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Egypt upheaval mars hopes of end to economic woes

Foreign investments in Egypt are down to $2.2 billion from $6.8 billion in 2010/AFP

Foreign investments in Egypt are down to $2.2 billion from $6.8 billion in 2010/AFP

CAIRO, July 13 – Egypt’s shattered economy was boosted this week by Gulf allies pledging billions of dollars in aid, but analysts say this simply buys time as political turmoil deepens its economic malaise.

The millions of ordinary Egyptians angered by record high unemployment, soaring inflation and chronic fuel shortages who took to the streets two weeks ago demanding Mohamed Morsi’s resignation blamed him for letting the economy nosedive.

Fuel supplies have returned, after panic buying before the military coup on July 3, and three Gulf monarchies relieved at the toppling of Egypt’s Islamist president have pledged $12 billion in assistance.

But dire security problems and political instability mean a return of the tourists and foreign investment that Egypt so desperately needs are a distant prospect.

And progress remains stalled on negotiations with the International Monetary Fund on a $4.8 billion loan.

“Even if they do agree on the loan, I just don’t believe that we’re going to see a flood of investment,” said financial analyst Andrew Cunningham.

“The country has been in turmoil since 2011, there’s just been a military coup and they’re shooting people on the streets. This is hardly an attractive prospect.”

Gulf pledges of financial assistance are a lifeline for the new administration.

Foreign reserves have fallen by almost 60 percent since the revolution that toppled Hosni Mubarak in February 2011, to 14.9 billion dollars in June the equivalent of just three months of imports.

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