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 now 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 December 30, when the central bank introduced a new system for selling foreign currency to try to stem the fall in foreign reserves.

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.

The delay means Egypt must now renegotiate some terms of the accord, and economists say it is by no means certain it will be able to secure the IMF board’s approval. 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 December 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.