The war in Gaza, with its threats of instability and regional turmoil, has temporarily pushed domestic issues onto the backburner.

“It is our moral duty to uphold the stability and success for which we all strive,” remarked Ihab Abdel-Gelil, a voter in his 50s, as he stood in a polling station. In the background, a song by popular singer Hakim was playing: “Keep going, and we’ll follow you... we live in safety with you.”

Yet observers agree that domestic issues will soon reassert themselves, however much the public is preoccupied with the turmoil next door.

“A plummeting Egyptian pound and soaring inflation are the most immediate and pressing issues confronting the next presidency,” says Mohamed Shadi, an economic expert at Al-Habtoor Research Centre in Cairo.

Inflation, which was at 36.4 per cent in November, is weighing heavily on households and the chronic foreign currency shortage threatens to cripple essential imports. The Egyptian pound has lost half its value against the dollar, and national debt has ballooned, reaching $164.73 billion at the end of June.

The choices the president makes in the coming months will have a profound impact.

“The president faces a critical decision, whether to devalue the pound once again or attempt to contend in other ways with the black market,” said Shadi.

It is an unenviable choice: either implement stringent reforms or risk plunging the nation into further economic turmoil. Finding the right balance between economic discipline and social responsibility will be a crucial test for the new president.

But how will it be implemented? Despite being the clear favourite, the incumbent President Abdel-Fattah Al-Sisi did not offer an electoral programme with detailed measures. According to Mahmoud Fawzi, Al-Sisi’s campaign manager, what he did offer was a vision, and a promise to “continue what we started”.

The focus, says Fawzi, will be on combating inflation, attracting investments, reducing unemployment through national projects, and expanding agricultural production.

An immediate challenge the government will face is financing $29.23 billion in debt repayments due in 2024, $19.43 billion in 2025, and $22.94 billion in 2026, according to figures released by the Central Bank of Egypt (CBE).

Shadi says the post-election government will be forced to revisit fiscal policies to address the debt challenges.

Analyst Amr Hashem Rabie advocates greater empowering of the private sector in managing Egypt’s economic affairs.

Under an agreement made with the International Monetary Fund (IMF) in late 2022 the government committed to reduce the state’s footprint in non-strategic sectors and to end preferential treatment for state-owned enterprises, including those owned by the military.

On the international front, Egypt’s influence in the region has been bolstered by its mediation over Gaza, winning some international support for the economy. The European Union has announced plans to support Egypt with $10 billion of investments “to buffer the economy from the impact of Israel’s war on Gaza and the potential spike in refugee flows.” The IMF is also considering expanding Egypt’s $3 billion loan programme by an “unspecified amount” to help the country overcome the economic impacts of the war, including falls in tourism and increased energy costs.

“While economic and social reforms require substantial funds, political reforms may not, so why not proceed with them. We can’t keep doing the same thing over and over,” says Rabie.

Fawzi says Al-Sisi is committed to strengthening pluralism by adopting an electoral system that expands parliamentary representation and to advancing human rights.

The war in Gaza has served to remind Egyptians of yet another challenge: the volatile nature of the region and the delicate balance Egypt must maintain.

Cairo has to manage crucial relationships with the Gulf states, particularly Saudi Arabia and the UAE, which provide much needed financial aid. Yet Egypt has adopted a different public position on the Gaza conflict to many of its Gulf allies, being more open in its criticism of Israel’s operations and future plans for Gaza, not least the potential for a forced exodus of Palestinians.

Relations with Israel, guided by the decades-old Peace Treaty, are strained. Despite the fact Cairo negotiated, with Doha, a truce and detainee swap between the Israelis and the Palestinians, President Al-Sisi and Israeli Prime Minister Benjamin Netanyahu haven’t spoken during the two-month war. Analysts, nonetheless, say Egypt will continue to play a pivotal role, in coordination with Qatar, as a mediator between Israelis and Palestinians.

Another challenge awaiting the next president is the Grand Ethiopian Renaissance Dam on the Nile which threatens Egypt’s main source of water. Years of negotiations with Ethiopia have resulted in no progress towards meeting Egypt’s concerns.

* A version of this article appears in print in the 14 December, 2023 edition of Al-Ahram Weekly