The Egyptian Stabilization Experience: An Analytical Retrospective

Arvind Subramanian

No 1997/105, IMF Working Papers from International Monetary Fund

Abstract: This paper analyzes the successful Egyptian stabilization experience during the 1990s, focusing on its distinctive features and contrasting them with the recent experiences of other developing countries. The key policy elements were a large fiscal adjustment, use of an exchange rate anchor that has endured for over six years, supported by prudent monetary policies, and early moves to liberalize interest and exchange markets. The outcomes included the avoidance of an output collapse despite the magnitude of fiscal adjustment; avoidance of stresses on the financial system; reversal of endemic dollarization; financial deepening at the expense of the banking system; and maintenance of external viability despite a lackluster export performance.

Keywords: WP; monetary policy; balance of payments; broad money; treasury bill; real interest rate; output performance; short-term debt; debt forgiveness; partnership agreement; current account; banking system viability; excess reserves; Commercial banks; Fiscal consolidation; Capital inflows; Inflation; Fiscal stance; Eastern Europe (search for similar items in EconPapers)
Pages: 61
Date: 1997-09-01
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Citations: View citations in EconPapers (14)

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