Sources reported on Wednesday that Egypt's central bank governor, Hassan Abdalla, and finance minister Mohamed Maait are presently in Washington to push forward for negotiations over an IMF loan that would help alleviate the currency crisis Egypt is currently undergoing. 

Talks over an IMF support package go back to the month of March during which the crisis in Ukraine caused massive investments worth $20 billion to be pulled out of Egyptian treasury markets. 

In July, Finance Minister Mohamed Maait said that Egypt’s import bills jumped significantly by war-induced hikes in commodity prices, particularly oil and cereals, from $5bn to $9.5bn.

Since then, the Central Bank has been tapping into its own reserves and borrowing from local banks in a bid to keep its economy afloat. Banks have likewise limited withdrawals of US dollars to avoid further flights of capital. 

"The conclusion of negotiations with the IMF are becoming increasingly urgent amid growing foreign exchange scarcity, supply shortages, and persistent inflation," said Callee Davis of Oxford Economics.  

On October 3, IMF managing director Kristalina Georgieva announced that an agreement between Egypt and the fund is within reach, though the content of the deal has yet to be disclosed. 

Some economists assume it could potentially allow the currency to move freely against foreign currencies, further providing the private sector with more leverage, as well as a big chunk of state assets.

The country already owes $11.6 billion to the IMF for a loan granted in 2016 and another two packages in 2020. Both are expected to be paid by 2025.

Read more: Egypt currency hits near-record low: Central Bank

Economic growth slowed to 3.2% in the fourth quarter of 2021-2022 against 7.7% last year, although the annual expansion was 6.6%.

The Egyptian economy has taken a huge hit, with inflation reaching 14.6% in July, which prompted a hike in the price of imports and slashed forex reserves by $7.8 billion since February to $33.1 billion in July.

The imposition of import controls caused Egypt to run a current account deficit of $18.4 billion in its fiscal year of 2020/2021, which further fell to $16.6 billion in 2021. 

Bank data further reveals that between August 2021 and August 2022, Net foreign assets in the banking system fell by almost $30 billion, prompting investors to question whether Egypt will have the capacity to repay its debts within the coming years.

By the end of June, the government amassed a total of $155.7 billion in foreign debt, of which $42.2 billion are due to be paid between March 2022 and March 2023.

On September 14, the Central Bank of Egypt announced that it had obtained US$13 billion in deposits from countries in the Gulf over the first three months of 2022. The Gulf deposits were intended to bolster stocks of foreign currency that were heavily depleted over the past year.

Although the report did not specify when repayments will be due, it is likely they may be rolled out, including the $1.25 billion Eurobond that matures in February 2023 and money owed to multilateral organizations.

According to the Central Bank, Egypt has eight months left to pay back $6 billion to multilateral organizations. Another $8 billion are due to be paid next year.   

Read more: How normalization with "Israel" assassinated Egypt's economy