Following the revolution that overturned Hosni Mubarak after 30 years in power, Egypt recently elected (despite only 33 percent of the population voting) Mohamed Morsi as Egyptian President.

Morsi is faced with two immediate challenges: a US$4.8 billion IMF loan that is yet to be advanced and a lack of genuine political consensus. Further, the country's official foreign reserves are down from £36 billion (before the revolution) to around £13 billion, and people feel that the country could miss its budget deficit target of 10.9 percent of gross domestic product if spending cuts are not enacted promptly. Over a quarter of the population is now under the official poverty line.

In order to combat the challenges Egypt is facing, it is believed that Morsi would be reluctant to implement any austerity measures which would risk losing what remains of his government's popular support. Further, without that political support, there is a suspicion that the IMF may be equally reluctant to provide Egypt with the money it desperately needs.