Although it was widely expected that former army chief and defence minister, Abdul Fattah al-Sisi, would win Egypt’s presidential elections held on 26-28 May, the low voter turnout suggests public support is not as entrenched as many believe.

Turnout was about 47 per cent, lower than the 52 per cent seen in the 2012 election that brought Muslim Brotherhood-backed Mohamed Mursi to power.

The muted backing for Al-Sisi will make it even more important that he tackles the major problems afflicting Egyptian society to garner wider support and maintain a level of social and political stability. The country has now had three presidents since 2011.

High unemployment, a lack of housing, inadequate infrastructure, the poor distribution of wealth and widening social divisions continue to plague Egypt. Al-Sisi will have to confront these issues by ramping up public spending, while not allowing the government’s already fragile finances to run out of control.

Al-Sisi will need to encourage investment in key industries that will generate jobs

Unemployment remains high, with 13.4 per cent of the total workforce currently without a job. This equates to a total of 3.7 million people without work. Unemployment among women and young people is particularly prevalent. A lack of employment opportunities was one of the main factors that led to the Arab Uprisings in 2011.

Encouraging investment

Joblessness has actually risen since the Egyptian revolution; it was under 10 per cent in 2010. Al-Sisi will be keen to prevent history repeating itself. Indeed, in his presidential campaign, the former army chief pledged he would bring down the unemployment rate to 8 per cent by the 2017/18 fiscal year.

To meet such a target, Al-Sisi will need to encourage investment in key industries that will generate jobs. Tourism is one of the biggest employers in the country, but requires high levels of investment and promotion to reverse the decline seen since 2011.

Following the ousting of Mursi last July, visitor numbers plummeted to a new low of 9.5 million in 2013. This compares with 14.7 million tourists that visited Egypt in 2010.

Before the May elections, the interim government had already been attempting to revitalise the tourism industry. It announced new advertising campaigns to attract more visitors from Arab countries, as well as planned infrastructure investments, such as a £E3bn ($428m) tourism project on the Red Sea coast. Nine other infrastructure projects worth £E391.6bn covering road, electricity and sewerage schemes were also approved at the beginning of the year. Meanwhile, the interim government allocated billions of Egyptian pounds from the 2013/14 budget to develop the Suez Canal axis project.

The new leadership will need to continue to drive investment in infrastructure projects that create employment. In this endeavour, it will seek support from international allies.

Gulf companies have already pledged to invest in Egypt. UAE-based developer Majid Al-Futtaim said earlier this year it will invest about £E16.5bn over the next five years building shopping malls and hypermarkets across the country. The planned investments are estimated to generate 42,000 jobs.

In March, Arabtec, also from the UAE, signed a $40bn deal to build 1 million affordable homes in Egypt and in June it invited local and UAE firms to register interest in the project. The development will not only provide jobs, but help tackle the country’s acute lack of low- and medium-cost housing.

Narrowing the divide between rich and poor will be another priority for Al-Sisi, and one way to do this is through boosting wages. Before the elections, Al-Sisi and the interim government had increased public-sector wages by using some of the aid pledged from Gulf governments.

A total of £E33.9bn of concessional aid from the UAE was added to the 2013/14 state budget in February this year. Of the additional spending, £E11bn will go to social programmes, including minimum wage increases for the public sector and raising pensions.

Cairo will have to find a means of supporting wage increases on its own in the coming years, which will be achievable through raising tax revenues.

So far, a broader value-added tax has been mooted, as has higher temporary taxes on bigger income sectors of society and a “development tax” on incoming tourists.

New budget

The budget for the fiscal year 2014/15 is in the process of being approved, having been submitted to the presidency at the end of May.

The draft version outlines further plans to boost public spending to reach £E807bn, an increase of £E65bn on the previous year. It also proposes to increase wage expenditure by 13 per cent to £E209bn.

The budget outlines measures to tackle Egypt’s huge subsidies bill, cutting energy subsidies to £E104bn, a reduction of £E30bn on last year’s budget. Subsidies for vital commodities such as food are set to marginally rise.

Based on these draft provisions, it is anticipated the 2015 budget will widen the country’s fiscal deficit to 12 per cent of GDP, which is slightly higher than the 11.5 per cent forecast for 2014.

Although Al-Sisi’s first year in power may see a widening deficit, his plans to boost public spending and channel investment into key job-creating industries could keep him in favour with Egypt’s election-weary population.