By Lesley Wroughton
WASHINGTON Jan 18 The International Monetary Fund has begun negotiations with Tunisia on a loan program, while Egypt has expressed readiness to move forward on a crucial $4.8 billion funding deal, a senior IMF official said on Friday.
Masood Ahmed, IMF director for the Middle East and North Africa, told reporters he hoped to report progress in the talks with Tunisia by early February. Tunisia said late last year it was seeking a $2.5 billion loan from the IMF, although Ahmed said the talks were currently establishing the funding needs of the government.
Tunisia's newly elected Islamist-led government has sought to revive the economy in the face of a decline in trade with the crisis-hit euro zone and political disputes over the future of the North African Arab state.
Also, Egypt is keen to move forward to finalize its IMF loan deal and a technical team is currently reviewing whether the authorities' economic measures are enough to deal with the country's financial challenges, Ahmed said.
He said the government told the IMF during a visit in early January that it was ready to move forward.
Egypt won preliminary approval for an IMF loan in November but political turmoil forced the government to delay unpopular austerity measures deemed necessary to win final approval from the IMF board. The economy was hit by more turmoil with tensions over a new constitution damaging people's confidence in the government.
Ahmed said the IMF needed to be satisfied that Egypt would be able to implement the program before it gave a final approval.
Meanwhile, the Egyptian pound has hit a new record low against the U.S. dollar this week since the authorities introduced a new system of foreign currency auctions to curb a decline in foreign reserves.
Ahmed said the IMF supported the authorities' objective to preserve and strengthen international reserves and to have a well-functioning market for foreign exchange.
"It is part of that process that they've put in place these auctions and in a way the prices are reflecting supply and demand," he added.