business‎ > ‎

Foreign Companies Suspend Egypt Operations

posted 16 Aug 2013, 09:49 by Mpelembe   [ updated 16 Aug 2013, 09:49 ]
Reuters Business  Report - Cairo remains a city on edge, two days after a ferocious crackdown left more than 600 people dead.

Egypt's army-backed government says it won't be changing its hardline approach to dealing with protesters.

The ongoing turmoil is the last thing Egypt's economy needs.

Mohamed al-Basha is an economist.


"The economy has already been going through two and a half very difficult years, so we'll have more of the same. Of course, tourism will be impacted for even a longer period, even just normal economic activity; any hope to investment recovery will be postponed."

For some foreign multi-nationals operating in Egypt, the danger to their staff is too high.

Oil giant Royal Dutch Shell has shut its offices and restricted business travel.

Sweden's Electrolux has stopped production at its factory in Cairo.

And Toyota is also suspending operations.

For the past few months Egypt's government has been spending twice as much as it receives in revenue.

That leaves it dependent on borrowing and foreign aid.

The International Monetary Fund says it won't engage in talks about a possible $4.8 billion loan until Egypt's interim government is recognised by the international community.

Saudi Arabia, the United Arab Emirates and Kuwait have stepped in, offering Egypt$12 billion in aid.

But it won't last forever.


"We think that an IMF deal remains critical at this point. A few months down the road, as I said you have the breathing space of the 12 billion dollars, but thinking over the coming 24 to 36 months, you need an IMF program."

Egypt's economy has been shaky ever since longtime leader Hosni Mubarack was overthrown in 2011.

With the streets still extremely volatile, tourism is also suffering - with many foreign governments advising citizens against all but essential travel.