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Economy in Egypt

Egypt's economy depends mainly on agriculture, media, petroleum exports, and tourism; there are also more than three million Egyptians working abroad, mainly in Saudi Arabia, the Persian Gulf and Europe. The completion of the Aswan High Dam in 1970 and the resultant Lake Nasser have altered the time-honored place of the Nile River in the agriculture and ecology of Egypt. A rapidly-growing population, limited arable land, and dependence on the Nile all continue to overtax resources and stress the economy. The government has struggled to prepare the economy for the new millennium through economic reform and massive investments in communications and physical infrastructure. Egypt has been receiving US foreign aid (since 1979, an average of $2.2 billion per year) and is the third-largest recipient of such funds from the United States following the Iraq war. Its main revenues however come from tourism as well as traffic that goes through the Suez Canal. Egypt has a developed energy market based on coal, oil, natural gas, and hydro power. Substantial coal deposits are in the north-east Sinai, and are mined at the rate of about 600,000 tonnes (590,000 LT; 660,000 ST) per year. Oil and gas are produced in the western desert regions, the Gulf of Suez, and the Nile Delta. Egypt has huge reserves of gas, estimated at 1,940 cubic kilometres, and LNG is exported to many countries.

Economic conditions have started to improve considerably after a period of stagnation from the adoption of more liberal economic policies by the government, as well as increased revenues from tourism and a booming stock market. In its annual report, the IMF has rated Egypt as one of the top countries in the world undertaking economic reforms. Some major economic reforms taken by the new government since 2003 include a dramatic slashing of customs and tariffs. A new taxation law implemented in 2005 decreased corporate taxes from 40% to the current 20%, resulting in a stated 100% increase in tax revenue by the year 2006.

FDI (Foreign Direct Investment) into Egypt has increased considerably in the past few years due to the recent economic liberalization measures taken by minister of investment Mahmoud Mohieddin, exceeding $6 billion in 2006.

Although one of the main obstacles still facing the Egyptian economy is the trickle down of the wealth to the average population, many Egyptians criticize their government for higher prices of basic goods while their standards of living or purchasing power remains relatively stagnant.

The best known examples of Egyptian companies that have expanded regionally and globally are the Orascom Group and Raya. The IT sector has been expanding rapidly in the past few years, with many new start-ups conducting outsourcing business to North America and Europe, operating with companies such as Microsoft, Oracle and other major corporations, as well as numerous SME's. Some of these companies are the Exceed Contact Center, Raya Contact Center, E Group Connections and C3 along with other start ups in that country. The sector has been stimulated by new Egyptian entrepreneurs trying to capitalize on their country's huge potential in the sector, as well as constant government encouragement.

 

Sources of the national income          

Suez Canal, tourism, gas, and oil are the main sources of income in Egypt.

* Suez Canal remains steady source of revenue for Egyptian economy. Despite the past year's political instability, revenues from the Suez Canal have reached record levels and are providing much-needed hard currency to the Egyptian economy.

 

* Tourism is one of the most important sources of national income in Egypt, The Egyptian people used to the presence of tourists in their midst since ancient times. Featuring Egypt abundance of tourist attractions of all kinds, because of the abundance of temples also Pharaonic Village which has many of the sayings of Pharaonic which has care of it and invest tourist attraction, is also available tourist infrastructure, which includes five-star hotels, tourist villages and tourist agencies and offices of the airline and is the congestion tourism in general in Cairo, Alexandria and Red Sea Governorate, Hurghada, Sinai and especially South Sinai Sharm El Sheikh, Dahab and Nuweiba, where you can find many sports like diving, which attracts tourists from around the world and particularly from Russia, Germany and Italy, a fan of this kind of sports, as Egypt is characterized by its proximity to coral reefs in the Red Sea and types of fish for which the festivals and competitions fishing yacht, which comes to fishing enthusiasts of Egyptians and foreigners.

