Egypt reaches $3bn IMF loan deal after agreeing to float currency

Egypt reaches $3bn IMF loan deal after agreeing to float currency

The IMF said it had reached a $3bn loan deal with Egypt after Cairo agreed to a key bailout condition and floated its currency.

The Egyptian pound slid 14.5 per cent to 23 to the US dollar on Thursday after the country’s central bank said it was moving to a “durable flexible exchange rate regime that leaves the forces of supply and demand to determine the value of the Egyptian pound against other currencies”.

This means abandoning a policy of drawing on its reserves to support the pound, which was aimed at reducing the cost of imports and maintaining social stability in a country where 60 per cent of the population are poor or vulnerable to price shocks.

Egypt has been in talks with the IMF for months amid soaring commodities prices and a foreign currency crisis stemming from Russia’s invasion of Ukraine, which accelerated billions of dollars of outflows as foreign debt investors exited the country.

The pound had already been allowed to fall by roughly 22 per cent since March, but Cairo was understood to have been resisting fully floating the pound in order to contain the impact on prices.

The fund said that, as well as the $3bn, the currency deal would “catalyse