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Egypt expected to pass constitution; currency limits imposed

Source: Thomson Reuters Foundation - Tue, 25 Dec 2012 15:52 GMT
Author: Reuters
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* Referendum results announcement due at 1700 GMT

* Critics say new constitution is divisive

* People anxious over economy, rush to take out savings

* Prime minister says stability is key to economic growth

By Shaimaa Fayed and Yasmine Saleh

CAIRO, Dec 25 (Reuters) - Egypt is expected to announce on Tuesday that voters approved a new Islamist-backed constitution, and the government slapped limits on carrying cash abroad to save the economy from collapse after weeks of street violence and political disarray.

President Mohamed Mursi, an Islamist elected this year after a 2011 revolution toppled long-serving autocrat Hosni Mubarak, has been accused by liberal, leftist and Christian opponents of ramming through a basic law mixing religion with politics.

Mursi says the charter has sufficient guarantees of minority rights, and that quickly enacting it will bring an end to the uncertainty and unrest plaguing Egypt since Mubarak's ouster in the wave of revolts across the Middle East and North Africa.

The referendum result appears to be in little doubt, and opposition groups which marched for weeks against the new charter did not announce plans for any major demonstrations to mark the official announcement.

Unofficial tallies from Mursi's Muslim Brotherhood showed the charter was approved by a 64 percent majority. The electoral commission will announce the official result at 1700 GMT.

In a move aimed at preventing capital flight and a potential bank run, the government banned people from carrying more than ${esc.dollar}10,000 in foreign currency cash in or out of the country.

A growing sense of crisis has gripped Egypt's polarised society, with a rush by Egyptians to take out savings from banks compounding worries about the future of its battered economy. On Monday, Standard and Poor's cut Egypt's long-term credit rating.

Hours ahead of the results announcement, Prime Minister Hisham Kandil told the nation of 83 million the government was committed to taking steps to heal the economy.

"The main goals that the government is working towards now is plugging the budget deficit, and working on increasing growth to boost employment rates, curb inflation, and increase the competitiveness of Egyptian exports," he said.

The government says its opponents are contributing to the economic crisis by prolonging the state of unrest. Mursi's opponents say by pushing through the contentious text he has made it harder to build a consensus needed for economic reform.

The central bank said on Monday it would take steps to "safeguard" bank deposits, without giving any details. Some Egyptians have withdrawn cash from accounts out of concern that the authorities might freeze deposits. Rumours are rife.

"I have been hearing that the central bank is going to take over all our bank deposits to pay wages for government employees given the current deteriorating economic situation," said Ayman Osama, father of two young children.

He said he had taken out the equivalent of about ${esc.dollar}16,000 from his account this week and planned to withdraw more, adding that he had also told his wife to buy more gold jewellery.

"I am not going to put any more money in the bank and neither will many of the people I know," he said.

It was not immediately possible to say how much people were withdrawing, with one senior banker saying there was not enough information available to make an estimate.

CRISIS MODE

"This is a political, economic and security crisis which requires serious work for the interests of Egypt," opposition leader Amr Moussa wrote on his Facebook page.

If the "yes" vote is confirmed, a parliamentary election will follow in about two months, setting the stage for yet another electoral battle between the surging Islamists and their fractious liberal and leftist opponents.

The referendum will be the Islamists' third electoral victory since the fall of Mubarak, after parliamentary and presidential elections. However, secularist and liberal opposition members hope they can organise better this time.

The opposition says the constitution, crafted mostly by Mursi's Islamist allies, fails to guarantee personal freedoms and rights for women and minorities. The government denies this.

Hossam El-Din Ali, a 35-year-old newspaper vendor in central Cairo, said he agreed the new constitution would help bring some political stability but like many others he feared the possible economic austerity measures lying ahead.

"People don't want higher prices. People are upset about this," he said. "There is recession, things are not moving. But I am wishing for the best, God willing."

Without broad support, Mursi will find it hard to implement reforms needed to secure a ${esc.dollar}4.8 billion loan from the International Monetary Fund.

Shortly before the referendum, Mursi introduced hikes on the sales tax on a range of goods and services from alcoholic beverages, cigarettes and mobile phone calls to automobile licences and quarrying permits. However, he withdrew them within hours under criticism from his opponents and the media.

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