Reform or De-Industrialization
Chapter 1: Stabilization Experience before the 1990s
1. Stabilization experience before the 1990s Our main emphasis in this volume is on the stabilization and structural adjustment experience in Egypt during the 1990s. However, it is useful, in the way of a background, to make a brief digression on the experience in the 1970s and 1980s. Discussion of such experience has to take into consideration that earlier programmes between Egypt and the IMF were either aborted or only partly implemented. Although Egypt is a founding member of both the IMF and the World Bank, its relations with the two Bretton Woods institutions, particularly the Bank, was turbulent throughout the 1950s and much of the 1960s. The High Dam episode and later socialist transformation both constrained the relation between Egypt and the two institutions. During 1961–62 the country faced a foreign exchange crisis as a result of a number of unfavourable developments. There was a cotton crop failure and a fall in rice output which resulted in a signiﬁcant drop in export proceeds. As a result, between 1960 and 1962 cotton exports fell by 38 per cent and total merchandise exports fell by 20 per cent. At the same time, Egypt had unavoidable standing commitments on capital account. Faced with a foreign exchange crisis, Egypt signed a stabilization agreement with the IMF in May 1962. But the May 1962 stand-by agreement proved short-lived; it collapsed soon after it was signed. That was to be Egypt’s only stand-by agreement with the Fund until the late 1970s. The shift...
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