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IMF Downplays Inflationary Risk as Egypt Seeks to Finalize Loan

  • Official says prices already reflect parallel exchange rate
  • Government would do more economic damage by delaying measures

Egypt is unlikely to see a jump in inflation from measures to ease a foreign-exchange shortage because import prices already reflect the black market rate, a senior International Monetary Fund official said.

Egyptian officials are widely expected to devalue the pound and cut energy subsidies to secure a $12 billion IMF loan, needed to fund an economic overhaul they hope will attract foreign investment to Egypt’s ailing economy. But with core inflation -- a key gauge of price increases for non-volatile consumer goods -- at the highest level since 2009, some analyst are warning of a public backlash if they force prices up further.