The agricultural revolution connected with the agrarian reform of 1952 (see above) did not allow, as hoped, the formation of the capital necessary for the establishment of other economic sectors and in particular of new industries. The funds from the liquidation of large agricultural properties (beyond the expropriation limit set at 200 feddan) were directed towards building constructions and, even when the state intervened by subjecting them to prior authorization, there were no significant shifts in favor of initiatives industrial. These were mainly employed by the state and public bodies.
The total investment expenditure in connection with the first five-year plan 1957-62 (see above) is estimated at 260 million Egyptian pounds. The program was part of a large state intervention whose overall objective is to more than double per capita income over the next twenty years, from £ 33 in 1956 to £ 77 in 1976. This increase is based on a development of the national income from 900 million pounds in 1956 to 2,470 million in 1976 and on an increase in the population over the same period from 23.5 to 32 million individuals. The share of national income from industrial activities should be raised from 11% to 19% as a result of the industrialization plan, with an average annual increase of 17%. In terms of imports,
On the financial level, the state initiative is conditioned by the scarcity of internal savings and currency availability, already blocked by the British government after the Suez accident and subsequently partially released. Currently, the level of these funds is almost nil, if we take into account the high indebtedness that the country has incurred in bilateral clearing accounts. The external balance of payments has shown a constant deficit during the last decade, with the only exception of 1954. In recent years, the hedging of imports has been complicated by the breakdown of financial relations with the USA, by the blocking of credits. opened by European countries and by the diversion of traditional traffic flows towards eastern countries, in particular towards the USSR. While towards this area, the Egyptian trade balance has always been active, it has presented a surplus of imports towards the convertible currency areas. Given the lack of intercommunication between the two areas, the major imports from Western countries could only be financed through a mobilization of foreign exchange reserves, which have steadily decreased since 1950, and with the use of the credit margins provided for by bilateral agreements. with the aforementioned countries. This led to a shift in the financial relations of Egypt which are now increasingly tied to cotton exports to the Eastern Bloc and to Russian aid. In recent times, the relaxation of relations with Western countries has opened up new prospects for the injection of foreign capital at the state level.
The economic and political events of Egypt have led to substantial changes in the country’s financial structures. In 1951, the National Bank of Egypt was recognized de iure as a central bank, but its definitive statute was approved in November 1957. The measure followed the nationalization laws of financial institutions issued in 1956 and the establishment of control over the banks in the following year. With the law n. 22 of 1957, banking activities (together with insurance and commercial representation) pertaining to foreign countries were “Egyptianized”, after those belonging to British and French subjects had already been seized (following the Suez incidents) and still first those belonging to Israelite citizens. In accordance with the new provisions, banking operations can only be carried out by joint-stock companies managed and wholly owned by Egyptians and which have a minimum capital of Leg. 500 thousand. For the fulfillment of the law, a period of five years has been left within which all the foreign activities specified above must be transferred to the Egyptian jurisdiction. Control over the banking system has been entrusted to the central bank with law no. 163 of July 1957. It also extends to special agricultural, construction and industrial credit institutions operating in the country under the aegis of the state. With the law itself, the central bank has been equipped with all the necessary tools to “regulate the type, volume and cost of credit”. In addition to the maneuver of the wise men, the bank can operate on the market and establish the reserve margins on deposits and liquidity on the banks’ assets from time to time. Following the absorption and merger of the banking organizations promoted by the aforementioned laws, the Egyptian banking system is now made up of 32 institutions, of which 11 are branches of foreign banks in the process of liquidation. On 11 February 1960, the ownership of the central bank was transferred to the state by virtue of law no. 40. Under the new law, the bank’s shares were converted into government bonds, redeemable in 12 years and yielding five percent annually. For Egypt public policy, please check loverists.com.
The parity rate of the Egyptian pound is currently set at US $ 2.8176. Transactions with foreign countries, however, are largely regulated at a higher exchange rate. Until September 1959, the settlement of receipts and payments in foreign currency took place through a system of bonuses set periodically by the central bank. The current system, in force since September 1, 1960, provides for a premium of 6.4% (a discount of 6.0% compared to the official exchange rate) for exporters of cotton and silk. All other exports (except for oil and cement which are done at the official exchange rate) have a premium of 17.5 % (discount of 14.9%). At import, the premium is 10% 127.5% for some invisible items).
