Economy in Egypt

Economy—overview: At the end of the 1980s Egypt faced problems of low productivity and poor economic management compounded by the adverse social effects of excessive population growth high inflation and massive urban overcrowding. In the face of these pressures in 1991 Egypt undertook wide-ranging macroeconomic stabilization and structural reform measures. This reform effort has been supported by three successive IMF arrangements the last of which was concluded in October 1996. Egypt's reform efforts—and its participation in the Gulf war coalition—also led to massive debt relief under the Paris Club arrangements. Although the pace of reform has been uneven and slower than envisaged under the IMF programs substantial progress has been made in improving macroeconomic performance. Budget deficits have been slashed while foreign reserves in 1997 were at an all-time high. And Egypt has been moving toward a more decentralized market-oriented economy. These economic reforms and growing investment opportunities have prompted increasing foreign investment but incoming capital has largely been concentrated in stock market portfolio flows. Egypt's economy also has been hit by a sharp downturn in tourism—a key foreign exchange and job producing sector—following the 17 November 1997 massacre of foreign tourists at Luxor. Although Egypt will probably regain these revenues over time the slump in tourism is likely to slow the GDP growth rate in 1998.  In 1999 egypt lost a lot of money due to a majoir drought.