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Expats the economic backbone of Egypt

Egypt's diaspora, which represents about 6 million living across the world, has remained the backbone for the North African nation as it struggles to finance a fiscal crisis that threatens to spiral out of control.

CAIRO // Egypt's diaspora, which represents about 6 million living across the world, has remained the backbone for the North African nation as it struggles to finance a fiscal crisis that threatens to spiral out of control.

It is one of the only foreign currency earners that has increased, against plummeting tourist numbers and falling foreign direct investment.

Egypt's fragile political transition was dealt a further blow on Saturday, however, when the presidential elections commission blocked 10 out of 23 candidates for May's elections, including three of the most prominent candidates.

It raises fresh doubts over the country's ability to secure external financial assistance and in turn increases the risk of a serious balance of payments crisis.

"With Egypt's foreign currency reserves now at dangerously low levels, failure to secure help from the IMF could push the country into a full-blown balance of payments crisis by June forcing a disorderly devaluation of the [Egyptian] pound," Said Hirsh, a Middle East economist at Capital Economics in London, said this week.

In addition to pressures on the balance of payments, lack of political progress is putting at risk the chances of fiscal reform, Mr Hirsh said.

It makes the billions of dollars earned in remittances all the more critical to steering Egypt away from an all-out fiscal crisis.

business@thenational.ae