ANNOYED at being skinned in a Cairo bazaar, a medieval Arab traveller sniffed that rascally Egyptians behaved “as if there were no Day of Judgment.” The IMF, which has been trying to extend a generous package of aid to Egypt since revolution pitched the country into turmoil two years ago, may have similar concerns. Along with its politics, Egypt’s economy has lurched ever closer to ruin, yet successive governments have blithely ignored the looming danger.

The current one, dominated by the Muslim Brotherhood, is no exception. Nine months into office, President Muhammad Morsi has yet to devise an economic plan plausible enough to convince the IMF, whose proffered $4.8 billion standby agreement and stamp of approval could unlock as much as $15 billion in multilateral aid, mostly on generous terms, and slash borrowing costs overall.

Earlier this month Mr Morsi’s government also rejected suggestions that Egypt could dip into its own deposits at the fund for emergency financing. Fearful of imposing austerity ahead of a general election due later this year, it has instead borrowed at steep rates from local banks, beseeched friendly governments (mostly in the Gulf) for cash and fuel, and busied itself trying to push through legislation to allow for issuing “Islamic” bonds.

This has not stemmed the slide. Egypt’s official foreign reserves, around $36 billion before the revolution of January 2011, have tumbled to around $13 billion, barely enough to cover three months’ imports. Yet in theory much of even that sum cannot be touched, since it consists of recent deposits in Egypt’s central bank from such brotherly states as Qatar ($4 billion), Saudi Arabia and Turkey ($1 billion each). Rich Gulf monarchies now say they are not in the mood to stump up more, so Mr Morsi’s government has turned to Iraq and, reportedly, Libya, to fill the central bank’s vaults. Even should they cough up, this would improve only the numbers, not the reality.

With the value of Egypt’s currency eroding by 10% since December, the bank has imposed increasingly stringent exchange controls. These are beginning to throttle trade and foreign investment. Some imported medicines, for example, have vanished from pharmacies, and brokers now warn foreign clients of trouble repatriating funds. In any case, little new money is coming in. Even as Brotherhood salesmen talk up investment, Egypt’s authorities persist in sounding hostile to foreign capital. Serial court rulings have overturned privatisation deals from more than a decade ago, and taxmen have taken to imposing large bills retroactively. The falling currency has pushed up inflation from an annual rate of less than 5% in December to 8% in February. That is particularly grim for Egypt’s growing number of unemployed. One labour group reports at least 4,500 factory closures since the revolution, which explains a rise in the official jobless rate from 9% to 13%. But far higher unofficial estimates are given credibility by evidence of a surge in crime and the plethora of unlicensed street markets that now swamp Egyptian cities. Thousands of workers in tourism, which in good times contributed 12% of Egypt’s GDP, have also been left idle. Though the beach resorts that attract most visitors have kept going by slashing prices, older tourist draws such as the Pyramids, the Valley of the Kings and cruise-boats on the Nile are eerily empty. The government’s budget deficit, meanwhile, looks set to approach a sickly 12% of GDP by the end of the fiscal year in June, above its earlier target of 9.5%. A single bill of around $20 billion accounts for the bulk of that shortfall: subsidies. Afraid of igniting popular unrest, Egyptian governments have shied for more than a decade from tackling a system that provides ungrateful consumers with such items as bread at the equivalent of less than an American cent a loaf, petrol at less than 20 cents a litre (barely a tenth of its price at pumps in Europe) and cooking gas at 7% of its actual cost. Diesel fuel alone makes up nearly half the subsidy bill. It powers not only the country’s commercial transport fleet but also the irrigation pumps used by millions of poor farmers; without it Egypt’s precious farmland would wither. Yet the government has had to import a growing proportion of Egypt’s diesel at world prices, in part because the state oil monopoly has had to export more crude oil to pay off pressing debts. Moreover, growing shortages of diesel fuel, prompted by smuggling and hoarding as well as by the government’s inability to import enough, have created mile-long queues, replete with fisticuffs and shootings. Black marketeers now charge double the official price.

Use your loaf

Subsidised bread is still plentiful. That is a good thing, since Credit Suisse, a Swiss bank, reckons that the average family spends nearly half its income on food. With the proportion of Egyptians under the official poverty line having risen from 21% in 2009 to 25% last year, nutritionists note with alarm that Egyptians have grown dangerously reliant on bread to feed their children. The local wheat harvest accounts for barely half of consumption, which is why Egypt is the world’s largest importer of wheat. Even as government stocks have fallen to an unusually low level, the state commodity-supply board has cut back on imports and issued what some experts say are unrealistically optimistic forecasts for Egypt’s own spring crop. “We expect a squeeze by early summer,” says a private trader.

To be fair to Mr Morsi’s government, it has not been entirely oblivious of the impending crunch. It has raised a few customs duties and minor taxes, and mooted plans to ration some subsidised goods, perhaps as soon as June. Where it has really fallen short, however, is in meeting the request, politely framed in a statement from the IMF after one delegation’s visit to Cairo, for Mr Morsi to build “broad support” for wider-reaching economic reform.

Not only has his government failed to propose a coherent plan for reform or to prepare the public for it, Mr Morsi and the Brotherhood have tried to muscle aside critics, using much the same methods as did Hosni Mubarak, the dictator overthrown in 2011 after 30 years in power. But Egyptians are no longer so easily cowed, so the result has been political paralysis accompanied by rising violence. Mr Morsi has shown growing frustration with the limits to his power, leading opponents to suspect he may try even harsher tactics to thwart them. Many Egyptians now fear that a judgment day is indeed nearing.