Reserves down to $15.1 billion EGYPT's net international reserves dropped to $15.1 billion at the end of March, from around $15.7 billion in February, according to the Central Bank of Egypt. Since January 2011, Egypt's international reserves have plunged from $36 billion. According to CI Capital, the reserves dropped at a much lower pace of four per cent month-on-month (MoM) in February and March, compared to the sharp decline over the preceding four months. CI Capital believes that despite current political tension there are still good signs. On the back of the 100 basis points (bps) increase in deposit rates announced by the Monetary Policy Committee (MPC) on 24 November, time and saving deposits in local currency saw a high single-digit year on year (YoY) growth of 6.4 per cent. This was the first such increase since last August, compared to a monthly average growth of 3.4 per cent YoY. CI Capital explained that this translates into a shift in demand from foreign currency to local currency deposits. They expect the reserves to end fiscal year 2011/12 at $12.2 billion. Late last week, an army official said reserves would fall to $10.4 billion. IMF negotiations proceeding NEGOTIATIONS over a $3.2 billion loan from the International Monetary Fund (IMF) are on track as planned, Minister of Planning and International Cooperation Fayza Abul Naga said this week. An IMF team is currently in Cairo for the technical negotiations with the Egyptian government. Two weeks ago another IMF delegation, headed by Masood Ahmed, director of the Middle East and Central Asia department, was in Cairo for meetings with the government. He also met with a broad spectrum of personalities, including members of the Freedom and Justice Party (FJP) who hold majority seats in parliament. The IMF said it wants broad backing from political groups in the country before approving the loan. But FJP members had expressed reservations against the government's plan to borrow externally, before exhausting alternative resources. The party also criticised the vagueness of the government's planned economic reform programme. Still, Abul Naga said this week that Egypt aims to sign a memorandum of understanding with the fund in June.
