Yesterday's announcement by the Dostour party raises fresh doubts about whether the elections, due to start March 21, will produce a parliament that represents a wide range of public opinion.
Dostour said in a statement that the military-backed government made it impossible for opposition parties to campaign openly. "The current political climate does not encourage political parties to participate in public life," it said.
Egypt has had no parliament since 2012, when a court ordered the dissolution of the previous Islamist-dominated legislature. Dostour held no seats in the previous parliament. Next month's election would have been its first political contest.
Nearly 75 percent of the seats in the 567-member assembly are reserved for individual candidates, which analysts say favours wealthy businessmen best able to fund personal campaigns. Another 5 percent of seats will be directly appointed by President Abdel-Fattah el-Sissi, the former army chief who has led Egypt since last year.
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Opposition activists predict that well-connected businessmen and one or two parties loyal to el-Sissi will dominate the next parliament.
Three policemen were shot to death yesterday in the central Egyptian city of Minya, but security officials said they suspected that common criminals were responsible, not Muslim radicals.