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With the Muslim Brotherhood's Mohamad Morsy and the former regime figure Ahmad Shafiq standing head-to-head, many believe that the Egyptian “revolution” has been unable to produce a presidential candidate that is in line with its core values. However, an important fact is that the political paradigm in Egypt has indeed shifted with the transformation of the political discourse in the country in under one year's time. History has shown us that revolutions do not progress in a linear form and so what is "square one" to some is actually an inevitable point in Egypt's pathway towards change that hopefully can lead to enhanced liberty and sustained development. However, liberty and development depend on the economic policy choices to be made by the future governments. In this respect, reading through the economic platforms of both presidential candidates is an important exercise for any informed voter.
What matters to many Egyptians today is economic stabilization – being able to carry on their ordinary lives again to make a decent living. Unfortunately, little is said about the short run in both Morsy's and Shafiq's platforms. A presidential candidate is sought to be in power for four years but their electoral platforms seem to be written as if they will be in power for much longer. Morsy states that the main focus of his economic platform is to initiate economic reform that can lead to sustainable development in line with Islamic principles. Shafiq's main economic objective according to his platform is to pursue an inclusive development process in all economic sectors based on a positive relationship between the state and the private sector. No mention is made by either candidate on how they intend to deal with the very serious and impending short run economic challenges confronting the country.
Following the first round of presidential elections, Egypt's benchmark stock index has declined by 4.7% to a six-week low after being badly hit in the revolution’s aftermath. Rising living costs are expected to increase at 12.1% in 2013 due to currency depreciation and increased government spending. Furthermore, the whole country has taken to the streets expressing its dissatisfaction with the economic situation. Between May 2011 and April 2012 Egypt has witnessed a total of 1,398 labor strikes in both government and private sectors, including those by teachers, doctors, public transportation workers, postal workers and public taxation authority workers.
The country is in need of an emergency economic plan to restore stability similar to the policies taken in Tunisia after the revolution. In practice, little can be done by the president to stabilize the short run economic situation since the draft budget proposal for 2012/2013 is to be finalized by the end of June which gives any incumbent very little time to review it and include any amendments. However, incoming presidents can still do a lot to restore the general confidence in the country's economy and security situation.
In terms of economic strategy, both candidates’ platforms lack clarity and coherence regarding how they will be implemented. It is as if both candidates have ticked all the boxes in terms of economic reform just for the sake of creating a rosy picture for voters despite the fact that many of their goals are conflicting and sometimes mutually exclusive.
Morsy states he intends to increase government expenditure and carry out infrastructure projects amounting to $100 billion over a 5-year period while decreasing inflation rates from 11% to around 3%. However, there is no explanation as to how this overly ambitious economic agenda is to be implemented as it would be difficult to generate the necessary funds for such projects without stimulating very high levels of inflation.
Shafiq plans to increase the minimum wage including the pay of government workers in addition to doubling both educational and healthcare expenditures while promising to decrease the government budget deficit to around 6% of GDP. Again, this seems quite unreasonable as these increases would put a huge strain on the government budget without any proper discussion of a reformed taxation policy.
There is clearly a political rationale behind the policy choices of the candidates. Tracing Morsy's economic platform to that of the Freedom and Justice Party in parliament, there are many elements of redistributionist and populist economic policies. Morsy's economic plan focuses on a general correction to the large income disparities in Egypt via state intervention in the area of taxation, spending and social services – with little mention of how he intends to generate the necessary funding.
On the other hand, while populist notions can be detected in Shafiq's economic platform, his policies are more liberal in the sense that they are directed towards less government intervention, allowing the market to carry out the necessary adjustment mechanisms. Shafiq is more lenient towards investors and dedicates a large portion of his platform to explaining how he intends to stimulate investment levels in Egypt. While Morsy does the same, his language towards business elites focuses more on reform of governance standards. A key dividing line will be the attitidude toward the redistribution of wealth from sectors such as financial services and real estate via a reformed taxation policy.
Ultimately, short run economic considerations take precedence to the average Egyptian voter. The reality is that the incoming president will have restricted leverage due to budgetary constraints; however, a responsible candidate should communicate innovative ways of how he intends to restore confidence to the Egyptian economy and help improve the living standards of his people. Unfortunately, between Shafiq's excessive liberalism and Morsy's dreamy populism, voters of the new Egypt are left with a very tough choice.