMF deal. The IMF said Saturday its Middle East director, Masood Ahmed, would visit Cairo to meet Egyptian officials to discuss recent economic developments and “possible IMF support for Egypt in facing these challenges.” Prime Minister Kandil said Monday's meeting aimed to reassure the IMF about the government's plans and the economy's capacity for recovery. The IMF deal is seen as vital for boosting investor confidence and staving off a financial crisis. Having spent more than half the country's foreign exchange reserves defending the pound since Mubarak was toppled, the central bank has warned the reserves had fallen to a critical level. Economists say the country's readily available foreign reserves will cover just over two months of imports. The central bank said the reserves were at $15.015 billion in December - little changed from November's level. The pound slid by half a percent on Sunday at the central bank's fifth auction of foreign currency under the new auction system designed to preserve the reserves. The bank sold all of the $60 million it had offered to banks at Sunday's auction. Last week, the bank sold $300 million at four similar auctions which bankers have described as a move towards a free float of the currency. — Reuters
