The return of several countries to the IMF for financial support over the past month underlines the severity of long-standing balance of payments problems in parts of the region. In Jordan and Tunisia, recently-agreed IMF deals will help these countries cope with a collapse in tourism receipts. Morocco is also in advanced negotiations over a financing package, although with the current account deficit having narrowed sharply, any deal is likely to be a precautionary arrangement. Meanwhile, rumours have started to circulate again that Egypt is on the verge of opening talks with the Fund. An agreement between Cairo and the IMF would be a positive step by helping to anchor structural and fiscal reform efforts, thus boosting the country’s medium-term growth prospects. However, perhaps the most tangible near-term impact would be another devaluation of the pound, which still looks overvalued.
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