- In 1991, the government started a comprehensive stabilization and reform program, the Economic Reform and Structural Adjustment Program (ERSAP), aiming at generating sufficient and sustainable growth rates, improving the standard of living, reducing unemployment and bringing inflation rates to safe levels. The program has successfully achieved macroeconomic stability. Central to this success were three elements: a major fiscal adjustment, exchange market reform and the adoption of an exchange rate anchor and a supportive monetary system.
- Privatization was an essential component of Egypt's economic reform and structural program:
- The privatization program started with the issuance of law 203 of 1991, which established the regulatory framework for the sale of shares and assets of the 314 public enterprises affiliated to 10 Holding Companies (HCs). The law allows the sale of public enterprises to private sector investors and does not preclude purchase of assets by foreigners.
- In addition to Law 203 companies, the government is committed to the sale of its outstanding stakes in 511 Joint Venture Companies (JVCs) according to Presidential Decree 341 of 1996 to reform and reconstruct JVCs. This includes both state and joint venture banks and insurance companies.
- Privatized companies are spread over a variety of sectors including agricultural, real estate and construction, food and beverages, milling, pharmaceuticals, cement, chemicals, fertilizers, engineering, retail, textiles, housing and tourism and telecommunications.
- The reform arrangements coupled with massive external debt relief, helped Egypt improve its macroeconomic performance during the 1990s. Although the pace of structural reforms such as privatization and new business legislation were slower than expected, Egypt’s steps toward a more market- oriented economy have increased foreign investment and enhanced macro-economic indicators.
- Sound macroeconomic policies and external financing, together with increasing the pace of structural reforms, including broad-based trade liberalization, privatization and financial sector reforms were implemented to push growth rates to higher levels.
- The year 2001 witnessed the implementation of a series of long-awaited measures on the economic arena. The government signed its long-negotiated Association Agreement with the EU, passed a mortgage law, successfully sold its debut sovereign Eurobond, and devalued the currency to below black-market rates for the first time.
- The liberalization of trade, promotion of exports and surge in FDI as well as institutional reform, were key areas for enhancing Egypt’s competitiveness. The agreement reached in Doha in November 2001 to launch a new trade round that addresses the concerns of developing countries gave Egypt more access to world export markets.
- The reduction in government borrowing provided a scope for recovery in private credit growth and hence investment and GDP growth during 2002. This helped further to control the budget deficit over the medium term despite the economic slowdown in 1999/2000 and 2000/2001.
(Click here for Egypt Economic Indicators)
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(Last Updated November 2007) |
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Egypt's reforms have also strongly contributed to the country's integration into the global economy. Egypt's volume of trade reached US $59.9 billion during 2006/2007, a 22.4% increase, compared to US$49 billion in the previous year. Imports and exports continue to rise, with total commodity exports amounting to US $22 billion (2006/2007) with an annual increase of 19.3%. Meanwhile, total commodity imports, in 2006/2007 reported an increase of 24.3 %, reaching US $37.8 billion.
Egypt's leading merchandise exports are crude oil, petroleum products, finished goods (steel, textiles and apparel), semi-finished goods (including aluminum and cotton yarn) and raw materials (cotton and other agricultural products). Leading imports include intermediate goods (especially iron and steel products), followed by investment goods.
The European Union (EU) remains Egypt's largest trading bloc, accounting for 34.4% of Egypt's imports and 34% of its exports in FY2006/07. The U.S. is Egypt's largest single trading partner, accounting for approximately 21.8% of its imports and 31% of Egypt's exports in FY 2006/07. Asian countries account for around 15.6% of imports and 13% of exports. Arab countries account for 8.6% of imports and receive 12% of exports.
Egypt Trade Agreements:
Egypt encourages regional cooperation based on peaceful coexistence, economic and political stability. Expanding trade with other countries and within region is a vital approach towards integration in the international market
Egypt has signed several multilateral and bilateral agreements to promote and develop the competitiveness of its exports and enhance global trade. These agreements give Egypt access to the world’s largest markets, and give investors in Egypt a wide manufacturing base for exports.
Egypt’s Membership in Multilateral Trade Agreements includes Agadir, COMESA, Euro-Med Partnership and GAFTA. In addition, Egypt is a member of bilateral agreements across the globe.
(For a complete list of Egypt’s Bilateral and Regional Agreements click here)
Agadir Agreement:
The Agadir Agreement is a free trade agreement between four Arab countries; Egypt, Jordan, Morocco and Tunisia. It was signed in Rabat in February 2004 and came into force in March 2007.
Agadir Agreement adopts the Pan-EUROMED Rules of Origin that allow for diagonal accumulation of origin amongst its member countries through the possibility of using production input components originating in any of the member countries of Agadir Agreement, EU countries or EFTA countries, to comply with the required rules of origin for the purpose of exporting their products to EU markets exempted from customs duties under their Association Agreements with the EU.
