Structural Reforms in Egypt

Abstract

Egypt has had fluctuating economic fortunes for the last two decades. Due to the rapid increases in the international price of petroleum, Egypt’s balance of payments situation has eased over the last few years. Prior to 1986, these oil prices had been the source of Egypt’s rapid ten-year growth. Since 1986, the country has had serious balance of payments problems; as a result of which its foreign debt has grown, with severe macroeconomic imbalances. Between 1986 and 1992 the per capita income of Egypt grew only by 10 per cent and, in the early 1990s, the country began to undertake a serious macroeconomic stabilization programme. Fiscal stringency and privatization were undertaken in some areas and foreign investment flows increased. Rate of growth of real GDP also increased, from 1.9 per cent in 1991–2 to about 5 per cent in 1995–6. During the same period, inflation fell from 21.1 per cent to 7.2 per cent. The fiscal balance, foreign reserves and external debt also improved (Table 6.1).