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Gulf support fails to reduce domestic borrowing in Egypt

The state of Egypt's economy shows no signs that it will improve any time in the near future, in light of the continued rises in unemployment, inflation and public debt.

Despite an influx of financial assistance from the Gulf States, internal debt over the past six months amounted to $70 billion, rising by 53.8 per cent since the ouster of President Mohamed Morsi in July 2013, according to the Egyptian Ministry of Finance.

Egypt's interim prime minister, Hazem Al-Beblawi, recently held talks with Saudi Arabia to obtain a number of additional credit facilities.

Zohal Mansfield, the deputy chairperson of the Africa Economic Relations Council and chairperson of the Turkish-Egyptian Business Council, said that the unemployment rate in Egypt rose by 13.4 per cent in the third quarter of 2013, while general inflation rose by 11.7 per cent and the price of food and beverages increased by 18.6 per cent. Domestic debt increased another $70 billion under the interim government, she added.

According to reports issued by the Ministry of Finance, the volume of domestic debt in Egypt, as of December 2013, amounted to $222.1 billion in total, and foreign debt reached $47 billion by the end of the same month.

Ministry sources have said that income declines and implementing the minimum wage system will likely raise the deficit by the end of the fiscal year to $34.4 billion. This is despite the $15.9 billion stimulus package from the Gulf States to the interim government.

The total financial and oil assistance acquired by Egypt since the 3rd July military coup so far has amounted to $26 billion.

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