Click here for more on the Agadir Agreement
The COMESA Agreement:
The Common Market for Eastern and Southern Africa (COMESA) agreement was signed on December 8, 1994, to replace the PTA Agreement (Preferential Trade Area) of December 21, 1981 and came into force on September 30, 1982. COMESA member States are Burundi, Comoros, Democratic Republic of Congo, Djibouti, Egypt, Eritrea, Ethiopia, Kenya, Libya, Madagascar, Malawi, Mauritius, Rwanda, Seychelles, Sudan, Swaziland, Uganda, Zambia and Zimbabwe.
Egypt became a COMESA member in July 1998. The vision of the COMESA is to have a fully integrated economic community for prosperity, internationally competitive and able to merge into the African Union.
Click here for more on the COMESA
Egypt-EFTA Agreement:
The European Free Trade Association (EFTA) member states including Iceland, Liechtenstein, Norway and Switzerland have signed a free trade agreement with Egypt in January 2007. The main objective of the agreement, which entered into force on the 1st of August, 2007, is to support and increase the bilateral trade between Egypt & EFTA States and to promote the economic integration into the Euromed Zone through the liberalization of trade in industrial products and processed agricultural products. It also contains provisions of increasing the foreign direct investments and issues concerning the intellectual property rights.
Under the agreement Egyptian exports of industrial products are liberalized and Egyptian customs tariffs on industrial imports from the EFTA States will be gradually reduced until January 2020 when custom duties on all industrial products will be eliminated.
Click here for more on Egypt/ EFTA States Agreement
The Euro- Med Partnership:
The Euro-Mediterranean Partnership was launched at the 1995 Barcelona Conference between the European Union and its originally 12 Mediterranean Partners: Israel, Morocco, Algeria, Tunisia, Egypt, Jordan, the Palestinian Authority, Lebanon, Syria, Turkey, Cyprus and Malta.
Egypt started negotiations with EU for concluding a partnership agreement in 1995. Its initial signature was made on January, 26, 2001 in preparation for the final signature that was put on June 25, 2001. In March 2007, Egypt and the EU adopted the Neighborhood Policy Action Plan (link here) to boost bilateral trade over the next 3-5 years. The EU will support implementation of an Action Plan with a €558 million ($731 million) assistance package. The agreement is expected to open new fields of cooperation between the two countries
Click here for more on the Euro- Med Partnership
GAFTA:
Egypt is also determined to foster closer economic links with its Arab neighbors via the conclusion of the Greater Arab Free Trade Area (GAFTA) which has been concluded with several Arab countries. GAFTA has been signed and is implemented by 12 Arab countries; Bahrain, Egypt, Iraq, Jordan, Kuwait, Lebanon, Libya, Mauritania, Morocco, Oman, Qatar, Saudi Arabia and United Arab Emirates. Egypt began implementing the terms of GAFTA in 1998. The GAFTA calls for phasing out existing tariffs by 2008 between its member countries.
Click here for more on GAFTA
Click here for more on Trade Agreements between Egypt and Arab countries
The Qualifying Industrial Zones Protocol (QIZ):
The Qualifying Industrial Zones (QIZ) protocol is between Egypt, Israel and the U.S. It was signed on December 14, 2004, providing quota and duty free access to U.S markets for products manufactured in specific industrial zones, provided 35% of the commodity’s value is manufactured in an Egyptian QIZ, of which 11.7% consists of Israeli inputs.
In October 2007, the Israeli input requirement was reduced to 10.5%. Upper Egypt became also a new zone under the agreement according to the latest amendments.
Implementation of the QIZ protocol began upon ratification by the Egyptian and Israeli side on February 16, 2005. Since its ratification, the QIZ agreement helped increase Egypt’s exports to the U.S to $2.4 billion in 2006 from $ 1.3 billion in 2004 .
The QIZ protocol has encouraged Egyptian companies without any previous experience to enter the U.S market.
Click here for more on the Qualifying Industrial Zones Protocol (QIZ)
Click here for more on Egypt-U.S. Economic Relations
Egypt- Turkey FTA:
In January 2007, Egypt and Turkey ratified a bilateral free trade agreement (FTA) that was signed in 2005. Under the agreement, Egyptian industrial exports to Turkey are immediately exempted from customs duties.
The objective of this agreement is to eliminate difficulties and restrictions on trade in goods, including agricultural products; to promote, through the expansion of reciprocal trade, the harmonious development of the economic relations between the parties; to create conditions for further encouragement of investments particularly for the development of joint investments in both countries.
Click here for more on Egypt-Turkey Free Trade Agreement
Egypt and China:
Recently, the fields of bilateral cooperation between Egypt and China have been deepened. In June 2006 the two countries signed 11 trade and business cooperation agreements ranging from manufacturing of communication equipment to cooperation in the hydrocarbons sector. They also announced plans to further develop the Sino-Arab Cooperation Forum.
There is also a deal to establish an industrial zone in Egypt for joint Chinese- Egyptian investments in the fields of textiles footwear and pharmaceutical Industries and another deal to establish three private sector-operated technology service centers in Egypt.
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Last updated November 2007
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