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Egypt
>> Regional Overview >> Egypt Overview
Previous Years' Activities
2002, 2001, 2000, 1999, 1998, 1997
Last updated: 23
THE DEVELOPMENT CHALLENGE: Egypt, a strong moderating force in the Middle East, has long been an important ally of the United States. Egypt and the United States share multifaceted strategic interests that include the achievement of stability and peace in the region. In the post-September 11th era, Egypt was one of the first Arab countries to publicly condemn the attacks and support the United States in the war against terrorism. The historic and continuing bilateral relationship that the U.S. has with Egypt serves the national security interests of both countries. It also promotes economic prosperity in Egypt through further developing the country's market-based economy that is transitioning from 40 years of state control. A key U.S. goal is for Egypt to become a fully integrated and competitive participant in the global economy.
Egypt made significant economic progress in the 1990s with major reforms that strengthened macroeconomic discipline, reined in inflation, and privatized many state-owned enterprises. Real economic growth averaged more than 4.6% over the decade and per capita Gross Domestic Product (GDP) has climbed above $1,500. Formidable challenges remain, however. Recurrent liquidity problems began in 1998 and, while successive devaluations totaling more than 25% have redressed some foreign exchange imbalances, hard currency shortages have persisted, especially after September 11th. Partly as a result, economic growth has slowed, the private sector faces increasing uncertainties, and the earlier growth of foreign direct investment has stalled. Privatization has slowed—with a still-sizable public enterprise sector—and despite general economic improvements, the gap between newly created jobs and the rising numbers of labor force entrants may actually be widening. Thus, for both the Government of Egypt (GOE) and USAID, accelerating job creation has emerged as an overriding goal. The GOE is aware the reform program needs renewed attention, but domestic and international circumstances facing Egypt create political obstacles.
USAID is working with the GOE to advance the reform process. More investment—both domestic and foreign—is necessary if higher growth rates are to be sustained and more new jobs created. This requires improving the legal infrastructure, easing the heavy burden of tariffs and other trade barriers, rationalizing the foreign exchange regime, removing market constraints for labor and capital, and restructuring the tax system while increasing transparency. Recent actions show the GOE’s willingness to make difficult economic decisions. For example, a free-trade agreement with the European Union has been signed and is now awaiting ratification, despite opposition of local interests fearing increased competition. Budget reporting has become more transparent, plans are underway for the central bank to become more autonomous, and, as mentioned above, the long-fixed exchange rate has been devalued. Job creation must match labor-force entrant numbers, and the proficiencies of these entrants must correspond closely with the needs of the market, both in relatively sophisticated areas like management and information technology and in the more fundamental skills imparted by basic education.
The positive effects of past family planning and mother/child health programs are clearly discernible, but greater efforts will be needed if the demand for and supply of new labor force entrants are to be balanced. Further health improvements for all Egyptians not only bolster living standards, but also support gains in labor productivity. As USAID begins to phase out its activities in infrastructure, millions of Egyptians enjoy greatly expanded access to utility services. Egypt continues to put in place the vital underpinnings for its continued economic growth, including the foundation for increased private investment. Further advances in the management of Egypt’s unique natural resource base are needed. Specifically, quality of life can be improved for the country's citizens by meeting higher standards for water and air quality. Also, Egypt and the rest of the world will benefit from protecting irreplaceable historic and natural monuments upon which the crucial tourism sector depends.
THE USAID PROGRAM: USAID plans to spend $655 million in ESF in Egypt in FY 2002 and is requesting $615 million in ESF in FY 2003. The Mission Performance Plan stresses accelerating economic growth—essential to strengthening Egypt as a stable and prosperous U.S. ally. The overall goal of USAID’s strategy is a globally competitive economy that benefits Egyptians equitably. Three strategic objectives aim at creating private sector jobs: (1) bolster the trade and investment environment; (2) develop competitiveness skills; and (3) increase access to sustainable utility services. Four strategic objectives target the enhancement of the human and natural resource base: (1) upgrade natural resource management; (2) provide health services; (3) strengthen governance and participation; and (4) improve basic education to meet market demand.
For these Agency priorities in FY 2002, USAID plans to spend the following amounts of economic support funds: $502.5 million—economic growth and agriculture; $39.4 million—human capacity development; $43.1 million—population and health; $45 million—environment and $25 million—democracy. USAID will request funding for similar priorities in FY 2003 as explained in the following Program Data Sheets.
OTHER PROGRAM ELEMENTS: Supplementary USAID-funded programs contribute to the achievement of the overall development goal specified in USAID's Egypt strategy. For example, through the Middle East Regional Cooperation Program (MERC), Egypt and other Arab countries have the opportunity to collaborate with Israel in developing and improving the quality of life in the subregion. Egypt also benefits from the U.S.-Israel Cooperative Development and Research Program (CDR). These programs administer collaborative research grants between Arab countries and Israel (MERC), and between developing countries, including Egypt and Israel (CDR). Some of the recent MERC and CDR activities that have benefited Egypt have included investigation of infectious poultry diseases found in Egypt; development of sensitive and accurate methods to detect Middle Eastern agricultural plant viruses; initiation of a registry of human cancer incidence by the Middle East Cancer Consortium to share information between different countries in the Middle East; analysis of maximum sustained yield of freshwater fisheries in Egypt, resulting in the recommendation to establish a hatchery for Tilapia fish; establishment of a regional information service on the safe and effective use of pesticides in Egypt; and improved coastal monitoring of coral reef areas in the Red Sea. The U.S.-Egypt Science and Technology Agreement that grants intended to positively influence development in Egypt.
ONGOING PROGRAMS FOR WHICH NO FY 2002 OR FY 2003 FUNDING IS REQUESTED:
Number: Title: Last Notified: Completion: 263-018 Infrastructure FY 2002 CBJ, page 375 FY 2005 OTHER DONORS: Egypt is a major recipient of bilateral and multilateral aid from at least 38 official and institutional donors. On a per capita basis, net official development assistance flows to Egypt since 1990 have been among the highest in the world. The United States is the largest single donor with the widest-ranging program. Other major donors include the European Union, with major programs in education enhancement, health sector reform, industrial modernization, and support to the government’s Social Fund for Development; Germany, with programs in environment, water supply and water management, agriculture, and solid waste management; Japan, with programs in environment, technology, small and medium enterprises, transportation planning, water management, and improved management of the Suez Canal; and various Arab organizations (the Abu Dhabi Fund for Development, the Arab Fund for Economic and Social Development, The Kuwait Fund for Development, the Saudi Fund for Development, and the Islamic Development Bank), with programs in industry, infrastructure, housing, and support for the Social Fund for Development. Other donors include Canada, Denmark, Finland, Italy, the Netherlands, Spain, Sweden, Switzerland, and the United Kingdom.
Program Data Sheets
- 263-016 Environment for Trade and Investment Strengthened
- 263-017 Skills for Competitiveness Developed
- 263-018 Access to Sustainable Utility Service in Selected Areas Increased
- 263-019 Improved Management of the Environment and Natural Resources in Targeted Sectors
- 263-020 Healthier, Planned Families
- 263-021 Egyptian Initiatives in Governance and Participation Strengthened
- 263-022 Basic Education Improved to Meet Market Demands
Country Background Information Resources
CIA Factbook
Library of CongressNational Geographic Country Maps
State Dept. Country Information
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Last Updated on: May 29, 2002 |
