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Death Toll Hits 33 on Third Day of Egypt Clashes

Violent confrontations between security forces and protestors demanding an end to military rule in downtown Cairo have resulted in 33 deaths, Reuters news agency reported on Monday, citing morgue officials.

Inside the EgyptStock Exchange just before its reopening.
CNBC
Inside the EgyptStock Exchange just before its reopening.

The bloodshed in and around Cairo's Tahrir Square, epicentre of the anti-Mubarak revolt, threatens to disrupt Egypt's first free parliamentary election in decades, due to start next week.

Clashes have raged on and off since police used batons and tear gas to try to disperse a sit-in in Tahrir on Saturday.

The anxious mood was reflected in investor sentiment, with broad selling pulling the country’s stock exchange, the benchmark EGX30, 4 percent lower on Monday. The EGX, one of the worst performing emerging markets, has lost over 45 percent so far this year.

Egyptian riot police used tear gas and rubber bullets in an attempt to break up the demonstration. The Ministry of Interior announced that 55 people have been arrested, while the Cabinet reiterated its commitment to holding elections on time.

Clashes appeared to have stopped as of 5 a.m. local time, with several hundred protestors still at the epicenter of the January 25 Revolution, Tahrir Square, after an earlier eviction. Demonstrators were calling on the Supreme Council of the Armed Forces (SCAF) to step down and hand over power to a civilian government. The council had triggered another barrage of criticism following the announcement of supra-constitutional principles last week, which would protect the military from future oversight.

Germany’s foreign minister, Guido Westerwelle, said in a statement that the clashes were of “great concern” and that it was of “utmost importance” that elections take place in a “peaceful and orderly environment”.

Egypt’s political uncertainty has made its economic recovery particularly shaky. The IMF said in its September report that GDP growth would be 1.2 percent for 2011, down from 5.1 percent last year.

Crucial tourism revenues remain subdued while unemployment has increased. And borrowing costs for the government surged to their highest level in three years in an auction on Sunday, with the average yield on 266-day T-bills edging higher to 14.705 percent. Foreign reserves continue to fall, now at $22 billion and the local currency is hovering around the lowest levels in 7 years.

“Until the political environment stabilizes, growth will remain weak, investment low, the cost of borrowing high and the Egyptian Pound under pressure," Simon Williams, Chief Economist at HSBC Middle East, told CNBC. "Egypt’s allies overseas can help by disbursing the funds they have promised, but it’s imperative that the transition gains momentum if the economy is going to move forward.”

In light of rising borrowing costs, and as Egyptian authorities try to ensure deficit funding, Finance Minister Hazem El Beblawi told the official MENA news agency on Saturday that there was a “strong tendency to accept the IMF loan in the coming period”.

The previous $3 billion loan offer was rejected in late June. Meanwhile, the Arab Monetary Fund is expected to disburse $200 million this month as a first tranche of a $470 million loan to support the government's finances.

Several aid pledges from around the world have yet to be received. For 2011-2012, the government forecasts a budget deficit of 8.6 percent.

Contact Europe: Economy

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