Supporting Egypt’s currency is like putting water in bucket that has holes: IMF Chief

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International Monetary Fund (IMF) Managing Director Kristalina Georgieva said that it is important that Egypt take actions to protect against leakage of foreign reserves, because otherwise “it’s like putting water in a bucket that has holes.”

This came during her interview with Asharq Business on Tuesday.

She explained that the IMF is having a very good discussion with the authorities of Egypt.

Georgieva said that having multiple exchange rates creates privileged positions for some and not for others. She indicated that the IMF also understands that when there is support for the currency but not enough foreign exchange that shrinks the reserves and makes the situation of the country more difficult.”

“How exactly does Egypt go about it? Of course, it is not only an economic question, it’s also a question of political economy,” Georgieva said.

She stressed that the IMF is very open to continuing discussions with the Egyptian authorities. “I have high respect for President Abdel Fattah Al-Sisi and I trust that by working together, he can make the right decisions for the country,” Georgieva added.

She indicated that the Egyptian authorities are taking appropriate steps, citing the recent agreement with the International Finance Corporation (IFC) to use their expertise to accelerate the privatisation of state-owned enterprises.

Egypt has done many things right, she said, explaining that there are three areas where the North African nation needs to advance its competitiveness.

The first one is to get the state out of activities where the state is not the best to do them. There is full understanding with the Egyptian authorities that it is a must to make it so that the private sector flourishes and creates more jobs, according to the IMF Chief.

Moreover, she explained that the second is that Egypt can do more to move support to the most vulnerable people and reduce support that benefits also the rich.

“They have done a lot. I want to praise them for that. But they can do even better.”

Third, Egyptian authorities need to think of ways in which they can make their reserve position stronger.

“We have discussed it, and I’m confident that as you ask about the review, we will make progress towards it, we are aiming to have the first review completed.”