The political chaos in Egypt stepped into its 4th day, after the shocking power-grabbing ruling of Mohammed Morsi (President) spurred the opposition and started street violence rounds at a time when the country requires unity to take up complicated economic resolutions.
Already, the economy of Egypt had been in severe problem, with the foreign reserves having dropped 40% since the growth and uprising estimated to be below 2% this year. Direct foreign investment and tourism have fallen, while joblessness has rose. Economists state the government needs to tauten spending, and undervalue the currency- infamous moves even without the annoyed demonstrators on the road.
European Council on Foreign Relations’ senior policy fellow, Elijah Zarwan told that Morsi needed political support to introduce infamous economic policies, like potentially letting the pound to devalue against the euro or the dollar or slashing fuel subsidies.
Morsi gave the constitutional declaration late Thursday night, declaring the president can take any measure or decision to safeguard the revolution, which is immune and final to appeal in the court. His statement also stopped the judiciary from suspending the parliament’s upper house or the body responsible for writing the new constitution. Both these are controlled by Islamists. Till the time new elections in parliament are conducted and the constitution is approved, the powers would stay in place. Such a move is anticipated only in spring.
The response was instant: The fractured opposition violent and united objections—mostly against the Morsi’s political party headquarters —exploded across the nation.
Rallies were announced by both the parties, slated for Tuesday, against and for the verdict, increasing the stress on the government and setting the nation on one more collision course.
The effect of the chaos on the economy was instant. On the first trading day after the verdict, Egypt’s standard EGX30 stock index fell 9.59% points on Sunday. These losses were amongst the greatest after the upheaval of President Hosni Mubarak in an eighteen-day uprising in Jan. 2011.
Such a crisis could not have stepped in at an even worse time, with the economists advising powerful drugs to hit the increasing deficits and economic miseries of the nation.
One good report was the announcement of the government last week about a deal with the International monetary Fund (IMF) for a loan amount of $4.8 billion; however, this also steps in hand-in-hand with high reforms. As a part of the deal, Egypt should reform its energy subsidies, leading to high increases in the petrol and cooking gas prices, which would be a highly infamous move that again threats getting individuals back out into the roads.