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Economic Denial in Egypt

(Asia Times-Hong Kong) Spengler - As Egypt's foreign exchange reserves dipped below what the central bank called a critical minimum, the country cut imports of essentials such as oil earlier this month. 15 Egyptian power stations, representing more than a tenth of the country's installed capacity, had stopped generating power, the daily al-Ahram reported Dec. 28. Egypt has been negotiating for a $4.8 billion loan from the International Monetary Fund, which is supposed to open the door for $6.7 billion in "loans and grants" from the European Community. As part of the loan package, the IMF wants Egypt to cut its budget deficit to 8.5% from 15%, almost entirely by reducing energy and food subsidies. That would impose extreme hardships on the half of Egypt's population living on less than $2 a day. Instead of acceding to IMF conditions, Morsi has adopted currency devaluation and exchange controls. Egypt's pound has lost about 10% of its value during the past month, which will be reflected in higher prices for essentials during the next several weeks.
2013-01-23 00:00:00
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