Egypt strengthens Islamist role in cabinet, eyes IMF deal

Sun Jan 6, 2013 1:44pm EST
 

By Tom Perry and Maria Golovnina

CAIRO (Reuters) - Egypt's president added fellow Islamists to a reshuffled government on Sunday and the new finance minister pledged to finish talks on an IMF loan to stave off a currency crisis that risks provoking more popular unrest.

A senior IMF official is due in Cairo on Monday to meet Egyptian leaders over the $4.8 billion loan deal, which was postponed last month to give Egypt more time to tackle political tensions before introducing unpopular austerity measures.

The new finance minister Al-Mursi Al-Sayed Hegazy is an expert on Islamic finance and is seen as sympathetic to the aims and thinking of President Mohamed Mursi, elected in June, and to his Muslim Brotherhood. A Brotherhood spokesman denied Hegazy was a member but said three other new ministers were.

The new ministers in what is still largely a government of non-partisan technocrats take office in an economic crisis which has seen the currency lose more than a tenth of its value since the uprising two years ago which 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, Hegazy said he was "completely ready to complete discussions" with the International Monetary Fund.

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

As Hegazy spoke on Sunday, the pound reached a new low, trading at 6.45 to the 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 an effort 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...

 
The opening bell is seen as traders work at the Egyptian stock exchange in Cairo January 3, 2013. REUTERS/Asmaa Waguih