CAIRO - Once parliamentary elections are out of the way, Egypt stands a chance of securing an International Monetary Fund loan to help address its currency and budget crisis; the problem is that no one knows when that will be.
With face-to-face contact between Egypt and the IMF re-established this week after a two-month gap, both sides are pushing for urgent action, but with strikingly different emphases.
President Mohamed Mursi's government wants a full $4.8 billion loan, as agreed in principle last November, but based on a gentler reform programme than originally planned, "in light of preserving growth rates, employment and protecting the poor."
By contrast, the IMF's top official for the region, Masood Ahmed, spoke only of "possible financial support" after he met the government and central bank in Cairo on Sunday.
Also, the IMF has vigorous reform in mind to tackle problems such as energy subsidies, which are draining huge sums from the state budget."Egypt needs bold and ambitious policy actions to address its economic and financial challenges without further delay," spokeswoman Wafr Amr said last week.
Such "policy actions," most likely tax rises and subsidy cuts that will send fuel costs soaring, would not go down well at any time with a population suffering from a steady economic slide since the 2011 revolution, let alone before an election.
"The IMF will want to see measures to rein in the budget deficit in order to agree to a package which the government may be loath to implement prior to elections. An imminent agreement seems unlikely," said Giyas Gokkent, Chief Economist at National Bank of Abu Dhabi.
Cairo already had to request a delay in the IMF loan in December during serious street violence, and trouble has regularly erupted since then over a variety of grievances.
In such a volatile atmosphere, matters would be helped if everyone knew when a new lower house of parliament would be installed. Mursi announced last month that the elections would start on April 22, only for a court to cancel his decree on a procedural technicality.
So, at this crucial stage of a turbulent transition to democracy since the fall of Hosni Mubarak, Egypt has had no lower house for nine months, and nobody, from Mursi down, can say when it will. "Egypt's unstable politics is likely to be the primary concern for IMF officials," said Oliver Coleman, analyst at risk consultancy Maplecroft.
"The judiciary has shown itself more than willing to rescind the decrees of the Mursi government, and a controversial economic reform package may meet the same fate without the mandate of a universally recognised parliament in place to back it up," he added.
Egypt's mounting deficit
Egypt's needs are pressing. In its plan drawn up for the IMF, the government forecast the budget deficit would hit 12.3% of the country's entire annual economic output in the year to June unless it made urgent reforms.
Far wealthier and more stable Portugal, which restored democracy almost 40 years ago, had to take a bailout from the IMF and European Union in 2011 after running a deficit that peaked below 10% of gross domestic product.
Egypt's pound is also steadily losing value, even though the central bank, which spent roughly two thirds of the Mubarak era foreign currency reserves trying to prop it up, is drastically rationing the supply of dollars.
This is crippling many small and medium-sized businesses, which are forced to turn to the black market, where unfavourable exchange rates can wipe out their profits.
On the streets, motorists queue for scarce supplies of diesel and other cheaper fuel, and anger is growing over inflation, which leapt to an annual 8.2% in February from 6.3% the previous month, eating into the living standards of people struggling to make ends meet.
This is creating a sense of helplessness among ordinary Egyptians about the reforms likely to come with an IMF loan.
"Now everything is expensive, and if they remove the subsidies, what will we do?" said Mohamed Shabaan, a 37-year-old driver. "We don't want [the loan], but at the same time I don't think that the country can function without it."
Shabaan, who makes a living chauffeuring visitors and expatriates around Cairo, has much to lose. According to the projections, the most commonly used 90 octane gasoline would leap to 5.71 Egyptian pounds ($0.85) a litre from 1.75 if subsidies go, while diesel would go up to 5.21 pounds from 1.10.
The government has promised limited amounts of subsidised fuel would remain available to some drivers under a smart card system due to start in July, but Shabaan's larger engined car would be excluded from the scheme.
In Tuesday, the government said it also planned to start rationing subsidised bread, a measure that would affect poor Egyptians particularly badly.
No election link
The Islamist-led administration, which is at loggerheads with the liberal and leftist opposition about the very character of Egypt, denies the stalled elections will determine the timing on an IMF loan.
"All the discussion was about financial support or the loan that Egypt aims to obtain from the Fund," government spokesman Alaa El-Hadidi said after Sunday's visit by the IMF official, the first since January. "There is no link between the loan and parliamentary elections."
But officials of the IMF and its biggest shareholder, the United States, regularly stress that the reforms need to win backing, or at least acceptance across Egyptian politics.
Consensus seems a remote possibility. Many opposition parties had already decided to boycott the elections in a series of disputes including over the electoral law, a new constitution written by an Islamist-dominated assembly and a Mursi decree last year when he temporarily gave himself sweeping powers.
Indicating the divide in Egyptian life, Hadidi said the economic programme had been sent to the political parties "some of whom disagree with anything the government presents."
Hadidi spoke of technical-level talks lasting between one and three weeks, but no date has yet been announced for when they would start. Ahmed, who heads the IMF's Middle East and Central Asia Department, gave little away after he met Prime Minister Hisham Kandil and central bank Governor Hisham Ramez.
"We agreed that our discussions would continue diligently over the coming weeks with the aim of reaching agreement on possible financial support from the IMF," said Ahmed.
William Jackson of Capital Economics in London noted the IMF seemed to believe a deal might take some time."This probably reflects the difficulties of passing any reforms with the political situation so volatile and without elections," he said.
The IMF has raised the possibility of a bridging loan to tide Egypt over, an idea rejected by Cairo as it pushes for a full loan in return for a full reform programme.
Will Cairo swallow its pride?
But Cairo might have to swallow its pride as the $36 billion in currency reserves that Mubarak left behind had shrunk to just $13.5 billion at the end of last month.
"If there's a sudden deterioration in sentiment and investors wish to take their money out of Egypt, then the pound will come under more pressure," said Jackson. "In this situation, the authorities may agree to a bridging loan from the Fund to prevent a sharp fall in the pound."
Investors have already been shaken by a series of high-profile legal actions against prominent business figures, including travel bans and freezing of their assets, over issues ranging from tax demands to insider dealing allegations.
This will make it tough to implement unpalatable polices. "No minister or senior government official wants to bear the brunt of taking radical decisions at a stage when mass demonstrations, imprisonment and travel bans are inches away from everyone," said Hany Genena, head of research at Pharos Securities Brokerage.
In the end, the fate of Egypt's reforms and the IMF loan is likely to be sealed on the streets.
Safwat Hassan, a 44-year-old marble trader, said Egyptians would resist sharp price rises resulting from subsidy reform. "The people do not accept this and there will be anxiety and demonstrations," he said. "This issue will not pass lightly."