UPDATE 3-New Egypt finance minister in reshuffle to ease protest

Sun Jul 17, 2011 4:00pm EDT

* Industry, foreign ministers, others also changing

* Protesters say moves go some way to fulfilling demands

* Analysts say economic policy likely constrained by army

* Report of Mubarak coma denied, some see a ploy (Adds Mubarak health speculation, ministerial changes, quotes)

By Edmund Blair

CAIRO, July 17 (Reuters) - Egypt picked a new finance minister on Sunday as part of a broad cabinet reshuffle demanded by protesters camped out in central Cairo, and the outgoing minister said policy making had become "confused".

The changes went some way to fulfilling demands of protesters, who have also called for a swift trial of Hosni Mubarak, 83. The former president's lawyer on Sunday said he had slipped into a coma but state media denied the report.

Mubarak has been hospitalised in the Red Sea resort of Sharm el-Sheikh since he was questioned in April and his health is often subject to speculation. Many Egyptians see his illness as a ruse to keep him out of court.

Protesters ended Mubarak's 30-year rule on Feb. 11, but many are frustrated the army council has not moved faster to shake up the system and purge the ex-president's officials.

Samir Radwan, who was appointed finance minister shortly before Mubarak left, will be replaced by Hazem el-Beblawi, 74, who has been an adviser to the Arab Monetary Fund in Abu Dhabi. Other names were also announced, including foreign minister.

The new finance minister could find policy initiatives vetoed by the army as his predecessor, Radwan, found when he secured a loan from the International Monetary Fund only to have the plan shot down, economists said.

Prime Minister Essam Sharaf's new cabinet is expected to take the oath of office on Monday.

Beblawi told reporters after his appointment that his aim was "restoring as much confidence as possible to Egypt's economy" and said there should be a cap on higher paid state employees, Al-Masry Al-Youm newspaper reported on it website.

"It is unacceptable that one employee's salary is a thousand times bigger that another's," he said.

The new minister also said he did not intend to amend the general budget set by his predecessor. "This budget had been approved based on the law, it would be dangerous to change or amend it -- that would lead to more tension," he said.

CONCESSIONS

State media listed new names for posts such as higher education, health, agriculture and communication. The general in charge of military production, in post since Mubarak's era and criticised by protesters, was replaced by another general.

The official news agency said some posts, such as justice, interior, information and education, might not change.

"Until now, the list of names mentioned included many names proposed by youth groups," said Ahmed Maher of the April 6 movement, adding Interior Minister Mansour el-Essawy, who is expected to keep his job, had won over some protesters by shaking up the police force last week.

Sharaf promised a reshuffle as one of several concessions offered by him and the army to placate protesters. Some demonstrators said more action was needed.

"We are waiting for a change in situation and not in names," an Egyptian, Marwa Abdel Sattar, wrote on the cabinet's Facebook page as ministerial changes were announced.

Demonstrators have stayed in Cairo's Tahrir Square since July 8, increasingly directing their anger at the army.

An army general, Tarek el-Mahdy, addressed the crowd in Tahrir on Saturday. Witnesses said dozens of angry protesters heckled him to leave the podium.

CONFUSION

Radwan told Reuters the policy-making situation had become "confused" and he believed it best to "leave the way for somebody to handle it in a consistent and coherent manner".

"People don't know what they want. Do they want increased expenditure and no borrowing from abroad? Everybody has suddenly become an expert on financial policy. That is not an atmosphere conducive to efficient work," Radwan said.

Radwan had negotiated a $3 billion loan from the IMF to help cope with a spiralling budget deficit. Egypt said in June it did not need the money.

Radwan said the budget had been revised to cut the deficit in response to demands for a national dialogue and concerns in the ruling military council about building up debts. Economists have questioned some of the budget assumptions.

An Egyptian investment banker said he had lacked authority and the government needed to do more to outline its plans.

"The whole problem is that we're still in search of an economic identity. So it doesn't really matter who's there, to a certain extent, because the headlines are not there," he said.

"It's a very worrying period. I think we'll end up all right, but after how long, and what will the ultimate bill be?" the banker said, asking not to be identified.

Beblawi, who studied in Paris, worked as professor of economics at the University of Alexandria until 1980. He was then chief executive of the state Export Development Bank of Egypt and executive secretary of the United Nations Economic and Social Commission for Western Asia (ESCWA).

"The first thing Beblawi needs to do is to reflect some confidence in his decisions, empowered by the legitimacy of the military council, and he has to think a bit like investors," said Mohamed Seddiek, head of research at Prime Securities.

Alongside Beblawi, Sharaf appointed Ali al-Silmi of the liberal Wafd party as deputy in charge of political development and democratic transformation. (Additional reporting by Dina Zayed, Shaimaa Fayed, Yasmine Saleh, Patrick Werr and Tom Pfeiffer; Editing by Sophie Hares)