The adoption of a divisive new constitution in Egypt looks unlikely to solve growing problems for the nation’s economy, which has been limping along ever since the 2011 revolution that ousted Hosni Mubarak.
Climbing debt, plunging tourism revenue, a tottering currency, fleeing investors and the hesitancy of creditors to step in to help President Mohamed Mursi’s Islamist-dominated government are adding to a sense of crisis.
“I’m more worried about the economic future of the country today than I was just a few weeks ago,” Angus Blair, a veteran financial analyst and head of the Signet Institute think-tank in Cairo, told AFP.
“Voting yes in the constitutional referendum will not stop the economic malaise,” he said.
Egypt’s opposition is showing no signs of letting up its pressure on Mursi’s government, prolonging a month-long political confrontation that has led to deadlock on urgent decisions.
Topping those is a $4.8-billion loan Egypt had been seeking from the International Monetary Fund, needed to stave off what analysts feared could be an unmanaged currency collapse within the next three to four months.
That is the estimate of how long the central bank has before it has burned through its remaining foreign reserves, which have more than halved in the past two years to less than $15 billion.
An IMF loan was put on hold this month, at the same time as Mursi went back on tax hikes on alcohol, tobacco, steel and cement that were meant to underpin agreement on the credit.
That has caused many investors to rethink plans for Egypt.
The European Bank for Reconstruction and Development is looking again at hundreds of millions of dollars it had been thinking of investing in Egypt’s private sector over the next couple of years, according to the EU ambassador to Egypt, James Moran.
An announcement late Saturday by state television that Egypt’s central bank chief, Faruq El-Okda, was resigning sent a jolt through markets.
The television soon cited a cabinet source denying the announcement. But observers said Okda may have been forced by a panicked Mursi government to retract his resignation.
“I think he definitely did resign, but the president and the government weren’t ready for this. He’s probably had enough of the stress and probably wants to hand the reins over to someone else,” said Blair.
The Cairo stock market was largely unchanged on Sunday following the final round of the constitutional referendum. But it was still tracking 24 percent lower than its pre-revolution level, following heavy losses in 2011.
Tourism income, a pillar of the economy, is likewise showing no signs of rebounding after the revolution and its volatile aftermath triggered a 30 percent slump to $8.8 billion last year.
With 83 million inhabitants and an economy worth $230 billion in real terms, Egypt is both the most population nation in the Arab world, and one of the poorest on a per capita basis.
Unemployment is over 12 percent, and around 40 percent of its citizens live on the equivalent of two dollars or less per day.
A large trade deficit and costly subsidies that Mursi is keeping despite pledges to cut them are pushing up public debt.
Gross domestic product is expected to grow a meager 2.0 percent this year and 3.0 percent in 2013, according to the IMF — less than half the performance recorded pre-revolution.
Mursi and the Muslim Brotherhood won power in part because of their promises to turn around the economy, to usher in stability and to battle poverty. But the continued dire conditions are eroding public support.
Mohamed ElBaradei, a Nobel Peace laureate who heads the opposition National Salvation Front, warned this week that “the country is on the verge of bankruptcy.”