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(Bloomberg) -- What comes first, another currency devaluation or a wave of Gulf investment? Cash-strapped Egypt is racing to resolve that dilemma and secure critical funding ahead of a key International Monetary Fund review.

With a target of $2 billion in foreign deals by the end of June, the Middle East’s most populous nation is going all-out to sell state assets ranging from banks to power plants and a military-owned network of gas stations. Allies such as Saudi Arabia, Qatar and the United Arab Emirates, who’ve pledged billions of dollars to help Egypt get through its economic crisis, are the likely buyers.

But there’s a problem. Those investors want to see the Egyptian pound, which has already lost about half its value in the past year, weaken further before they’ll open the taps. And the North African country needs the foreign exchange from those very same deals as a buffer before it lets the currency depreciate, which may accelerate inflation that’s already above 30%.

Read More: Gulf Powers Play Hardball Over Sending Billions to Rescue Egypt

The quandary is a pressing one for Egypt, a top wheat importer whose finances were tipped into crisis by Russia’s invasion of Ukraine. Enacting a truly flexible currency regime and trimming the state’s economic footprint are key conditions in a $3 billion IMF program.

It’s not insolvable. Economists see deal-by-deal exchange rates among the ways Egypt and its Gulf allies could thread the needle, allowing Cairo to meet the demands of an IMF review by the close of next month and get the second tranche of its loan.

Read More: IMF Awaits More Egyptian Reforms Before First Review

The pound has been devalued three times since early 2022, but investors think it has further to fall. While it trades at 30.9 against the dollar, Societe Generale SA forecasts it dropping at least 16% to 37 by the end of the year, around the same level that it now changes hands on the black market.

Although the three energy-rich Arab nations were quick to help Egypt with $13 billion in central bank deposits last year, they’ve signaled further assistance will come via investments that bring returns.

Read More: Egyptian Pound Rises on Black Market Amid Muted Dollar Demand

That’s placing the onus on Egypt, which is grappling with its worst foreign-currency crunch in decades, to prepare attractive deals. It’s putting parts of at least 32 companies on the auction block, this month selling a 9.5% stake worth $121 million in state-controlled Telecom Egypt to mainly local investors. 

Authorities recently approved regulations aimed at cutting red tape and speeding up permitting and land allocations to smooth the way for investors.

Read More: Egypt Puts State Assets Up for Sale to Hunt Foreign Exchange (2)

But expectations the pound will be devalued in the coming months are giving would-be buyers little incentive to act now when they could wait for a more favorable exchange rate for locally priced assets.

One solution could be for authorities to give a discount on the valuation of state assets to compensate for the pound’s relative strength, according to Monica Malik, chief economist at Abu Dhabi Commercial Bank PJSC.

Setting a separate foreign-exchange rate for the deals is another possibility, she said, although “wider investment would still need a further devaluation in the pound.”

More loosening of the pound isn’t easy for Egypt. The past year’s plunge has helped send food prices skyrocketing, piling pain on consumers in the country of over 104 million people.

Authorities are also keen to amass a comfortable supply of hard currency before any further devaluation so they can meet market demand for dollars and avoid a spiraling exchange rate, according to people familiar with the matter. 

Such liquidity is also essential to clear a backlog of foreign-currency requests from importers and other companies, which would ease pressure on the pound and ensure a successful adjustment, said the people. They asked not to be identified as the deliberations are private. 

Without raising FX liquidity before devaluing, “the parallel market would return if shortages persist,” Malik said.

Read More: How to Know Where Egypt’s Once-in-Decade Crisis Is Heading

Despite December’s cancellation of a requirement that importers acquire letters of credit to bring in select goods, some businesses are still struggling to secure currency from banks. 

Some hotels, car dealerships and real estate companies have started to factor in possible changes in the local currency’s value by raising prices.

Even if the mooted asset sales do come through, they “might not be large enough to raise the necessary liquidity to push for an orderly foreign-exchange transition,” according to Mohamed Abu Basha, head of macroeconomic research at Cairo-based EFG Hermes. 

BNP Paribas SA, which this month said another devaluation “may be more distant than previously thought,” added it didn’t rule out the possibility of another Gulf deposit at the central bank “to help manage any future currency adjustment.”

--With assistance from Netty Ismail.

(Updates with comment from economist in 16th paragraph.)