CAIRO: Egypt’s Finance Minister Hazem El-Beblawi, also the deputy premier, returned to work on Wednesday after the ruling military council rejected his resignation, a Cabinet source said, after a day of confusion that underscored the country’s fragile politics.
El-Beblawi handed in his notice on Tuesday after less than three months in the job because of an army crackdown on a protest demanding Coptic rights that left 25 people dead and sparked anger among Copts, politicians and rights activists.
It was the deadliest violence since president Hosni Mubarak was overthrown in February in a popular uprising.
The army council now in power has pledged democracy but calls have grown for a faster transition to civilian rule. The interim cabinet is under heavy pressure to solve Egypt’s social ills and restore the confidence of investors.
El-Beblawi said he resigned because the government, while not directly responsible for the deaths, must shoulder ultimate responsibility. He later told Reuters he was "in a difficult situation" because the army had rejected his resignation.
Faced with widespread criticism of its tactics in quelling the protest, the army appealed for unity between Christians and Muslims on Wednesday and denied that troops opened lethal fire.
El-Beblawi resumed his duties and attended a meeting of a ministerial committee dealing with social insurance, the Cabinet source said. El-Beblawi could not be reached for comment.
"We believe it is a kind of comfort for the market that he stays as he knows the problems and what needs to be done and he believes in a free market economy," said Merrill Lynch economist Turker Hamzaoglu.
"But what has happened is confirmation that domestic policy is taking turns and twists all the time," he said, adding that El-Beblawi’s success in securing funding from abroad will influence decisions by foreign investors to return to Egypt.
Egypt’s economy was pummeled by the uprising, with a sharp downturn in tourism and exodus of foreign investors. Economists see it expanding by just 1.3 percent in the year ending in June 2012 compared to previous growth rates of around 6 percent.
El-Beblawi was appointed in July by the military council running Egypt since Mubarak’s overthrow and has been negotiating with Gulf Arab states to support a state budget that soared because of the political turmoil.
His predecessor had secured a loan from the International Monetary Fund only to be forced to turn it down amid opposition from the army generals.
El-Beblawi said last week that Egypt was now reconsidering the IMF support and was still in talks with Arab states for funds of close to $7 billion.
Egypt’s foreign exchange reserves have dropped by $12 billion since the start of the year.
Until there is clarity on funding from the likes of Arab states or the IMF, "no one is going to take the lead and risking jumping the gun by investing in Egypt," said Hamzaoglu at Merrill Lynch.