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Egypt reform targets currency reserve recovery

Egypt’s government reform programme is targeting a recovery in foreign exchange reserves to $19 billion by the end of June, climbing to $22.5 billion a year later, according to a copy of the plan seen by Reuters.

Reserves have tumbled to $13.6 billion in January from $36 billion before the overthrow of President Hosni Mubarak in February 2011, and the Egyptian pound has tumbled 8.2 per cent against the dollar since the central bank began auctioning dollars at the end of December.

The reform programme is a prerequisite for resuming negotiations with the International Monetary Fund on a $4.8 billion loan for Egypt that was agreed in principle last November. Talks were suspended the following month due to street violence in Egypt.

The programme targets a budget deficit for the year ending June 2013 of 189.7 billion Egyptian pounds, or 10.9 per cent of GDP, assuming reforms are made. Without the reforms, the deficit would hit 12.3 per cent of GDP, it forecast.


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