With the promulgation of a series of laws beginning in 1961, the economy of Egypt was rapidly socialized. Foreign trade, wholesale trade, banking, insurance, and most manufacturing enterprises were taken over by the government. Although agriculture, urban real estate, and some manufacturing concerns remained in private hands, stringent regulations were imposed. An economic development plan introduced in 1960 brought about a considerable expansion of industry and increase in production during the succeeding five years. The plan was replaced in 1965 by a seven-year plan that was less successful, partly because of insufficient foreign investment; a comparatively modest three-year plan was introduced in 1967. Losses suffered during the Arab-Israeli War of June 1967, and the general economic dislocation that persisted afterward seriously retarded social and economic development. Egypt's economic ills were a major reason for the peace efforts of the late 1970s, because the country could not afford another war. Although the economy grew rapidly during the late 1970s and early 1980s, the collapse of world oil prices in the mid-1980s, followed by the Persian Gulf crisis of 1990, left Egypt in difficult financial straits.
With one of the highest ratios in the world of population to cultivable land, Egyptian government leaders have acknowledged population growth as the principal cause of the country's economic difficulties. The economy also is burdened by foreign debt, which in the early 1990s was more than twice the size of the country's annual budget. In the early 1990s Egypt began putting into place economic reforms recommended by the International Monetary Fund and the World Bank, including relaxed price controls, reduced subsidies, and a liberalization of trade and investment.
The estimated annual national budget in the mid-1990s included about $16.8 billion in revenues and $19.4 billion in expenditures.
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