Despite the election of a pious president, Egypt appears to be running out of money to pay its fuel import bills. That’s the news from this Reuters story, which reports that after payment delays and other hiccups, banks and other lenders have been pulling back from Egypt and that the resulting funds shortage is forcing the country to scrounge under the couch cushions and hunt for more international loans to cover the fuel bill.No doubt there is a lot of Egyptian speculation about how “the Jews” or other dark forces are withholding loans as part of a dark plot, but the reality seems to be that the cost of Egypt’s fuel subsidy policy is so high that the government is stretching to pay it. Gasoline costs less than 90 cents a gallon for Egyptian consumers; the government subsidizes the gap between the Egyptian domestic price and the world price. Rising oil prices worldwide mean that the cost of this subsidy has exploded; Reuters estimates the total cost to be something like 20 percent of the country’s total budget.The obvious thing to do would be to phase the subsidy out, replacing it with income support for the poorest, but that’s not going to happen. The political consequences of a big subsidy cut would be extremely dangerous and destabilizing, and between corruption, bad management, and incompetence (normally referred to politely by development professionals under the delicate rubric of “capacity limitations”), the Egyptian government can’t really run a targeted income program.Let’s hope Egypt doesn’t approach the U.S. or other Western countries for official assistance on the gas subsidy. American taxpayers are not particularly interested in digging deeper to keep Egyptian gas prices at one quarter of those in the U.S., whatever good foreign policy reasons there might be to fork over aid. In an election year, no sane U.S. politician would back this.The real problem is that, between the bad global economic climate generally and the queasy feeling many investors have over the political and social situations in Egypt, the country isn’t attracting the kind of foreign investment it needs to grow. Fixing this is what President Morsi needs to do, and it isn’t going to be easy.