More predictions on our IMF package roll in: Goldman Sachs and Morgan Stanley both had things to say about our IMF package, hinting that we’re moving closer to an agreement.

Goldman Sachs sees a USD 12 bn loan in our future: Goldman Sachs sees the IMF increasing the size of our assistance program to USD 7 bn, the bank said in a note. The bank also sees the Egyptian government receiving some USD 5 bn from international and regional partners, bringing our total funding to USD 12 bn.

Most expectations are within this range: While there hasn’t been much of a consensus on the size of the package, Enterprise sources with knowledge have put it in the USD 6-9 bn ballpark. Egypt has recently wrapped up talks with an IMF delegation in Cairo where they made progress on the details of the agreement.

The IMF and Egyptian officials have reached a preliminary agreement on the new loan, which would include the long-stalled first and second reviews of our initial USD 3 bn agreement, according to Goldman Sachs, but the staff-level agreement may take a few weeks.

Why the additional funds? Egypt faces a USD 8 bn financing gap and needs some USD 17 bn to stabilize the exchange rate, the bank said. This brings the country’s total financing needs for the next four years to USD 25 bn.

But it won’t be enough: “We believe it is highly unlikely that the additional funding that will be made available to Egypt under the new program will cover [Egypt’s financing needs],” the bank said. The bank points to the state privatization program and other financing strategies to help fill what will remain of the financing gap.

The Morgan Stanley take: The bank believes that the CBE’s decision to hike interest rates by 200 basis points last Thursday paves the way for policymakers to devalue the EGP and seal the IMF agreement as the country moves to an “inflation-targeting framework” in line with the fund’s requirement, the bank said in a report. The bank expects the CBE to enact a limited devaluation at first, before gradually scaling it up to a more flexible rate.

The markets are in desperate need of some clarity: Just days after dipping to record lows in the parallel and derivative markets — changing hands at 70 to the USD — the EGP slightly strengthened with the USD currently changing hands for anywhere between EGP 48-56, according to local media. This discrepancy between prices is likely the result of the CBE’s rate hike and anticipation of when Egypt and the IMF may wrap up their agreement sending markets into panic.

AND- Investors ditch EGX stocks in anticipation of devaluation: Egyptian stocks lost around EGP 40 bn of their market value on Sunday, falling to EGP 1.97 tn, as investors anticipated the movement of the EGP / USD exchange rate and parallel market prices, Naeem Brokerage’s Allen Sandeep told Asharq Business. The EGP currently stands at anywhere between 62-66 to the USD on the parallel market, traders told Asharq.

Temporary dips: Egyptian stocks are moving in tandem with the black market exchange rate, Thndr Securities’ Amr Elalfy said. “Egyptian stocks are far from their true valuations,” Elalfy said, adding that he expects stock prices to rise following the devaluation announcement and “provision of USD liquidity into the market.”

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