Billie Holiday & That Ole Devil Called The IMF

Might as well give up the fight again
I know darn well he’ll convince me
That he’s right again
When he sings that siren song
I just gotta tag along
With that ole devil called love

Billie Holiday, That Ole Devil Called Love

In a fun twist on the over-reported ties between Egypt and the International Monetary Fund,  London-based investment banking boutique Exotix likens the country’s tumultuous relationship with the IMF to Billie Holiday’s classic song about the internal dilemma associated with the inevitability of succumbing to a suitor’s advances.

Instead of “That Ole Devil Called Love”, it’s “That Ole Devil Called The …IMF Fund”.  It’s not quite as catchy…

Exotix’s chief economist, Gabriel Sterne, describes the reason why the song and dance between Egypt and the IMF has dragged on, drawing on convenient remarks made by IMF head Christine Lagarde that it “takes two to tango” to secure the much-needed loan.

He also confesses to an Exotix miscalculation (shared by some economists and analysts) regarding Egypt’s performance.

We did not think that reserves would fall as far as they have done, but we also under-estimated the extent to which the authorities would tolerate low levels of reserves without allowing for greater exchange rate depreciation.

So now the main concern is economic paralysis, Mr Sterne writes.  While Exotix thinks there is little chance of the military interfering in policy-making, the concern lies with politicians who are “fast running out of the breathing space they had at the start of the revolution.”

The note is recommended reading for Egyptophiles looking for a forensic summary of Egypt’s fixed income sector and are fond of pretty graphs like the one below, which shows how foreigners sold their holdings of treasury bills as soon as they could (most T-Bills are held by domestic banks, effectively supporting the government in an effort to plug the deficit gap).




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