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* IMF official to discuss $4.8 bln loan
* HSBC sees IMF visit as positive
* Parliamentary vote looms in coming months
* Qatari PM due in Cairo on Tuesday for talks
By Tom Perry and Yasmine Saleh
CAIRO, Jan 7 (Reuters) - A senior IMF official met Egypt's
government on Monday to discuss a vital $4.8 billion loan as the
Islamist-led state battles to contain a currency crisis set off
by political turmoil that is depleting its foreign reserves.
The IMF's Middle East and Central Asia director, Masood
Ahmed, met Prime Minister Hisham Kandil at the start of a visit
coinciding with a sharp decline in the value of the Egyptian
pound, which has hit a series of record lows against the dollar.
"At this stage, the putative $4.8 billion IMF deal is the
only thing standing between Egypt and a disorderly economic
deterioration," HSBC said in a note issued on Monday. "The fact
that Mr. Ahmed is making the trip to Cairo is positive."
Egypt has endured nearly two years of political upheaval
since the euphoria of the uprising that toppled Hosni Mubarak in
February 2011 and eventually brought Islamists to power. Their
credibility - and how well they do in forthcoming parliamentary
polls - may rest on how they handle the economic crisis.
Before the visit, the International Monetary Fund had said
Ahmed would discuss recent economic developments and "possible
IMF support for Egypt in facing these challenges". Egyptian
state media said the IMF team would stay for several days.
"We will attend many meetings with the Egyptian government
today. The technical team will come later," Ahmed said after the
meeting attended by Egypt's newly sworn-in finance minister, a
little-known academic who is an expert on Islamic economics.
"All details will be discussed in these meetings today,"
added Ahmed, who was due to meet President Mohamed Mursi later.
The pound has lost more than 4 percent of its dollar value
since Dec. 30, when the central bank introduced a new system for
selling foreign currency to try to stem the fall in foreign
reserves. The pound's slide has raised concern about inflation
in the food-importing country that could ignite further unrest.
The pound has been weakened by investors and ordinary
Egyptians selling their pounds for dollars, fearing that further
political instability will erode their local currency savings.
The pound last traded at 6.45 pounds to the dollar on Sunday
. Markets were closed on Monday for a public holiday
marking Coptic Christmas. The currency has now lost more than a
tenth of its value since Mubarak's overthrow.
Trying to revive an economy pummelled by a turbulent
political transition, the Islamist-led government struck an
initial agreement on the IMF Stand-By Arrangement in November.
But last month Cairo postponed formal conclusion of the deal
because of new political confrontations and protests ignited by
Mursi's drive to fast-track a new, Islamist-tinged constitution
that was approved in a popular referendum.
Confronted by lethal street violence at the time, Mursi
postponed planned tax increases seen as part of a package of
austerity measures needed to secure the IMF loan.
Egypt must now renegotiate some terms of the accord, and
economists say the IMF board's approval is not a certainty.
In the past two years, Egypt's finances have been bolstered
by aid from foreign donors such as Qatar, which the government
says has deposited $2 billion at the central bank.
Qatari Prime Minister Sheikh Hamad bin Jassim al-Thani is
due in Cairo on Tuesday for talks with Kandil that would include
"ways of supporting economic, trade and investment ties in this
important period", Egypt's state news agency said.
With parliamentary elections approaching, Mursi has seemed
wary of any action that could undermine the popularity of the
Muslim Brotherhood, which propelled him to power in a June vote.
The parliamentary election process is due to get under way
within two months of the passage of the new constitution, which
was signed into law on Dec. 26. However, the vote could be
pushed back slightly by the need to secure the constitutional
court's approval of a new election law, say some analysts.
A slight delay might suit the Brotherhood, letting Mursi
secure the IMF deal while allowing extra time for his group to
explain its merits before the election. "It would allow a window
between the IMF and the elections to argue they are fostering an
economic recovery," said a Cairo-based diplomat.
Kandil said on Sunday the government would seek to reassure
the IMF about the government's economic plans and the economy's
capacity for recovery.
Finance Minister AL-Mursi Al-Sayed Hegazy, who was sworn in
on Sunday as part of a cabinet reshuffle, said he was ready to
complete discussions on the IMF loan.
"We think there is enough IMF shareholder support and
interest in the near-term stability of Egypt that negotiations
will likely reach a timely agreement shortly," Bank of America
Merrill Lynch (BAML) said in a note released on Monday.
"Should Egypt fail to seal a deal shortly or delay it for
too long, a hard landing would ensue, along with a large
(Egyptian pound) devaluation."
Having spent more than $20 billion defending the pound since
Mubarak's fall, the central bank introduced the new system for
auctioning foreign currency to preserve what it described as
critically low foreign currency reserves.
The central bank said on Sunday its foreign reserves had
inched down $21 million in December to $15.015 billion.
Economists had expected a steeper fall.