Etudes par pays volume 2, PDF, 346 p., 1,4 Mo - Femise

11873_02 Study D2: Poverty, Informal Sector, Health and Labour
5. TRENDS AND CORRELATION
5.1. The evolution from the structural adjustment of the 80s
After a period of unprecedented economic growth in Egypt during 1975-
1985, the situation changed dramatically since 1984/85. The Egyptian
economy enjoyed a decade of boom, mainly, due to large foreign exchange
inflows because of the increased petroleum prices, export proceeds, higher
Suez Canal revenues, accelerating worker’s remittances, and enhanced
tourism earnings.
The drop in foreign inflows was the result of unfavorable external
developments, principally the decline in petroleum prices as well as in other
related sources of foreign exchange, recession in the world economy, and
the sharp decline in the flow of aid. Unable to respond to these external
shocks due to structural weakness, Egypt experienced a dramatic fall in its
growth rate and severe macroeconomic imbalances (Kheir –El-Din & El-
Shawarby, 2003).
It became obvious that the Egyptian economy could not meet the needs of the
society without external aids. In the meantime, Egypt faced a problem with
its creditors, as it was not able to maintain debt service payments. The
following key indicators show the extent of the crisis in the beginning of
1990, which the Egyptian economy was confronted with (CBE, 1992-1998):
a) Total external debt around US $ 49 billion,
b) Total external debt to GDP 150%,
c) Budget deficit around 20% of GDP,
d) Inflation rate higher than 20%,
e) Negative real interest rate around 6%, and,
f) Reserves were just over three weeks of imports.
FONDAZIONE CENSIS
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