To the victor in Egypt's presidential race: a terrible economy

The Muslim Brotherhood has fronted a candidate. A former ally of Mubarak may even run. But whoever wins will start with less than half the foreign reserves Egypt had before the revolution.

The Muslim Brotherhood, after months of denials of interest in the presidency, nominated one of its own for the presidency of Egypt this weekend. In Cairo yesterday, rumors were flying that Omar Suleiman, the retired general who emerged as one of Hosni Mubarak's closest confidants in the final years of his rule, was priming for a run of his own.

Meanwhile, secularists have all but abandoned the body tasked with writing Egypt's new constitution (with a hard-to-believe deadline of one month from now – don't bet on it), angry that the committee is dominated by the Muslim Brotherhood and their uneasy Islamist allies from the salafi Nour Party.

Egypt's political transition has gotten even messier and more dysfunctional (hard to believe) in recent weeks, and takes real expertise to untangle (for an excellent piece looking at some of the complexity of the presidential race, start here).

But there's one solid fact that will confront whoever wins the presidency and that won't be addressed by the most brilliant and fair constitution in human history: Egypt's economy is in really, really bad shape.

Both foreign and domestic investment has dried up in the past year, while the economy stagnates and the population continues to grow. Millions of Egyptians rely on subsidized bread and fuel to just get by from day to day, and those subsidies put massive strains on government coffers. The latest reminder of that was the release of foreign reserve figures yesterday. Bloomberg reports that Egypt's foreign reserves fell to $15.1 billion in March from $15.7 billion at the end of February. The good news is that was the smallest month-on-month decline since Mubarak was ousted in February 2010. But that's still a 3.8 percent decline, and less than half of the $36 billion Egypt's central bank had in December of 2011, before the uprising against Hosni Mubarak began.

The country currently has enough foreign cash on hand to cover about three months of imports. And this isn't about imports of foreign cars or Hollywood movies. Egypt is the largest wheat importer in the world, with about half of the country's grain coming from outside. For nationalistic reasons, Egypt rebuffed a $3 billion loan offered by the World Bank on really sweet terms last June. The country's current military-backed cabinet is now seeking the same amount of money from the International Monetary Fund.

The hitch? The deal probably won't be signed until June – and even then, the IMF is seeking broad statements of support from political forces like the Muslim Brotherhood in exchange. The Brotherhood's Freedom and Justice Party, which won the most seats in parliamentary elections, has been leery of outside forces and have occasionally launched broadsides against foreign interference. (And some of its leaders have expressed a desire to strictly limit alcohol sales, something that could take a bite out of the country's $3 billion tourism industry.)

Hostility to foreign lenders like the IMF and World Bank is quite popular in Egypt, so that makes political sense. But the country is in desperate need of cash. And that's a reality that's going to confront Egypt, no matter who wins the presidency.

Follow Dan Murphy on Twitter.

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