Can Morsi bite the bullet?

Egypt’s worsening economic and social situation might have fueled the fire of the 2011 revolution, but two years later most of the same problems persist. The blame is usually laid at the door of former president Hosni Mubarak or the Supreme Council of the Armed Forces, which took power after Mubarak stepped down in February 2011. Egypt transitioned to civilian rule when the first Muslim Brotherhood president in Egyptian history, Mohamed Morsi, took up his post in July 2012, but the problems he inherited remain unresolved.

Egypt’s new president appointed Prime Minister Hisham Qandil, who pledged to form a technocratic, rather than “bearded,” government to tackle Egypt’s huge economic and social problems. They indeed have a massive (if not impossible) task on their hands, with problems including a gaping budget deficit, rampant poverty, appalling health and education systems, and never-ending strikes over labor issues. Are they up to the job?

Too many promises

Before taking power, Morsi and his government made many big promises. In the annual Egyptian presidential speech commemorating the October War of 1973, President Morsi said he was very satisfied with the progress toward fulfilling the five main promises he made for his first hundred days in power. Nevertheless, they were unlikely to be able to keep those promises, given the dire state of the economy. This bodes ill for their credibility.

The Muslim Brotherhood inherited serious economic issues, which have only become worse in the wake of the revolution due to the lack of trust from investors and the decline in tourism. This includes a gaping budget deficit, amounting to 11 percent of the GDP, a lack of foreign currency reserves, slow growth, and high inflation; urban consumer inflation stood at 6.2 percent during the past year according to state statistics. Tourism used to make up 11 percent of the country’s GDP. Yet with concerns over security, there were 33 percent fewer tourists in 2011 than in 2010, according to the Egyptian Ministry of Tourism. This represents a loss of nearly US$4 billion, leaving US$8.8 billion in revenue from tourism in 2011.