The approval of Egypt’s new constitution marks a key political milestone, paving the way for fresh elections to take place in the coming months. However, these could lead to a renewed flare-up in tensions between the Muslim Brotherhood and the armed forces. If so, this would derail the nascent economic recovery. What’s more, the constitution mandates a set level of public spending on areas such as healthcare and education. If the government is to meet these without causing the budget deficit to widen alarmingly, it will need to reduce spending sharply in other areas (notably on subsidies).
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