CAIRO — Egypt’s president added fellow Islamists to a reshuffled government on Sunday and the new finance minister pledged to finish talks on an International Monetary Fund (IMF) loan to stave off a currency crisis.
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, Mursi Al Sayed Hegazy, is an expert on Islamic finance and is seen as sympathetic to the aims and thinking of President Mohamed Morsi and to his Muslim Brotherhood.
A Brotherhood spokesperson 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 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 IMF.
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 per cent 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.
Hegazy, who replaces Mumtaaz Saeed, a career bureaucrat, teaches economics at Alexandria University.
In 1985, he earned a doctorate from the University of Connecticut, according to a biography provided by Alexandria University. It listed two dozen papers on Islamic economics which he had written or reviewed.
Religious strictures on charging interest on loans creates particular economic conditions for Muslim businesses.
The Muslim Brotherhood now controls eight of some 35 portfolios in Prime Minister Hisham Qandil’s Cabinet, including the influential supply, information and housing ministries.
The IMF signed the loan deal in November but final ratification was postponed last month at Cairo’s behest because of the unrest set off by Morsi’s drive to fast-track a controversial new constitution.
Fearing further public anger at the time, Morsi cancelled tax increases believed to be part of a package of austerity measures agreed as part of the IMF deal.
The constitution was approved in a popular referendum and signed into law on December. 26.
The IMF said on Saturday its Middle East director, Masood Ahmed, would visit Cairo to meet Egyptian officials to discuss recent economic developments and “possible IMF support for Egypt in facing these challenges”.
Qandil said Monday’s meeting aimed to reassure the IMF about the government’s plans and the economy’s capacity for recovery.
The IMF deal is seen as vital for boosting investor confidence and staving off a financial crisis.
Having spent more than half the country’s foreign exchange reserves defending the pound since Mubarak was toppled, the central bank has warned the reserves had fallen to a critical level.
Economists say the country’s readily available foreign reserves will cover just over two months of imports.
The central bank said the reserves were at $15.015 billion in December — little changed from November’s level.
The pound slid by half a per cent on Sunday at the central bank’s fifth auction of foreign currency under the new auction system designed to preserve the reserves.
The bank sold all of the $60 million it had offered to banks at Sunday’s auction. Last week, the bank sold $300 million at four similar auctions which bankers have described as a move towards a free float of the currency.