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During the presidency of Gamal Abdel Nasser, the economy of Egypt was radically socialized. Beginning in 1961, foreign trade, banking, insurance, and most wholesale and industrial establishments were nationalized. Those sectors which remained in private hands were placed under heavy regulatory restraints.
Industry was expanded and production increased according to a five year plan. Inadequate foreign investment, a sluggish bureaucracy and the disastrous 1967 Arab-Israeli War subverted subsequent development programmes until a process of economic reform was inaugurated by Abdel Nasser's successor, Anwar Sadat, in the aftermath of the October War of 1973. By reversing many of Abdel Nasser's policies and opening Egypt to foreign investment, Sadat began a gradual revival of the Egyptian economy which was significantly enhanced by remittances from Egyptians working in the surrounding oil producing countries. The very slow but sure relaxation of import, currency and trade restrictions stimulated Egypt's foreign exchange economy. Tourism, which had fallen off drastically during Abdel Nasser's time due to Egypt's anti-western stance and poor tourist infrastructure, was restarted with the privatization of many nationalized tourist facilities. Sadat's dramatic peace initiative and treaty with Israel transformed the western view of the Arab leader and his country and further enhanced the country internationally, although the gesture was motivated by more practical considerations: Egypt couldn't afford another war with Israel. Despite the many advances the country has witnessed under President Hosni Mubarak, Egypt continues to suffer from the vagaries of regional instability and its exploding population. Government leaders openly admit that population growth is undermining all efforts toward developing the country's economy. This situation is further aggravated by consumerism. Servicing a foreign debt over twice the size of the national budget is another negative factor. Under pressure from the IMF and World Bank, Egypt finally began to lift price controls, reduce subsidies and begin to relax restrictions on trade and investment. Tourism represents one of the most lucrative sectors of Egypt's economy but is highly vulnerable to internal violence and regional politics. The government remains hopeful that the oil and gas discoveries in the western desert will produce significant revenues. Trade Egypt's main exports are petroleum and petroleum products, cotton and cotton textiles, farm produce, cotton clothing, and aluminium products. Egypt's main trading partners have been the U.S., Italy, France, Greece, Germany, Great Britain and Japan. The country's trade deficit continues to worsen, with an annual $3.5 billion of exports as against $10.5 billion in imports. Egypt must import wheat, flour, meat, machinery and automotive vehicles, iron, steel, food products, paper products and chemicals. Currency The Egyptian Pound (L.E.), divided into 100 piastres, is the official currency of Egypt. As of 1995 the 3.40 Egyptian Pounds equal One US Dollar. The once severe currency restrictions have largely been lifted and the Egyptian Pound can be freely exchanged with other currencies. |
