Egypt's foreign reserves at critical level

Nugget · Dec 29, 2012

Egypt's foreign reserves at critical level - http://www.couriermail.com.au/news/...t-critical-level/story-e6freoo6-1226545204880

THE Central Bank of Egypt says the country's foreign currency reserves are at a "critical" minimum level.

The bank says reserves are at the minimum level needed to pay Egypt's international obligations. It did not give a current figure. In statistics from November, the reserves stood at $US15 billion ($A14.52 billion), less than half what they were before last year's uprising, even with help of deposits from Qatar.

The bank said in a statement on Saturday that it has introduced a new auction system for buying and selling US dollars after a rush by Egyptians to sell the pound in exchange for dollars over concerns of devaluation.

Reserves have tumbled since foreign investment dried up amid the country's turmoil the past two years. Much of the reserves have gone toward propping up the currency.

Meanwhile, the country's Islamist president has warned against any unrest that could harm the drive to repair the economy.

In his first address before the newly convened upper house of parliament, Mohammed Morsi said the nation's efforts should be focused on "production, work, seriousness and effort," now that a new constitution came into effect.

He blamed protests and violence or causing further damage to an economy already in crisis since the fall of autocrat Hosni Mubarak.

Morsi denounced those who he said were spreading panic about Egypt's economy, saying the country will "not go bankrupt" and that its banks were healthy, after a rush on dollars the past week. He presented the country's foreign currency reserves, currently at $US15 billion, as up slightly from last year, though he acknowledged they were still down dramatically from around $36 billion in 2010.

Citing the economy, Morsi pressed the opposition to drop its refusals to deal with his government, repeating his invitation for it to join a national dialogue he has been holding - and adding a warning that appeared directed at the opposition not to turn to protests that might cause unrest.

All sides must "realise the needs of the moment" and work only through "mature democracy while avoiding violence," he told the 270-member Shura Council. "We condemn and reject all forms of violence by individuals, groups, institutions and even from the nation and its government. This is completely rejected."

Last month, the largely secular and liberal opposition launched a wave of protests against decrees by Morsi grabbing new powers - since revoked - and against the draft constitution that his Islamist allies rammed through to finalisation and put to a referendum, completed a week ago. In response, Islamists also launched mass rallies, and the two sides erupted into violence several times. The worst violence came in clashes outside the presidential palace in Cairo that killed 10 people, and though it was sparked when Islamists attacked a sit-in, Morsi's allies have depicted the opposition as to blame.

Under the new constitution, the upper house of parliament, which normally has few powers, will serve as the law-making body until a new legislating lower house is chosen in national elections expected within a few months. The upper house, called the Shura Council, has an overwhelming Islamist majority, mainly from Morsi's Brotherhood and the allied ultraconservative Salafis.

Morsi has depicted the national dialogue that he launched earlier this month as a compromise giving all factions a voice. The dialogue is supposed to draw up key legislation to put before parliament, including a law organising the parliamentary elections, and decide other issues. The opposition has dismissed the dialogue initiative as disingenuous, and so far mainly Islamists are participating, along with a few small liberal parties.

In his speech, Morsi repeatedly said it was time to return to "production" and "work". He did not give details on an overall economic program, including how the government will tackle a crippling deficit or carry out expected changes in taxes or reductions of subsidies.

His government has requested a $US4.8 billion loan from the International Monetary Fund to bridge the burgeoning budget deficit.

Standard & Poor downgraded Egypt's long-term credit rating one level this week to B-, six steps below investment grade.

"The reason (for the lower ranking) is the lack of political stability in the recent past," Morsi said.

He denounced those he said were spreading rumours that undermine the economy. "Those who talk about bankruptcy, they are the ones who are bankrupt. Egypt will never be bankrupt and will not kneel, God willing," he said to a round of applause.

Morsi appeared to chide the opposition for not working with him, saying all sides must pass through the crisis together. "We all know the interests of the nation. Would any of us be happy if the nation goes bankrupt? I don't doubt anyone's intentions. But can anyone here be happy if the nation is exposed to economic weakness?"

In attendance at the session were leading national figures such as Egypt's new Coptic pope, Tawdros II, seated next to the country's top mainstream cleric, grand sheik Ahmed al-Tayeb of Cairo's Al-Azhar, Sunni Islam's foremost seat of learning. The former head of the ultraconservative Salafi Nour Party and the head of the Muslim Brotherhood party were also seated front-row along with former interim prime ministers, the country's defence minister and other members of cabinet.
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nickndfl · Dec 29, 2012

They lost most of their tourism. No westerner with any common sense is going to go near the pyramids right now.

systematic · Dec 29, 2012

Meanwhile, the country's Islamist president has warned against any unrest that could harm the drive to repair the economy.
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I think that says it all

KMGeneral · Dec 30, 2012

nickndfl said:

They lost most of their tourism. No westerner with any common sense is going to go near the pyramids right now.
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Too true, and it's not like they're going anywhere

LovingtheSilver · Dec 30, 2012

KMGeneral said:

nickndfl said:

They lost most of their tourism. No westerner with any common sense is going to go near the pyramids right now.
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Too true, and it's not like they're going anywhere
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Unless things turn 'Timbuktu Style'

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Egypt's foreign reserves at critical level

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