Tough task for new leader in Egypt

07 June 2012

Presidential runoff has become a two-man race between an Islamist candidate and former prime minister. Whoever wins will have a difficult task ahead attempting to bring economic stability to the country

When President Hosni Mubarak was overthrown in February 2011, Egyptians had high expectations of democracy. Speaking to ordinary Egyptians and even public figures in the direct aftermath of the revolution, it was difficult to anticipate how the political landscape would evolve and which policies would gain traction with the public.

Having lived through years of autocratic rule, Egyptians were overwhelmed by the multitude of possible options. Taxation policy, the role of the government, provision of public services and the role of religion were all new issues to consider and form opinions on.

Much has changed since then. Step into a taxi or cafe and conversation automatically turns to politics, a stark contrast to the Mubarak years. A Cairo newspaper vendor says sales have increased dramatically since the revolution and there are days when demand outstrips supply.

The politicisation of Egypt has certainly been helped by multiple elections. Elections on the constitution and multiple phases of voting for the People’s Assembly and Shura council have promoted greater understanding of the emerging parties and candidates as they vied for votes.

However, over the past year and a half, Egypt’s economy has increasingly struggled. The interim government has tried to limit the damage to the economy as much as possible, but foreign direct investment has been withdrawn from the country and Egypt’s current account has been severely damaged. At almost three months’ of imports, the balance of payments situation will not allow the new president much room in which to manoeuvre.

Coupled with this, subsidies, wages and interest from debt account for about 70 per cent of Egypt’s budget. That leaves just subsidies for reform and even this will be an uphill battle.

It is unfortunate Egypt’s first taste of democracy comes at a time when its financial constraints are so severe. Having secured democracy without high costs, Egypt is poised to discover its limits.

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