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Egypt constitution no remedy for economic woes

The European Bank for Reconstruction and Development is looking again at hundreds of millions of dollars it had been thinking of investing in Egypt’s private sector over the next couple of years, according to the EU ambassador to Egypt, James Moran.

An announcement late Saturday by state television that Egypt’s central bank chief, Faruq El-Okda, was resigning sent a jolt through markets.

The television soon cited a cabinet source denying the announcement. But observers said Okda may have been forced by a panicked Morsi government to retract his resignation.

“I think he definitely did resign, but the president and the government weren’t ready for this. He’s probably had enough of the stress and probably wants to hand the reins over to someone else,” said Blair.

The Cairo stock market was largely unchanged on Sunday following the final round of the constitutional referendum. But it was still tracking 24 percent lower than its pre-revolution level, following heavy losses in 2011.

Tourism income, a pillar of the economy, is likewise showing no signs of rebounding after the revolution and its volatile aftermath triggered a 30 percent slump to $8.8 billion last year.

With 83 million inhabitants and an economy worth $230 billion in real terms, Egypt is both the most population nation in the Arab world, and one of the poorest on a per capita basis.

Unemployment is over 12 percent, and around 40 percent of its citizens live on the equivalent of two dollars or less per day.

A large trade deficit and costly subsidies that Morsi is keeping despite pledges to cut them are pushing up public debt.

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Gross domestic product is expected to grow a meagre 2.0 percent this year and 3.0 percent in 2013, according to the IMF — less than half the performance recorded pre-revolution.

Morsi and the Muslim Brotherhood won power in part because of their promises to turn around the economy, to usher in stability and to battle poverty. But the continued dire conditions are eroding public support.

Mohamed ElBaradei, a Nobel Peace laureate who heads the opposition National Salvation Front, warned this week that “the country is on the verge of bankruptcy.”

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