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      Egypt Broke, Foreign Banks Hold Up Aid, Demand Reforms

      According to economists in the U.S. and Europe, Egypt's economy has basically been paralyzed for the past year and a half
      By David Lev
      First Publish: 6/21/2012, 11:33 AM

      Egyptians protesting Mubarak verdict in Tahrir Square
      Egyptians protesting Mubarak verdict in Tahrir Square
      Reuters

      One of the results of the revolution in Egypt,perhaps unforeseen by Egyptians who sought to get rid of Hosni Mubarak's government, was the economic effects of the rebellion. They're all aware of it now, though; according to economists in the U.S. and Europe, Egypt's economy has basically been paralyzed for the past year and a half, and aid and assistance promised by foreign governments and institutions has not materialized.

      The country's GDP has taken a major blow, economists say, although the total figures are unclear, because Cairo has stopped giving out information about the economy's performance. However, statistics have shown a sharp drop in foreign tourism, as Europeans who had made up the bulk of tourists in the country stay away due to ongoing unrest - political and otherwise.

      Tourism was one of the main sources of income for Egypt, and currently the country is surviving on emergency cash transfers from wealthy Gulf countries. However, those sums are not sufficient to cover all of Egypt's obligations and debts.

      Over the past several months, the International Monetary Fund has held up transfer of a promised $5 billion loan, due to the economic chaos raging in the country. The IMF has told Egypt's military rulers that the money will not be transferred until there is a stable, elected government in Cairo that is committed to badly needed economic reforms.

      Without that money, the country will not be able to pay several other loans and bond issues due, raising the possibility of a government default. In addition, there may not be enough money in the country to pay civil servants and members of the armed forces, analysts said.

      Other financial institutions, including the World Bank and the European Central Bank, are following suit, and have held up large loans Egypt was supposed to receive.

      A large loan and funding program by the European Bank for Reconstruction and Development has been held up as well, and Cairo will not get that money, the group says, until democratic reforms that will lead to a more egalitarian society are implemented.