Later this month, a new presidential election will give Egypt another chance to fulfill the promise of the popular uprising that toppled then-President Hosni Mubarak three years ago. To succeed, the next president will have to act quickly on at least three fronts: security, finance and economic growth, and he will need to do so in the context of pursuing the revolution’s objectives of “bread, dignity and social justice.”
Task No.1 is to address the country's recent spate of violence. Although isolated, these outbursts have already claimed too many lives, stripped too many citizens of their sense of safety, weakened the country’s international standing, devastated tourism, undermined basic economic activities and contributed to harmful shortages.
Second, the country must address its budget and trade deficits. Even if the government hits its target of reducing the fiscal shortfall to 14 percent of gross domestic product next year, such a large deficit will still threaten to aggravate already excessive inflation, which hits the poor particularly hard. Meanwhile, the trade deficit requires lots of foreign borrowing, which makes Egypt heavily reliant on exceptional assistance from friendly countries such as the United Arab Emirates, Saudi Arabia and Kuwait.
Third, the government must find a way to durably boost economic growth, which has been far too slow to absorb new entrants into the labor force, make a dent in alarming levels of unemployment and underemployment and address the devastating poverty and lack of upward mobility that afflicts the most vulnerable segments of society.
While the challenges are great, Egypt has the capability to overcome them. Having been involved in many reform efforts during my earlier 15-year career at the International Monetary Fund, I have seen countries with a lot fewer resources than Egypt turn around even more difficult situations.
The key is for the next president -- likely to be Abdel-Fattah Al-Seesi, Egypt’s former defense minister and head of the armed forces, who is expected to achieve a decisive victory -- to capitalize on Egyptians’ increased sense of citizenship and national consciousness that the 2011 revolution has unleashed.
The fundamental gains of the popular uprisings of the past three years are still there, even though Egypt has struggled mightily so far in making the trickiest pivot of most revolutions -- that of transitioning from dismantling a repressive past to building a promising future. After being alienated for decades by a repressive regime, the majority of average Egyptians now have a greater sense of ownership in and pride for their country; and they rightly yearn for greater democracy, justice and prosperity.
On the security front, the new president would need to mix firmness with new policies of durable reconciliation with his opponents, avoiding settling into the suppression of the past. Concurrently, he would need to set out quickly a three-year economic plan, a fundamental anchor that has been sadly lacking for years. In addition to the usual macroeconomic indicators, it would clearly define objectives in areas such as employment, health, education, literacy and child mortality in terms that are measurable, transparent and meaningful for the population at large. In doing so, it could also help garner loans with low interest rates and long maturities from official multilateral institutions (such as the IMF and the World Bank), regional organizations (including the European Union) and governments. Importantly, this would be in support of an Egyptian-designed and owned program.
Notwithstanding its renowned inefficiencies, the public sector would have no choice at this stage but to play a defining role by improving the environment for both local businesses and foreign investors. This would entail addressing the government's finances, streamlining energy subsidies, reforming the tax system, fixing the social safety net, revamping the institutional framework and making the bureaucracy more transparent and predictable. In short, the government would need to sustainably adjust its mindset to one of an enabler of the talents and comparative advantages of Egyptians, and certainly not as a substitute for them or one that seeks to undermine them through waste and corrupt activities.
Egypt’s next president has a great opportunity to set in motion a self-reinforcing process of economic, financial, political and social revival. In doing so, he would do more than improve the lives and livelihoods of 90 million citizens. He would also contribute to greater stability in an important region of the world.
To contact the writer of this article: Mohamed A. El-Erian at M.El-Erian@bloomberg.net.
To contact the editor responsible for this article: Mark Whitehouse at email@example.com.