Erian: Despite difficult challenges, Egypt has a considerable economic upside

Already struggling to meet citizens’ legitimate needs and aspirations, the Egyptian economy has suffered a series of additional setbacks in recent years. So much so that, for the first time in many years, the population has had to cope with power cuts, shortages of goods, and partial controls on foreign exchange. With a new government committed to meeting the objectives of the 25 January Revolution, Egypt now needs to decisively overcome four major problems; and it can do so using four major attributes.

Tackling four major challenges

Of all the headwinds to Egypt’s sustained prosperity and social justice, four major ones stand out today. And while they do not explain all of the forces holding the economy back from delivering on its considerable potential, it is unlikely to develop strong forward momentum unless each of them is addressed in a decisive and sustained manner.

First, the country faces twin financial deficits in the form of a large budget shortfall and a deepening balance of payments imbalance.