Middle East

Egypt's Morsi downplays economic crisis

Egypt's President Mohamed Mursi signs a decree to put into effect the new constitution in Cairo December 25, 2012, in this handout photo released by Egyptian Presidency office. REUTERS/Egyptian Presidency/Handout

CAIRO: Egypt's President Mohamed Morsi downplayed on Saturday the country's teetering economy before a newly empowered senate, and insisted that a new constitution that fuelled protests guaranteed equality.

Since the constitution's acceptance in a two-stage referendum this month following weeks of often violent protests, the Islamist Morsi's government has sought to downplay fears of a downturn amid a declining Egyptian pound.

In his address to the senate, which the constitution invests with legislative powers until a new parliament is elected in two months, Morsi insisted there had been gains as well as losses in the battered economy.

"General indicators for the social and economic situation have shown some noticeable progress," Morsi said, blaming the weeks-long protests in November and December for damaging tourism.

Amd in comments apparently meant to reassure foreign lenders and investors, he said the country's depleting reserves in fact registered an increase by November and pledged to double them in the future.

"I say to all, both at home and abroad, the state of financial institutions is not what some are trying to picture," he said, adding that foreign reserves increased by $1.1 billion from July to $15.5 billion in November.

"We cannot even consider this satisfactory. In June 2010 it was $35 billion. But in July 2012 it was $14.4 billion," he said.

"But with Egypt now approaching stability, and with a sense of responsibility, we will do our utmost to double it (reserves) in future," he said.

Morsi added that the number of tourists over the past four months had doubled compared with a six-month period last year.

He also said the Suez Canal recorded two billion dollars in revenue between July and October 2012 -- "the largest percentage in a long time."

"Unfortunately, if it were not for events in which some people violated the peacefulness of politics, this noticeable rise (in tourism) would have continued," he said of protests such as the one that killed at least eight people in clashes outside the presidential palace on December 5.

The mass rallies that broke out in November after Morsi adopted extensive powers -- later repealed -- have now subsided, but the opposition this week called for further protests against the new constitution.

The opposition, led by the National Salvation Front coalition, sees the charter as a possible tool to introduce strict Islamic sharia law by weakening human rights generally, women's rights and the independence of the judiciary.

It also stressed the low voter turnout of 33 percent in the referendum on December 15 and 22.

But in Saturday's speech, Morsi insisted the charter granted equality.

"All are equal before the law, and in this constitution," he said, adding that there would be "freedom for all people, with no exceptions."

He also broached on foreign relations in his speech, reaffirming support for Syrian rebels.

"The Syrians' revolution, and we support it, will achieve its goals of freedom and dignity," he said.

Morsi again promised to reshuffle his cabinet. Two ministers, including one of his Islamist allies, have so far resigned in disagreement with government policy.

The likelihood of prolonged "elevated" political conflict despite the adoption of the constitution prompted the ratings agency Standard and Poor's this week to knock Egypt's long-term credit rating down a peg to "B-."

The political crisis has stalled a $4.8 billion IMF loan which analysts expect will come through after a new parliament is elected.





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