Egyptian PM says economy in serious condition

CAIRO - Egyptian Prime Minister Kamal el- Ganzouri said Sunday that the country's economy is in a serious condition, stressing that stability and security are vital for economic recovery.

Ganzouri told a press conference that the country will not move forward without security.

Ganzouri's cabinet was sworn in on Wednesday before Hussein Tantawi, head of the ruling military council, who granted Ganzouri the presidential powers in all areas but defense and justice. To restore security and revive the economy are considered the priority for the new cabinet.

The country's foreign reserves have plunged to about $20 billion at the end of November from around 36 billion dollars at the end of last year. The Central Bank of Egypt said this is still within safe limits, yet the country needs about five billion dollars to cover its imports each month.

Frequent protests and social instability have dealt a heavy blow to tourism and foreign investment in Egypt. As Christmas and the New Year approach, this year's tourism revenue is expected at 9.5 billion dollars, about 25 percent less than that of 2010, Tourism Minister Mounir Nour told state-run Ahram newspaper in a recent interview.

Meanwhile, in the first half of 2011, the inflow of foreign direct investment was 65 million dollars, compared with 2.3 billion dollars in the second half of last year.

Official statistics showed that Egypt's GDP (gross domestic product) grew by 0.4 percent in the second quarter this year, following a significant contraction of 4.3 percent in the first quarter. While the annual GDP growth for the 2010/2011 financial year (which ended on June 30 this year) was just 1.8 percent, compared with 5.1 percent in the previous financial year.