* Economy hit by security, political situation
* Economy growing too slowly to absorb young job-seekers
* Currency fall pushes up state subsidy bill, budget deficit
* Businesses turn to black market for dollars
By Asma Alsharif and Marwa Awad
CAIRO, Feb 21 Egypt plans to invite an IMF
mission to Cairo within a week, the government said on Thursday,
flagging an early resumption of negotiations for a $4.8 billion
loan as it struggles with an acute foreign currency shortage.
Planning Minister Ashraf al-Araby said foreign investment
had all but dried up, predicted a huge budget deficit as food
and fuel subsidy bills soar, and announced data also underlining
the depth of Egypt's crisis before elections expected in spring.
Araby said growth had been just 2.2 percent year-on-year in
the December quarter, noting that strong investment was needed
to reach seven percent - an annual rate economists see as needed
to soak up the waves of young people entering the labour market.
He also predicted the budget deficit could hit 10 percent of
annual economic output in the financial year to June, a level
Egypt cannot afford without outside help.
"The Egyptian economy is recovering extremely slowly due to
the security and political situation," Araby's ministry said in
Analysts had expected the government of President Mohamed
Mursi to try to delay a deal with the International Monetary
Fund until after the parliamentary elections, as the loan's
terms will demand highly unpopular austerity measures.
However, Araby predicted rapid movement. "God willing, we
expect to invite the IMF delegation within days," he told a news
conference. Asked to be more specific, he said: "Within days, no
more than a week."
Egypt's upper house of parliament adopted a revised
electoral law on Thursday, clearing the way for Mursi to call
the lower house polls expected to be held in April or May.
Egyptians are angry as the crisis drags ever more of them
into poverty. Cairo reached an initial agreement with the IMF on
the loan in November but postponed ratification the next month
due to violence on the streets.
This followed Mursi's move to expand his powers and push
through a new constitution seen by opponents as favouring his
backers in the Muslim Brotherhood and more hardline parties.
Araby announced foreign investment in Egypt was dire in the
six months to the end of December - the first half of Egypt's
"We had almost an absence of new direct foreign investments
during the first half of the year," he said.
POUND HAS TUMBLED VERSUS DOLLAR
Egypt's pound has tumbled 8 percent against the dollar this
year as its international reserves fell to $13.6 billion, less
than the $15 billion needed to cover just three months' imports.
This drop has inflated the budget deficit by forcing up the
cost of subsidising energy and food staples, such as bread.
The government announced new fuel prices for many sectors of
the economy on Tuesday which industry sources said were 50
percent higher than previous levels, drawing protests by factory
owners affected by the increase.
Private industry and individuals are struggling to borrow or
get access to dwindling supplies of dollars.
Mahdi Ibrahim, who runs an import-export business with
Brazil, expressed anger about problems in getting hold of even
relatively small sums in dollars - difficulties which are
forcing businesses to turn to the black market for funds.
"I have pulled all my money out of the bank because of the
restrictions on my ability as a client to buy dollars or
transfer hard currency abroad. I have business to take care of
abroad," he told Reuters.