Economic Policy Reform In Egypt

Egypt seems to be blessed with many factors, which can only be as a result of an effective economic policy reform. The labor force in Egypt is highly entrepreneurial. There have been instances in history when Egypt could at a stretch attain a sustainable rate of growth in its gross domestic product for many years. The sustainable rate of growth used to be between 8 percent to 10 percent. Economic policy reform in Egypt ought to be such that it permits private investment as well as competition in prices in the domestic economic set up. The economic policy reform in Egypt aims at changing few existing policies and norms in the country so that the country may have a higher gross domestic product, increase in the employment rate and to ensure that income is equally distributed among the people of the country. It has been observed from instances occurring in other countries that if there is too much intervention of the government to take control of matters related to the economic logistics, it stunts social welfare growth in the country.

Improvement of the incentive system of the country is brought about by the implementation of an efficient policy reform in Egypt. Economic policy reform in Egypt pertain to the following segments of the economy :

• Privatization
• Exchange rates
• Monetary policies
• Insurance
• Fiscal policy
• Labor
• Trade
• Public debt management.

Economic policy reform in Egypt commenced in the first half of the 1990s. Reforms in economic policies were directed for a free market economy. After the implementation of economic policy reform in Egypt, there has been a marked reduction in the budget deficit. Even inflation decreased to as low as 3%. The exchange rates were also stable and liberal. Until, 1997, Egypt showed considerable progress in the economy. However, owing to the East Asian currency crisis in 1997, there was slowdown in the global economy, adversely affecting Egypt too.

Economic policy reform in Egypt concentrated on the following:

Privatization:

The Egyptian government’s main aim comprises:

• Keeping the money market active
• Attracting foreign investment
• Experimenting with several options of Public Business Sector
• Taking care of payments of bank debts

Economic policy reform in Egypt pertaining to customs legislations:

The reforms were meant for:

• Bringing about simplification of the tariff structure
• Reduction of prices
• Encouraging export activities
• Rebooting the market
• Downsizing number of tariffs to 5 from 36.
• Reducing custom duties imposed on import of various commodities; on spare parts as well as capital goods.
• Resolving disputes pertaining to categorization of tariff.

Economic Policy reform in Egypt pertaining to corporate tax system:

Reform policies in Egypt in the corporate tax structure was adopted for the following purposes:

• Maintaining a fair system of taxation
• A consistent influx of revenues from the states
• Promoting operations pertaining to investment as well as production
• Reduction in the cost incurred on the transfer of technology

In addition to the above sectors of the economy, other spheres were also reformed equally. They included sales tax, foreign debt, income tax, taxation on profits earned by the corporates, foreign trade and other areas.