Egypt is teetering on the edge of an economic crisis. Cast adrift in a deepening political quagmire over the past fourteen months, the economy has now reached a critical juncture, as the country faces the pressing challenge of financing a large budget deficit as rapidly dwindling foreign currency reserves threaten to crack apart an already fragile situation.
Yet, more than a year after the launch of a revolution driven in large part by economic grievances, the budgetary and fiscal proposals being considered to secure external financial assistance are geared more towards furthering Mubarak-era policies than to promoting social justice.
The state deficit for the fiscal year that ends in June is expected to exceed 140 billion Egyptian pounds ($24 billion), or 8.7 percent of expected economic output, according to the Finance Ministry. Meanwhile, the central bank's foreign reserves have been shrinking by roughly $2 billion every month, precipitated by a sharp decline in tourism and foreign direct investment since the revolution began.
Over the past year, the government has used up more than $20 billion to prop up the local currency. In February, foreign reserves stood at $15.7 billion, enough for just three months of imports, and with it, the looming prospect of devaluation.
