- The political forces that have emerged since the overthrow of Hosni Mubarak in 2011 have struggled to overcome his regime’s economic legacy, particularly unemployment, inflation, the structural fiscal deficit and infrastructure weaknesses.
- Policy-makers initially sought international assistance to deal with the short-term damage to the balance of payments in the hope that capital inflows would resume, enabling Egypt to get back on a track of high growth and an overall improvement in living standards.
- As in Mubarak’s later years, the policy framework for international assistance was based on encouraging private investment while pursuing medium-term targets for gradually reducing the fiscal deficit.
- This approach failed mainly owing to the reservations of the military command, the political priorities of the Muslim Brotherhood after the election of Mohammed Morsi as president, and resistance from elements in the judiciary, the business community and the media.
- The interim technocratic government formed after Morsi’s overthrow has been given a financial lifeline by Gulf Arab states hostile to the Muslim Brotherhood.
- One of the central challenges facing the new government is to address the structural weaknesses of the economy and attract private investment. This will be complicated by the Brotherhood’s resentment at Morsi’s removal and by the opposition of many anti-Morsi groups to liberal economic reforms.