A senior government official has revealed an International Monatery Fund (IMF) suggestion to fully float the Egyptian pound against the US dollar, during ongoing negotiations for a US$12 billion loan to be paid to Egypt over 3 years.
In discussions with an IMF delegation currently in Egypt, the government rejected the proposal in favor of devaluating of the pound by 20 percent to a value of LE10, said the official.
The IMF recommended that two dollar prices should be set, so as to attract direct foreign investment, the official added.
The IMF called for acceleration in the pace of a privatization program in a number of public banks as a push for a return to free-market trade in Egypt.
The government showed the Fund delegates a program drawn up by the Ministry of Investment for the stock market, including plans to put oil companies and small banks on the stock market independent of the state's stakes in major public banks.
The government had proposed to put 20 percent of each entity on the market, but the IMF requested for the percentage to be raised to 49 percent, the official said.
In August the government will begin the program, putting oil companies and a bank that is 90 percent supported by the Central Bank of Egypt on the stock market.
The Ministry of Finance said that the fund has not imposed any conditions in return for approving the loan for Egypt's program of economic reform.
The IMF mission, comprising seven experts from different fields, is making contact with civil society organizations, business organizations, and the House of Representatives to hear their opinion on the government's loan request.
According to Reuters, Finance Minister Amr al-Garhy has expressed doubts over the proposed loan, warning that accepting the funds would cause Egypt to slide into a mammoth external debt of $53.4 billion.
Edited translation from Al-Masry Al-Youm