New Egypt Cabinet No Quick Fix For Flailing Economy

As Egypt’s first permanent government since the overthrow of Hosni Mubarak took shape on Wednesday, the first names to emerge suggest a continuity that could aid the economy after 17 months of turmoil.

Yet the new administration’s unclear powers and the scale of the challenges it must face dispel any optimism that Thursday’s cabinet unveiling will begin a new era of stability.

Career bureaucrat Mumtaz al-Saeed, who has led efforts to secure urgent aid from foreign donors, remains finance minister and Osama Saleh, head of the General Authority for Free Zones and Investment, will lead a revived investment ministry.

For investors who fled in the absence of a stable, long-term government, there are still reasons to worry.

Saeed needs to show broad backing at home for any economic reforms to secure a long-awaited $3.2 billion emergency loan from the International Monetary Fund. A cabinet including more of his political opponents might have helped.

Parliament, the body that had the best claim to reflect the popular will, was dissolved in June, further eroding the legitimacy of any major reforms by the new administration.

The army leadership that took power from Mubarak now holds a veto over any legislation passed by Islamist President Mohamed Mursi’s new team.

Political turmoil is likely to continue as long as there is no new constitution defining Mursi’s powers and those of the army, Egypt’s power broker for the past six decades.

Reuters