Egypt - Economy Development Planning

Development planning

Planning in Egypt remained essentially a blueprint for investment, and the balance between supply and demand was adjusted through quasi-market mechanisms and fiscal and monetary policies. The emergence of Egyptian economic planning could be traced to the creation in 1952 of the Permanent Council for National Production (PCNP). The PCNP initiated partial planning by surveying the country's basic economic resources and proposing investment projects and budgets. More comprehensive planning awaited the formulation of the First Five-Year Plan (1960-65). The plan was the work of the National Planning Committee, which absorbed the PCNP and other planning affiliates. It sought progress on all economic fronts, following what economists called a balanced growth model, which required heavy investments. It favored heavy industry, electricity, irrigation, and land reclamation--a persistent pattern since then.

Achievements were mixed: GDP grew at a rate close to the target of 7 percent per annum, but other goals were not met. The lack of macroeconomic coordination and implementation mechanisms, as well as the projection of unrealistic targets are cited as reasons for this failure. Furthermore, private-sector investment, which was expected to play a key role, did not materialize, especially after the wave of nationalization in the early 1960s.

A number of subsequent plans were never implemented. It is indicative of the long hiatus in planning that the next plan was also called the First Five-Year Plan (FY 1982-86). (To avoid confusion, this plan is referred to as the 1980s First Five-Year Plan, and the earlier one as the 1960s First Five-Year Plan). It was seen as part of a long-term plan extending to the year 2002. With this plan, the Ministry of Planning began to assume major responsibility for the economic process.

The plan itself had the same thrust as that of the 1960s, emphasizing heavy industry and electricity, and suffered similar problems. Apart from improving the infrastructure, especially in the metropolitan areas, its targets, including an annual GDP growth rate of 8 percent, were seldom accomplished. Before its conclusion, Egypt was feeling the heavy burden of external debt.

The latest plan, the Second Five-Year Plan (FY 1987-91), promised continuity and change. The most prominent investment areas were those of electricity and power, industry, public utilities, irrigation, and land reclamation. It anticipated a GDP growth rate of 5.8 percent per year, which in early 1990 it was already failing to meet. Most noticeably, the plan envisaged that private-sector investment would almost double to 39 percent of the total, from 23 percent in the previous plan. The increase was predicated upon an assessment of the sector's outlays in the preceding plan, which showed outlays as often surpassing targets, and upon the incentives the government would offer. The government specified other plan objectives, such as increased productivity, rather than added capacity; a shift to exports rather than import substitution; improvement of data gathering by spreading computer usage and training census personnel; and redressing regional disparities through investment in new and previously neglected regions.

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