The Egyptian economy shrank 7 percent in the third quarter of the fiscal year that ends on June 30, after a revolt that toppled former President Hosni Mubarak, Finance Minister Samir Radwan said.
Exports fell 40 percent, the value of imports increased due to higher global commodity prices and tourism revenue “went away,” Radwan told Cairo-based ONTV network in an interview late yesterday. Gross domestic product expanded 5.6 percent in the previous three months, according to government figures.
“The stoppage of economic life has affected business,” Radwan said. “The number of businesses that went bankrupt is big.” The contraction rate is based on the previous quarter, Radwan said in an interview in Cairo today.
The economic slowdown has prompted Radwan to seek soft loans from the World Bank and the International Monetary Fund to finance a budget deficit that he forecasts could widen to 9 percent of GDP in the current fiscal year compared with 8.1 percent in the previous 12 months. Economic growth may slow to as little as 2.5 percent compared with 5.1 percent in the previous year, Radwan said this month.
World Bank Loan
Egypt will obtain a $2.2 billion loan from the World Bank, payable over 18 years with an interest rate below 3 percent, Radwan said in the interview, conducted after he returned from Washington, where he held talks with international lenders.
Mubarak resigned on Feb. 11 after 18 days of mass protests, ceding power to the military, which has dissolved parliament and suspended the constitution.
“Uncertainty has demolished Egypt’s macroeconomic scene,” Mona Mansour, a research director at Cairo-based investment bank CI Capital, wrote in a report today. “Imposed curfews, closure of businesses and security issues have all restricted business activities.”
Egypt’s benchmark EGX 30 Index declined for the fourth time in five days, losing 1.9 percent to 4,986.46 at the 2:30 p.m. close in Cairo.