Reform or De-Industrialization
Chapter 7: ERSAP and Industrialization: Concluding Remarks
Since joining the International Monetary Fund in 1945 as an original founding member, Egypt has signed ﬁve stabilization agreements with the Fund. These agreements were: a credit facility in May 1962, which collapsed fairly rapidly; a stand-by arrangement in April 1977; an extended fund facility in July 1978; another stabilization package in May 1987, which was supported by a stand-by credit of SDR 250 million; and ﬁnally the stabilization package under the Economic Reform and Structural Adjustment Programme (ERSAP) which has been through various stages since the beginning of the 1990s. The various packages since the late 1970s and 1980s must be viewed against a dismal background of a stagnant economy, rapidly rising inﬂation (estimated unofﬁcially at 30 per cent in mid-1987) and a budget deﬁcit which approached 23 per cent of GDP in 1985/86 – and possibly even higher in 1987/88. The elements of the packages mentioned above reﬂected with varying degrees the main policy recipe propagated by the IMF. Invariably, they included the following measures; trade liberalization; gradual devaluation-cumuniﬁcation of the exchange rate; raising energy prices; decontrol of the prices of agricultural commodities; action to reduce the budget deﬁcit as a proportion of GDP; liberalization of interest rates; setting limits on monetary expansion; privatization; and, lately, a social safety net. Commitments under a stabilization agreement usually include some strategy-related stipulations in addition to the speciﬁc policy measures in different areas. Such commitments, be they of the broad strategic type or the narrow...
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