Egypt’s economy hurting from ongoing instability
Steve Chiotakis: Egypt’s stock market was down more than five percent at the start of trading today, following violence on the streets of Cairo between Muslims, Christians, and security forces. It’s one of the worst cases of rioting since last February’s revolution, and that’s amplified uncertainty about Egypt’s economy.
Reporter Julia Simon is with us now from Cairo to talk about it, hey Julia.
Julia Simon:
Chiotakis: How is the Egyptian economy been doing lately?
Simon: Well, amidst all the violence in recent months here there’re still American investors interested and the American Chamber of commerce is actually promoting investment in the country. But it’s a really difficult sell. One of the things that’s holding back economic growth is the Mubarak regime racked up a lot of debt — now 22 percent of the country’s spending goes to paying off foreign loans. And Egypt’s public debt is about 80 percent of the GDP.
And with all the political uncertainty, last week Fitch Ratings agency downgraded Egypt’s long-term credit rating — making borrowing even harder. And, of course, tourism’s having a lot of trouble as well.
Chiotakis: I can imagine. How can the economy withstand all this continued turmoil and uncertainty?
Simon: It’s not exactly clear at this point. Back in June Egypt’s finance minister rejected a loan from the IMF for $3 billion, mainly for nationalistic reasons. Egypt’s government didn’t want to be seen as being dependent on the IMF, the World Bank. And also these Gulf countries had promised a lot of money to Egypt.
But much of the Gulf money hasn’t come through yet. And so now the new finance minister, he’s reconsidering the IMF loan. And we expect an IMF delegation to visit soon to discuss borrowing.
Chiotakis: All right, Julia Simon reporting from Cairo. Julia, thanks.
Simon: Thank you.
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