* As Egypt is one of the most prominent tourist country in the world where the number of tourists visiting Egypt more than 9.79 million tourists in 2007. Egypt is also ranked 58th among 124 countries in the tourism competitiveness index

 

Currency of Egypt

In 1834, a Khedival Decree was issued providing for the issuing of an Egyptian currency based on a bimetallic base, i.e.: based on gold and silver. The Egyptian pound, known as the gineih, was introduced, replacing the Egyptian piastre (qirsh) as the chief unit of currency. The piastre continued to circulate as 1⁄100 of a pound, with the piastre subdivided into 40 para. In 1885, the para ceased to be issued, and the piastre was divided into tenths 'oshr el-qirsh). These tenths were renamed milliemes (malleem) in 1916.

The legal exchange rates were fixed by force of law for important foreign currencies which became acceptable in the settlement of internal transactions. Eventually this led to Egypt using a de facto gold standard between 1885 and 1914, with E£1 = 7.4375 grams pure gold. At the outbreak of World War I, the Egyptian pound was pegged to the British pound sterling at EG£0.975 per GB£1. The first E£1 banknote issued in 1899

Egypt remained part of the Sterling Area until 1962, when Egypt devalued slightly and switched to a peg to the United States dollar, at a rate of EG£1 = US$2.3. This peg was changed to 1 pound = 2.55555 dollars in 1973 when the dollar was devalued. The pound was itself devalued in 1978 to a peg of 1 pound = 1.42857 dollars (1 dollar = 0.7 pound). The pound floated in 1989; however, the float is tightly managed by the Central Bank of Egypt and foreign exchange controls are in effect.

The Egyptian pound was also used in Anglo-Egyptian Sudan between 1899 and 1956, and Cyrenaica when it was under British occupation and later an independent emirate between 1942 and 1951.

The National Bank of Egypt issued banknotes for the first time on 3 April 1899. The Central Bank of Egypt and the National Bank of Egypt were unified into the Central Bank of Egypt in 1961.

For a wider history surrounding currency in the region, see British currency in the Middle East.

Before the 19th century, locally minted coins were used in Egypt due to the absence of an official currency in the country. In 1834, a parliamentary bill issued a new currency based on a bimetallic system made up of gold and silver. This bill was executed in 1836 and the Egyptian Pound replaced the Egyptian Piastre, which had been used since Egypt was a part of the Ottoman Empire. In 1885, the bimetallic standard was replaced with the single gold standard due to fluctuations in the value of silver.

In 1898, the National Bank of Egypt was formed, and began issuing the first banknotes a year later. These notes were convertible into gold until 1914, when the Egyptian Pound adopted a fixed exchange rate to the British Pound. In 1961, the Central Bank of Egypt was formed and was given the responsibility to manage and control the national currency. A year later, Egypt left the Sterling Area and pegged its value to the US Dollar until 1989. Today, the Egyptian Pound's exchange rate fluctuates while being closely managed by the central bank.

 

 

EGYPT INFLATION RATE
The inflation rate in Egypt was recorded at 12.97 percent in November of 2013. Inflation Rate in Egypt is reported by the Central Bank of Egypt. Inflation Rate in Egypt averaged 8.91 Percent from 1958 until 2013, reaching an all time high of 35.10 Percent in June of 1986 and a record low of -4.20 Percent in August of 1962. In Egypt, the headline Consumer Price Index (CPI) measures the change in the cost of a fixed basket of goods and services that are purchased by a representative sample of households from urban areas, which include Cairo, Alexandria, urban Lower Egypt, urban Upper Egypt, Canal cities and Frontier governorates. The most important categories in the headline CPI are Food and Beverages (40 percent of total weight); Housing, Water, Electricity, Gas and other Fuels (18.4 percent); Medical Care (6.3 percent) and Transportation (5.7 percent). Clothing and Footwear account for 5.4 percent of total index and Education for 4.6 percent. Hotels, Cafes and Restaurants represent 4.4 percent of total weight and Furnishings, Household Equipment and Routine Maintenance of the Dwelling for 3.8 percent. Miscellaneous Goods and Services account for 3.7 percent, Communications 3.1 percent, Recreation and Culture 2.4 percent and Tobacco and Related Products 2.2 percent.

 

 

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