Kuwait pledges $4bn to prop up Egyptian economy By Heba Saleh in Cairo and Michael Peel in Abu Dhabi ©EPA Kuwait on Wednesday pledged $4bn to help prop up Egypt’s troubled economy, taking Gulf country commitments to Cairo to $12bn over the past two days. The announcement came as the Egyptian authorities intensified their crackdown of figures associated with the former regime, ordering the arrest of Mohamed Badie, the leader of the Muslim Brotherhood, and eight others for allegedly inciting violence. Kuwait will deposit $2bn in Egypt’s central bank, make a grant of $1bn and send $1bn in oil and oil products, the Kuwait state news agency reported. The promise comes a day after Saudi Arabia pledged $5bn in aid and the United Arab Emirates $3bn, reflecting their support for last week’s military coup in Cairo and their antipathy towards Mohamed Morsi, the ousted Muslim Brotherhood president. Analysts say Egypt faces a funding gap of up to $23bn over the next two years. The money from the Gulf will give it some breathing space until it is able to secure a long-delayed loan from the International Monetary Fund, which is conditional on the implementation of austerity measures and is still seen as crucial for restoring business confidence in the country. Angus Blair, chief executive of the Cairo-based Signet Institution, an economic think-tank, said the funds were “a huge endorsement of the country’s political change”. He said they would give Egypt up to six months of breathing space, allowing it to put in place “a good economic plan that could turn sentiment and restore domestic and foreign direct investment. “This could include tax cuts and fiscal incentives to business and measures to unblock the hydrocarbons sector and spur it to invest again by tackling energy subsidies and paying back some of the billions owed in arrears to oil and gas companies,” he said. Meanwhile, in addition to Mr Badie, prosecutors in Cairo ordered the arrest of Essam al-Erian, the deputy head of the Freedom and Justice Party, the Brotherhood’s political arm and Assem Abdel Maged, a former jihadi in the Islamic Group, an organisation that killed tourists and policemen in the 1990s. The charges relate to several incidents, including Monday’s bloody clashes in front of a Republican Guard building in Cairo in which 51 people were killed when police and troops opened fire. It is not yet clear what sparked the violence. The military say they were attacked. Amnesty International said evidence it had gathered suggested that the security forces “used excessive force” against pro-Morsi demonstrators, including intentional lethal force against people who were posing no risk to the lives of the security forces or others. Egyptian Islamist and secular groups earlier lambasted a constitutional road map intended to chart a return to democracy as Hazem El Beblawi, the country’s prime minister designate, began to assemble his government. The barrage of criticism levelled at the constitutional declaration announced on Monday by Adli Mansour, the interim president, highlights the hurdles in the path of attempts to forge a new political consensus after the army deposed Mr Morsi, the elected Islamist president. Egypt after Morsi Mohamed Morsi has been ousted as president, plunging the Arab world’s biggest nation into uncertainty The Brotherhood, smarting from his downfall and the arrest of several of its leaders, has rejected attempts to draw it back into the political process and dismissed the president’s constitutional declaration as “rejected, null and emanating from someone who has no legitimacy”. Nour, the ultraconservative Salafi party, which distanced itself from the Brotherhood a few months ago, and whose support is crucial for giving the new arrangements an Islamist veneer, has also criticised the process. On Monday, the party suspended its participation in talks over the country’s future after the clash at the Republican Guard facility. The National Salvation Front, an alliance of secular groups, has also expressed misgivings about the declaration, although it retracted an earlier statement rejecting it completely. The front said it was not consulted over the declaration and it did not agree with the inclusion and the omission of some provisions and wanted others amended. Amid the political turmoil, the cost of insuring against an Egyptian government debt default tumbled on Wednesday as news of the Gulf aid packages calmed fears that Egypt’s already fragile economy could be hit by a balance-of-payments crisis. Egyptian credit-default swaps, which investors use as insurance against defaults or to bet on creditworthiness of countries and companies, fell 141 basis points to 675bp on Wednesday, down from a record 925bp touched earlier this month. The EGX 30 benchmark index had gained 0.66 per cent by late Wednesday trading, having jumped 3.3 per cent on Tuesday on news that Saudi Arabia and the Emirates had pledged $8bn in aid. Ziad Bahaa Eldin, a lawyer, who once headed the Egyptian Investment authority and then the Egyptian Financial Services Authority, the market regulator, was late on Tuesday appointed deputy prime minister for economic recovery. Mr Bahaa Eldin is also a former member of parliament for the ESDP.
Posted on: Thu, 11 Jul 2013 06:41:27 +0000