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The Muslim Brotherhood needs urgent help to fix Egypt's finances. The country is gripped by shortages and the options for attracting aid are narrowing. A recent court ruling means there is no certainty on when parliamentary elections will be held. Cairo is tempting financial and social disaster the longer it delays a deal with the International Monetary Fund.
Qatar has increased the urgency for Cairo to act. Doha was the country's main donor over the last two years, with over $5-billion in aid. Now it has signalled that it is not ready to offer more funds. Egypt could still request bilateral aid from Saudi Arabia, Turkey, or even Iraq. Without external support and foreign reserves at just $13.5-billion, Egypt might be as little as two months away from a full-blown balance-of-payments crisis.
The problem is that such hand-to-mouth financing is now insufficient for the country to function properly or to contain public frustration. The recent 10 per cent devaluation of the pound translated into higher inflation and it is getting harder to import goods. Unrest is edging closer to the Suez Canal. A strike this week by microbus drivers protesting about ongoing diesel shortages paralysed parts of the capital.
The government has trapped itself in a vicious cycle. As long as the economy isn't creating jobs, the political landscape will become ever more fractious. The Islamist-led government will be less inclined to implement reforms that will hurt it politically even if they favour long-term growth. Egyptians may not like the IMF, but inaction is proving worse.
Egypt is now mulling a bridging loan from the IMF as a stopgap measure. That would release only $750-million and is a poor alternative to a full deal but it may install some confidence that a serious programme isn't too far behind. The Brotherhood has not demonstrated the financial savvy it was credited with when it came to power. With a weak political opposition, the alternative would be a return of the military and a step back for democracy. The government has to find a way to put the country before the ballot box.