Egypt Hasn’t Received $35 Billion Pledged by U.S, Arabs, El-Ganzouri Says

Egyptian Prime Minister Kamal el- Ganzouri said the country hasn’t received funds pledged by the U.S., other developed nations and Arab states as capital fled after the ouster of Hosni Mubarak.

“Nothing has arrived” from the $35 billion pledged for Egypt and Tunisia by the Group of Eight major economies, the premier said at a televised press conference in Cairo today.

Egypt’s “Arab brothers” delivered $1 billion of $10.5 billion promised in soft loans and aid, while the U.S. had promised $2.25 billion in re-financing, grants and loans for small industries, he said. About $9 billion has left Egypt in recent months, he said.

El-Ganzouri was appointed by Egypt’s military rulers this month as the country faces renewed violence between security forces and demonstrators demanding that the generals step down. A worsening economic outlook has brought record bond yields, credit rating cuts and the threat of currency devaluation.

U.S. Secretary of State Hillary Clinton called El-Ganzouri yesterday to express concern about “horrible images” of the beatings of people demonstrating against military rule. Violence erupted on Dec. 16 as soldiers and police tried to disperse protesters in central Cairo. The United Nations also criticized the behavior of security forces.

Seventeen Killed

Videos and photographs posted online and broadcast on private television stations showed troops dragging demonstrators, hitting them with batons and stomping on them. Seventeen people have been killed in clashes since Dec. 16, most of them from gunshot wounds, according to the Health Ministry.

Yields on Egypt’s benchmark dollar bonds maturing in 2020 rose to record highs above 8 percent this week. Moody’s Investors Service cut Egypt’s rating by one level to B2 yesterday, citing political instability, a deterioration in the balance of payments, “increasing pressure” on government finances and the absence of “a meaningful level of exceptional, external financial support.”

El-Ganzouri cited “differences” between Egypt and the countries that promised to help it. After the uprising “everyone rushed to help Egypt, but when we differed in the past months, they turned their back on us until we agree.” He didn’t elaborate.

The government raised its forecast for the budget deficit in the current fiscal year to 10 percent this week from 8.6 percent. The central bank used up almost half of its foreign currency reserves in the first 11 months of this year.

Capital Outflows

Egypt’s net outflows reached $8.9 billion in January through September, compared with inflows of $12.2, the central bank said in a report published on its website. The capital flight was largely caused by the sale of $7.5 billion of securities, especially treasury bills, by foreigners, it said.

El-Ganzouri was sworn in on Dec. 7, in the middle of a six- week, multiphase parliamentary election, the first since Mubarak’s fall, that’s due to conclude next month. The Muslim Brotherhood’s Freedom and Justice Party heads the count so far, with a third of the country’s provinces still to vote.

The premier said protesters and “outlaws” were more responsible for the recent violence than security forces. The military council said yesterday on its Facebook page that continued protests are part of a plot to “topple the state” and bring condemnation of the army when it intervenes.

Foreign Plots

“I was hoping that I come today to tell you two weeks have passed and the accomplishments are this and that,” El-Ganzouri said today. “Instead I have come to say this is the case, and this is what’s being plotted against Egypt.”

The state-run Al Ahram newspaper, citing an unidentified “high-profile official,” said today that the alleged foreign plot will use “internal elements” to call for a peaceful protest on Jan. 25 that would escalate to a “civil war” between civilians and the armed forces, after which foreign armies would have an excuse to intervene to separate the two sides and impose international guardianship over Egypt.

Egypt’s acting ruler, Field Marshal Mohamed Hussein Tantawi, issued an order for the lower house of parliament to convene on Jan. 23, the state-run Middle East News Agency reported yesterday. Activists have started calling online for a million-person march on the revolt’s first anniversary on Jan. 25.

To contact the reporter on this story: Maram Mazen in Cairo at mmazen@bloomberg.net

To contact the editor responsible for this story: Louis Meixler at lmeixler@bloomberg.net

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