CAIRO (AP) — The International Monetary Fund said Wednesday that Egypt is making progress with its economic reform program, although it will still take time to improve living standards in a poor country beset with rocketing inflation.
While the currency depreciated more than expected when it was floated as part of the reform package enacted late last year, there is potential for it to come down as economic growth picks up, IMF Mission Chief for Egypt Chris Jarvis said in a news conference broadcast online from IMF headquarters in Washington.
Egypt's government and central bank were sticking to their pledges made to secure a $12 billion loan package from the lender of last resort, and that this was "showing some results," he said.
"Exchange rate liberalizations are always difficult. The one in Egypt is actually off to a pretty good start," he said. "When Egyptians ask themselves at the end of this program, are you better off, they would be able to answer with ... a yes."
Egypt qualified for the loan, but the reforms led to inflation in December jumping to a record high of 24.3 percent, the highest since 2008. The currency, the pound, depreciated from 8.9 pounds to the dollar to nearly 19, adding to the inflation as many products are imported. But Jarvis said he expected inflation to drop significantly by the second half of 2017.
The second tranche of the IMF loan will be disbursed in late April, he said, adding that IMF representatives will visit Cairo in late February to assess in detail how things are going.