The Egyptian economy has for decades suffered from deep structural economic problems, including high unemployment, inflation, poor infrastructure, and a chronic fiscal deficit. Hopes that the post-Mubarak era would allow for meaningful economic reform and restructuring have gradually faded, while the distribution of economic power and the Mubarak-era economic structure remain more or less intact. Political chaos has taken its toll: since Mubarak was overthrown almost three years ago, real GDP growth has averaged less than 1.5 percent. The situation may be deteriorating, as
foreign exchange reserves provide only three months of import cover despite recent inflows of billions of dollars from Gulf Arab states, the fiscal deficit has reached almost 14% of GDP and the official unemployment rate has risen to 13.3%. Donors have shown willingness to provide financial support, but they have made clear that they would prefer this to be within the framework of a policy programme approved by the International Monetary Fund (IMF). Successive governments have come close to agreeing terms with the IMF, but on each occasion the political leadership has lacked the conviction or the will to commit to policies that would be unpopular with some segments of society.
David Butter, writing for Chatham House, provides a useful primer on how we got here, as well as the challenges that lie ahead in his recent piece Egypt in Search of Economic Direction