Egypt Economy and Energy

By | January 3, 2022

Institutional organization

After the fall of King Farouk in the 1952 military coup, Egypt was transformed into a republic, although an authoritarian regime backed by the military has been in place ever since. The Constitution of 1971 – amended several times – gave the president wide powers: in addition to the command of the armed forces, the head of state was responsible for the appointment of the prime minister and the council of ministers, as well as provincial governors, commands of the armed forces and security, the most important religious figures and high court judges. Added to this was also a right of veto over the laws. Following the fall of Mubarak, the process of writing the new Constitution has undergone ups and downs, starting with the referendum of March 2011.

After Mursi’s deposition, a new Constitution was approved by a large majority in a referendum held in January 2014. The text, which appears to be a re-edition of the 1971 Constitution, strengthens the prominent role of the armed forces (articles 203, 204 and 234): military courts can try civilians; full army budget control powers ; autonomy of the Supreme Council of the Armed Forces in the appointment of the Minister of Defense (for eight years). In addition, religious parties are prohibited and the Sharia law is confirmed (art. 2) at the basis of Egyptian law, but articles are nevertheless abolished. 4 and 219 which concerned the role of religion in law and in the exercise of state power. Although the new Basic Charter gives the military oneprivileged status, institutionalizing the influence of the army on the political management of the country, contains elements of secularism and greater guarantees of law than the previous text adopted by the Mursi presidency. For Egypt business, please check


Among the countries of the Arab world, Egypt is the third largest economy after Saudi Arabia and the United Arab Emirates, with a GDP of 286.1 billion dollars. From 2006 to 2008 the Egyptian economy grew on average by 7%, recording a decline (4.7%) in 2009 due to the repercussions of the international economic crisis, and then recovering in 2010 (5.1%).

The outbreak of internal revolts and the political instability that followed from 2011 to today have blocked the resumption of economic growth, which stood at 2.2%. The sharp decline in economic activities had an inevitable negative impact on the macro-economic situation, highlighting an increase in the Egyptian public debt and the deficit (which correspond respectively to more than 100% and 14% of total GDP), a strong contraction of investments and the consequent deterioration of the balance of payments caused a sudden hemorrhage of foreign exchange reserves, which from the 32 billion dollars at the end of 2010 have returned to stabilize at just over half after the minimum peak reached in 2012 (11 billion). To further worsen the state of the deficit, the 3 plan was added,

The tourism sector, which constitutes a good portion of the Egyptian GDP and contributed in the pre-crisis period with revenues of 11.9 billion dollars, was affected above all by the profound internal political tension. In an attempt to revive the economy, the Mahlab government sought to stimulate investment through a partial reform of the legal system and an attempt at deregulation to reduce the burden of the complex Egyptian bureaucracy. Although the government is late in implementing deeper structural reforms than the economy would need, the latter has recently launched an important investment plan in the infrastructure sector through public-private partnerships, such as the one concerning the expansion works of the Suez Canal.

While these investments could help tackle the unemployment problem, on the other hand, they will increase the fiscal deficit, already burdened above all by the extensive policy of subsidies on basic necessities such as food and fuel. This is one of the reasons for the lack of agreement on the IMF loan which would require the implementation of profound reforms and the cut in subsidies, which have already been partially reduced by the introduction of some legislative measures in April 2014. the precious aid of the Gulf monarchies contributed to the difficult economic situation in Egypt, abundantly arriving since the fall of Mohammed Mursi in the summer of 2013. Above all thanks to the intense mediation of al-Sisi, Saudi Arabia,financial default. Egypt is now in 128th place out of 187 countries analyzed in the World Bank’s Doing Business Index (in 2008 it was among the top ten top reformers) and 118th out of 148 countries in the global competitiveness index. Although the costs of the riots and transition are high and the general climate remains uncertain and volatile, the political situation in Egypt appears to be heading towards a form of stability that could favor some economic recovery in the country in the long run.


Egypt remains among the main oil and gas producers in the region despite the depletion of fields in the Gulf of Suez which has led the government to start exploration activities for gas and oil in border areas, such as the Western Desert on the border with Libya, the offshore areas of the Mediterranean and the Sinai. The explorations were undertaken by foreign companies (primarily BP and Eni) in collaboration with the state-owned Egyptian General Petroleum Corporation (Egpc). An important infrastructure for oil export is the Suez-Mediterranean Pipeline (Sumed), 50% owned by Egypt. It represents an alternative transit route to the Suez Canal for oil coming from the Red Sea and destined for the Mediterranean.

The growth in electricity consumption of 8% per year (uninterrupted since 2009) has been added since 2011 to the collapse in gas production (which has decreased every year since 2012 by more than 10%), to delays in construction projects for new electrical systems and, finally, to the accumulation of deficits on subsidies given by the government to almost half of the total needs for domestic use. All this has resulted in continuous blackouts, which become particularly frequent during the hottest months of the year. The Kuwaiti Petroleum Corporation has rushed to Egypt’s aid, offering coverage of 85,000 barrels per day of crude oil and 1.5 t of diesel to make up for the lack of gas, guaranteeing emergency energy coverage until 2016. All funded. from Kuwaiti government loans. The ability to cope with these energy criticalities, as well as to find concrete answers to the difficult economic situation, appears to be the most pressing challenge of the executive in office.

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