Egypt strengthens Islamist role in cabinet, eyes IMF deal

Sun Jan 6, 2013 7:57am EST
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By Tom Perry and Maria Golovnina

CAIRO (Reuters) - Egypt reshuffled its government on Sunday to strengthen Islamist control and pledged to complete talks with the International Monetary Fund on a $4.8 billion loan deal to stave off a currency crisis that risks igniting more unrest.

A senior IMF official is due in Cairo on Monday to meet Egyptian leaders over the deal, which was postponed last month to give Egypt more time to tackle political tensions before introducing unpopular austerity measures.

Finance minister Al-Mursi Al-Sayed Hegazy was sworn in by President Mohamed Mursi as part of a reshuffle that expanded the Islamist Muslim Brotherhood's direct control over ministries.

Mursi fired his finance and interior ministers after promising a reshuffle to assuage anger at an economic crisis which has seen the currency lose more than a tenth of its value since a 2011 uprising toppled Hosni Mubarak.

Political unrest over a new Islamist-tinged constitution had delayed tax increases believed to be key to the IMF deal, but in a brief statement to journalists, Hegazy said he was "completely ready to complete discussions" with the Fund.

The political conflict triggered lethal street protests last month that added to pressure on the Egyptian pound as speculators worried about the instability began exchanging their local currency for dollars.

As he spoke on Sunday, the pound reached a new low, trading at 6.45 to the U.S. dollar. It has lost more than 4 percent of its value against the dollar since the central bank brought in a new system of currency auctions on December 30 in to preserve the country's dwindling foreign reserves.

Importers have warned that the weakening currency and uncertainty about how low it will go could lead to sharp rises in the prices of imports including food.   Continued...