Egypt shakes up Cabinet, appoints 10 new ministers

[January 07, 2013]  CAIRO (AP) -- Egypt swore in 10 new ministers on Sunday in a Cabinet shake-up aimed at improving the government's handling of the country's ailing economy ahead of talks this week with the International Monetary Fund over a badly needed $4.8 billion loan.

The reshuffle, which President Mohammed Morsi had promised in response to public anger over Egypt's economic malaise, affected two key ministries, the interior and finance. It also solidified Islamist control of the government, putting three portfolios in the hands of members of the president's Muslim Brotherhood.

The dire state of Egypt's economy was punctuated Sunday by new central bank figures that put December's foreign currency reserves at $15.01 billion, down $26 million from a month earlier. The reserves have dropped by more than half since the uprising that ousted longtime ruler Hosni Mubarak in February 2011.

The central bank said last month that current reserve levels represent a "critical minimum."

Morsi met with the new ministers after their swearing-in ceremony at the presidential palace in Cairo where they discussed ways to revive tourism and attract foreign investors, a presidential official said, speaking on condition of anonymity because he was not authorized to brief the media.

Prime Minister Hesham Kandil, meanwhile, said he stressed in his first meeting with the new ministers the need for immediate action to stabilize the economy.

At the heart of those efforts lies the $4.8 billion loan that Egypt has requested from the IMF. Cairo says the funds are needed to bolster confidence in the country's economy and attract foreign investors.

Egypt asked the IMF for a delay in the talks on the loan after a wave of political turmoil erupted in December over a contentious new constitution. Mass protests and street violence tied to the constitution dealt yet another blow to major foreign currency earners, including tourism and foreign investment.

The unrest also sparked a rush on U.S. dollars by worried residents and led to a drop in the Egyptian pound, which shed nearly four percent of its value against the dollar over the past two weeks.

The opposition, a coalition of liberal, secular-leaning, and leftist groups, was not offered any seats in the new Cabinet and has said that any government shake-up that doesn't replace Kandil falls short of what is needed.

The two most important changes affect the finance and interior ministries.

El-Morsi Hegazy, a professor of public finance at Alexandria University, takes over the Finance Ministry, replacing Mumtaz el-Said, who was appointed by the country's transitional military rulers and widely viewed as being at odds with the Brotherhood.

Mohammed Ibrahim, meanwhile, will lead the Interior Ministry, which is responsible for the police force. He previously was in charge of prisons and prior to that was director of security in the province of Assiut, which has a large Coptic Christian population and has also been home to a number of Islamic militant groups.

Ibrahim said his priorities will be to fight a rising wave of crime and restore stability to Egypt.

"We will strike with an iron fist against anyone that threatens the security of the nation and Egyptians," Ibrahim told the state news agency, pledging to clamp down on cross-border weapons smuggling. Egypt has been flush with weapons smuggled from Libya and Sudan.

Three of the new ministers are from the Brotherhood, according to the spokesman for the group's Freedom and Justice Party, Ahmed Subaie. They take over the ministries of transportation, local development and supply and interior trade, giving the Brotherhood a total of eight Cabinet posts.

Also included in the reshuffle were the ministries of civil aviation, environment, electricity, communication and parliamentary affairs.

Karim Ennarah, a researcher on police and security reforms at the Egyptian Initiative for Personal Rights, said the previous interior minister, Ahmed Gamal Eddin, was likely replaced because Brotherhood leaders were upset with the police's handling of attacks against the group's offices and supporters during clashes with the opposition last month over the constitution.

"It seems like it is a clash of egos. It's obviously not a reform of any kind," Ennarah said.

With the new Cabinet set, Kandil told reporters he will meet with IMF officials Monday "to reassure them about Egypt's situation and economic recovery in the coming period."

An IMF statement said the purpose of the visit is "to discuss with the authorities the most recent economic developments, their policy plans for addressing Egypt's economic and financial challenges, and possible IMF support for Egypt in facing these challenges."

Egyptian officials have said that the country's budget deficit is likely to reach 200 billion Egyptian pounds ($31.5 billion) by mid-2013.

The implementation of austerity measures, many of which are believed to be linked to conditions attached to the IMF loan, was also delayed last month due to the political situation.

Kandil's government is expected to announce tax hikes and cuts in subsidies soon. Talk of restructuring the current system is sensitive in a nation where nearly half of its 85 million people live just at or below the poverty line of $2 per person a day.

[Associated Press; By AYA BATRAWY]

Associated Press writer Sarah El Deeb contributed.

Copyright 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.