IMF loan is mandatory and the pound price is to decrease
Dollar is expected to reach EGP 11
Egypt’s government has declared war on the black market’s dollar price; this decision was made after the government had learned that it is to acquire an IMF, International Monetary Fund, loan worth of $12bn. Under the loan agreement, IMF will lend Egypt $3bn a year.
Egypt is expected to get the first installment of the IMF loan by September 2016. Economists and investors stated to MEO that the IMF loan is necessary to revive exports, tourism and foreign investment. 
Abu Bakr Imam, Head of Prime Holding Research Division, said that there is no solution to the dollar crisis but obtaining financial aid from other countries. An IMF loan is necessary for Egypt as it will attract more foreign investments and therefore guarantee developing the economy, said Imam. Furthermore, he expected that the pound price will suffer another fall soon.
Similarly, Dr. Ahmed Al-Shamy, a member of Suez Investors Association, believes that IMF loan is “mandatory” to obtain if the government wants to develop the economy. The government must put an end to the black market through holding meetings with Egyptians who live abroad to convince them to transfer their money to Egypt. He added that other solutions to solve this crisis will take too long to be fruitful, either reviving tourism or increasing exports. Therefore, fast-track procedures should be taken into consideration such as stopping the imports of nonessential commodities.
Likewise, Hany Gniniah, Head of Research Division at Belton Financial, said that Egypt is obligated to obtain the IMF loan as a result of the pound price fall. Furthermore, he believes that the pound decrease is temporary and not constant, adding that floating the pound would make it exchanged at the average price of the black market, EGP 12.50. Furthermore, floating the pound will make it rise gradually against the dollar, EGP 11 or EGP 12, and it may rise again to be valued at EGP 10 against the dollar by the end of this year. In a research note of Belton Financial that MEO got a copy of, it is certain that Egypt will be able to reform its financial situation and put an end to the black market if it gets the IMF loan.
In addition, the IMF loan and exchange rate stability will enhance shares’ investment, adding that if EGX30 index rises to 8000 points, we will be able to evaluate the whole situation instead of getting rid of the shares.
In regard to investors with fixed income assets, Belton Financial expects that such assets will witness great profits at the last quarter of 2016. Interest rate could remain high for few weeks but will decrease if the government’s reformation programme turns to be fruitful.
