Economist predicts tough times ahead

Political unrest pushes Egyptian economy into danger

GMT 14:33 2013 Wednesday ,30 January

Arab Today, arab today Political unrest pushes Egyptian economy into danger

Egypt's talks with IMF over a $4.8m loan are likely to take a hit, say experts
Cairo - Akram Ali

Egypt's talks with IMF over a $4.8m loan are likely to take a hit, say experts Cairo's Centre for Economic Studies has said that the Egyptian economy is in a "critical state" as a result of ongoing violence. In a report, written by Abdel-Moneim Sayed ,the Centre said that foreign currency reserves in Egypt's Central Bank [estimated at $12.5 billion] are set to witness a decrease due to the lack of foreign investments and tourist activity.
Furthermore, the budget deficit is expected to hit a record of 200 billion EGP and a drop in the credit assessment of Egypt, would force the government to pay higher rates for the loans it needs to cover the deficit.
The political unrest has also resulted in continuously dropping exchange rate of the Egyptian pound against the US dollar, which is reflected by a significant rise in prices of the imported goods.
The current political situation is also expected to affect the Egyptian government's negotiations with International Monetary Fund [IMF] over a $4.8bn loan, which the government needs to restore international confidence in Egypt's economy.
"The Egyptian economy is going through one of its worst eras," said Abdel-Moneim Sayed, author of the report. "Foreign or national businessmen are no longer interested in investing their money in Egypt amid the current unrest and lack of security," he added.
Sayed predicted that the Egyptian budget deficit could reach 228 billion EGP if the political strife in the country is resolved.
"Egypt has the potential to achieve mass economic growth, but the political parties must reach an agreement to bring calmness back to the country, and subsequently restore the world's confidence in the Egyptian economy," he concluded.

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