Unrest could damage Egypt's faltering economy, Morsy warns
CAIRO — Egypt's Islamist president used his first address before the newly convened upper house of parliament on Saturday to warn against any unrest that could harm the country's battered economy, as Egypt's central bank said it would start foreign currency auctions on Sunday to conserve reserves that have fallen to a critical level.
In the nationally televised speech, Mohamed Morsy said the nation's entire efforts should be focused on “production, work, seriousness and effort” now that a new constitution has come into effect. He blamed protests and violence the past month for causing further damage to an economy deteriorating from the turmoil since the fall of autocrat Hosni Mubarak in early 2011.
Soon after Morsy's speech, the central bank sounded its alarm bell. Foreign currency reserves — which have been bleeding away for nearly two years — have fallen to the minimum needed to cover foreign debt payments and buy strategic imports, the bank announced on its website.
“This is a massive, massive setback for them,” said an economist based outside Egypt. “If the Egyptian pound is no longer freely convertible, then you're bound to undo eight years of successful and effective currency management.”
Morsy's strongly worded address to lawmakers appeared aimed at sending a message to the mainly liberal and secular opposition not to engage in protests, depicting unrest as a threat to the priority of rebuilding.
All sides must “realize the needs of the moment” and work only through “mature democracy while avoiding violence,” Morsy told the 270-member upper house, or Shura Council. “We condemn and reject all forms of violence by individuals, groups, institutions and even from the nation and its government. This is completely rejected.”
He appeared to chide the opposition for not working with him.
“We all know the interests of the nation,” he said. “Would any of us be happy if the nation goes bankrupt? I don't doubt anyone's intentions. But can anyone here be happy if the nation is exposed to economic weakness?”
The opposition accuses Morsy of concentrating power on the Muslim Brotherhood, from which he hails, and other Islamists and of steamrolling any alternative voices.
In his speech, Morsy repeatedly said it is time to return to “production” and “work.” But he did not give details on an overall economic program, including crucial questions such as how the government will tackle a crippling budget deficit or carry out expected tax increases or reductions of subsidies.
The impending austerity measures are major concerns in a country where about 40 percent of the 85 million population live near or below the poverty line of surviving on $2 a day. Morsy's government has requested a $4.8 billion loan from the International Monetary Fund to bridge the budget deficit, but talks are on hold since the government reversed plans for tax increases this month.
Instead, Morsy denounced those who he said were spreading panic about Egypt's economy, saying the country will “not go bankrupt.”