Estimating Egypt's Equilibrium Real Exchange Rate (Electronic book text)

1. In the last six years the Egyptian economy has undergone significant economic reforms in favor of macroeconomic stability and market liberalization. The fruit of these reforms is just beginning to mature: the economy is experiencing substantially higher growth rates, led by higher domestic and foreign private investment, the fiscal and external positions are strong, and living standards have finally started to improve. With the aid of a precautionary stand-by arrangement from the International Monetary Fund and assistance from the World Bank, the Egyptian government is also implementing an extensive privatization program comprising two thirds of the public enterprise sector as well as the divestiture of public ownership in the financial sector; a rationalization of the tax system and implicit subsidies is also under way.