Egypt's Capacity To Absorb and Use Economic Assistance Effectively
ID-77-33: Published: Sep 15, 1977. Publicly Released: Dec 3, 1982.
- Full Report:
U.S. assistance to Egypt has become a political symbol of evenhanded support among the Middle East adversaries. The economic impact of U.S. assistance depends on Egypt's development of economic reforms.
The U.S. programs provide long term benefits through development projects. Short term balance-of-payment relief is provided through the Commodity Import Program and food aid. The most serious impediment to Egypt's development is its difficulty in mobilizing domestic resources. Egypt's accelerated development program will require it to stretch financial, material, and organizational resources to the limit. This could have a destabilizing effect if development is not accompanied by sound budgetary management.
Matter for Congressional Consideration
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Matter: Congress should consider the merits of providing hard currency financing for the local costs of selected projects in the U.S. assistance program for Egypt. The following factors should be considered: (1) the U.S. level of assistance to Egypt is based on political considerations, not on Egypt's economic capacity to accelerate its development program; (2) the economic reforms enacted are expected to fall short in providing the increased savings required to accelerate Egyptian development; and (3) U.S. assistance to Egypt should include projects which will provide long term benefits.