31 Dec 2012

Egypt and IMF to resume talks on loan

5:16 am on 31 December 2012

Egypt will soon resume talks with the International Monetary Fund over a loan of $US4.8 billion to shore up the economy.

Talks were suspended because of political turmoil over a new constitution, which was approved by a referendum last weekend.

"We hope that there will not be any fundamental changes in our plan with the IMF because we will summon them in January so we resume discussions to go forward in the matter of the loan," said prime minister Hisham Kandil.

Egypt is grappling with a crippling budget deficit and dwindling foreign reserves. The BBC reports the Central Bank has spent more than $US20 billion in foreign reserves to support the pound since a revolution against former President Hosni Mubarak in 2011.

Over the weekend, the Central Bank announced regular currency auctions, with the bank offering $US75 million at the maiden auction on Sunday.

The auctions are meant to slow the depletion of the country's foreign reserves.

The Central Bank also forbid corporate clients from withdrawing more than $US30,000 in cash per day.

On Saturday, the Central Bank said its reserves, which stood at about $15bn at the end of November, had fallen to a critical level.