In his speech, Morsi repeatedly said it was time to return to ‘‘production’’ and ‘‘work.’’ But he did not give details on an overall economic program, including crucial questions like how the government will tackle a crippling budget deficit or carry out expected tax hikes or reductions of subsidies.
The impending austerity measures are major concerns in a country where some 40 percent of the 85 million population live near or below the poverty line of surviving on $2 a day. Morsi’s government has requested a $4.8 billion loan from the International Monetary Fund to bridge the budget deficit, but talks are on hold after the government reversed plans for tax hikes this month.
Instead, Morsi denounced those who he said were spreading panic about Egypt’s economy, saying the country will ‘‘not go bankrupt.’’ He underlined that banks were healthy, after a rush to buy dollars the past week over fears of devaluation of the Egyptian pound.
‘‘Those who talk about bankruptcy, they are the ones who are bankrupt. Egypt will never be bankrupt and will not kneel, God willing,’’ he said to a round of applause.
He directly blamed the past month’s violence for Standard & Poor’s downgrading this week of Egypt’s long-term credit rating one level this week to B-, six steps below investment grade.
Morsi presented the country’s foreign currency reserves, currently at $15 billion, as up slightly from last year, though he acknowledged they were still down dramatically from around $36 billion in 2010.
After last year’s anti-Mubarak uprising, foreign investment and tourism — one of the country’s biggest money makers — dried up. With fewer dollars coming in, the central bank has been spending reserves furiously to prop up the currency and pay for key imports. The slight uptick in reserves from last year is mainly due to hundreds of millions of dollars provided by the Gulf nation of Qatar.
In its statement Saturday, the central bank announced the introduction of a new auction system for banks buying and selling U.S. dollars, urging citizens to ‘‘ration usage’’ of foreign currency in favor of the Egyptian pound.
Amr Adly, who heads the Social and Economic Justice Unit at the Egyptian Initiative for Personal Rights, said Morsi’s speech failed to outline a real economic recovery plan.
‘‘We need to know the reality of the economic situation and have an idea of the measures that will be taken to address this situation,’’ Adly said. ‘‘We are not bankrupt yet because we can still service the debt, but we are on the verge of bankruptcy.’’
AP writer Mariam Rizk contributed to this report from Cairo