CAIRO: Egypt’s growth rate in 2010/11 is expected to fall to 3 percent from an initial forecast of 5.8 percent if protests continue, Finance Minister Samir Radwan said on Thursday.
"If these protests and demands continue … it is expected that the economic growth rate will fall to 3 percent during the financial year" which ends in June, rather than the forecast of 5.8 percent, he said, quoted by state news agency MENA.
"The budget deficit has begun to rise and now stands at 8.5 percent. If these unjustified demands and protests keep going, it is possible the deficit could hit 10 percent, and that’s worrying," he added.
Since the February 11 ouster of president Hosni Mubarak, Egypt has been swept by a wave of strikes and demands for social reforms, hitting an economy already suffering from a fall in tourist revenue amid political uncertainty.
The Cairo stock exchange has been closed for more than a month, and the bourse said on March 3 that trading had been suspended indefinitely. It had been due to reopen on Sunday.
"Resuming of trading will be decided following the discussions with Egypt’s new prime minister" Essam Sharaf, a bourse statement said.
The stock exchange closed down 10 percent on January 27, after LE 70 billion ($11.9 billion) was wiped off shares in 48 hours.
Standard and Poor’s on Thursday removed the threat of an imminent downgrade of Egypt’s debt rating but said that the outlook was still negative.
It affirmed its ‘BB/B’ long- and short-term foreign currency ratings for Egypt, which it made at the beginning of February before Mubarak quit.
"The ratings could stabilize at current levels, in our view, if Egypt’s political transition strengthens the social contract and if government debt dynamics remain within our forecast of net general government debt reaching a plateau of 62 percent of GDP," S&P credit analyst Mike Noone said in Paris.
"Conversely, if the political transition falters or if concessional external financing does not materialize to finance fiscal deficits — which we forecast to be in the range of 9 percent to 11 percent of GDP for the next few years — then we could lower Egypt’s ratings later this year or in 2012," he added.
Despite a slight uptick in tourism, precious revenues have been lost in recent weeks.
Further straining the economy is the repatriation of tens of thousands of the 1.5 million Egyptians who have been working in Libya.
Not only are vital foreign currency remissions lost, but returnees swell the ranks of the unemployed, which are estimated at 10 percent of the Egyptian workforce officially, unofficially at 20 percent.