Egyptian economy: Sputtering, but restarting

The Egyptian pound fell to its lowest level in seven years in the last week of the year; the International Monetary Fund was withholding a badly-needed loan until the unrest following the constitutional referendum in November subsided; and Egypt’s foreign reserves had three months left in them before the country would officially be bankrupt.

Help may be on the way. On Thursday, the European Union announced it offered 6.5 billion euros of soft loans and grants to Egypt, but those funds are contingent on the $4.8 billion loan from the IMF successfully going through, the state run outlet Al-Ahram reported on Friday. President of the European Council Herman Van Rompuy said in a press release that “mutual trust” between all involved parties will help ease economic pains, noting that the current IMF plans “will have a very high social cost and will be met with widespread discontent.”

Negotiations with the IMF are said to be at “an advanced stage.” In a press conference on Friday, IMF head Christine Lagarde said that the Arab Spring countries were the IMF’s “main priority,” and the IMF is “ready to support the democratic transitions unconditionally.”