2015 Index of Economic Freedom

Egypt

overall score55.2
world rank124
Rule of Law

Property Rights20.0

Freedom From Corruption32.0

Limited Government

Government Spending68.0

Fiscal Freedom85.8

Regulatory Efficiency

Business Freedom65.4

Labor Freedom53.6

Monetary Freedom67.4

Open Markets

Trade Freedom70.0

Investment Freedom50.0

Financial Freedom40.0

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Quick Facts
  • Population:
    • 84.2 million
  • GDP (PPP):
    • $553.6 billion
    • 2.1% growth
    • 3.2% 5-year compound annual growth
    • $6,579 per capita
  • Unemployment:
    • 12.7%
  • Inflation (CPI):
    • 6.9%
  • FDI Inflow:
    • $5.6 billion
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Egypt’s economic freedom score is 55.2, making its economy the 124th freest in the 2015 Index. Its overall score is 2.3 points higher than last year due to improvements in six of the 10 economic freedoms, including labor freedom, monetary freedom, and investment freedom, that outweigh declines in trade freedom and the control of government spending. Egypt is ranked 12th out of 15 countries in the Middle East/North Africa region, and its overall score is below the world average.

Over the past five years, Egypt’s economic freedom score has declined by nearly 4.0 points, pushed down by double-digit losses in property rights, investment freedom, and financial freedom. However, this decline has come to a halt in the 2015 Index.

Further action to restore and improve economic freedom is essential to counter economic stagnation and poverty. Long-established weaknesses in the institutional framework that include price controls and government subsidies of gasoline have greatly burdened the budget and forced the government to seek a bailout from both the IMF and other Arab states. The rule of law is ineffective and arbitrary, and judicial procedures are long and costly.

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Background

The army ousted President Hosni Mubarak in February 2011, and the Supreme Council of the Armed Forces assumed power pending election of a new civilian government. The parliament was dissolved in June 2012 after one-third of its members were found to have won their seats illegitimately. Mohamed Morsi of the Muslim Brotherhood’s Freedom and Justice Party was elected president in June 2012 and granted himself sweeping new powers in November. His increasingly authoritarian rule triggered huge demonstrations and a July 2013 army coup. Field Marshal Abdel Fattah el-Sisi was elected president in May 2014. Three years of political instability have hurt tourism and foreign investment, both of which are important sources of foreign exchange. There have been limited market reforms, but food, energy, and other key commodities remain heavily subsidized.

Rule of LawView Methodology

Property Rights 20.0 Create a Graph using this measurement

Freedom From Corruption 32.0 Create a Graph using this measurement

Long before the 2013–2014 political upheaval, corruption was pervasive at all levels of government. The rule of law has been highly unstable across the country, and the judicial system’s independence is poorly institutionalized. Judicial procedures tend to be protracted, costly, and subject to political pressure. Property rights are not protected effectively, and titles to real property may be difficult to establish.

Limited GovernmentView Methodology

Egypt’s top individual and corporate income tax rates are 25 percent. Other taxes include a property tax and a general sales tax. Total tax revenue is equal to 12.9 percent of domestic income. Government spending equals 32.7 percent of the domestic economy, and public debt has risen to 89 percent of GDP. Measures to reduce the budget deficit by lowering energy subsidies are underway.

Regulatory EfficiencyView Methodology

Previous regulatory reforms have made starting a business less time-consuming. However, without restructuring in other policy areas, those reforms have failed to create real momentum for dynamic entrepreneurial growth. Informal labor activity persists in many sectors. The government introduced significant electricity and fuel price increases in 2014 in a move to cut state subsidies.

Open MarketsView Methodology

Egypt’s average tariff rate is 8.1 percent. The government increased tariffs on luxury goods in 2013. Foreign ownership of land in some regions is restricted. Despite the uncertainty generated by political turmoil that has included the overthrow of two governments, the banking sector remains integrated into international markets and has shown a high level of resilience. Banks continue to be relatively well capitalized.

Country's Score Over Time

Bar Graph of Egypt Economic Freedom Scores Over a Time Period

Country Comparisons

Bar Graphs comparing Egypt to other economic country groups Download Charts

Regional Ranking

rank country overall change
1Bahrain73.4-1.7
2United Arab Emirates72.41.0
3Qatar70.8-0.4
4Israel70.52.1
5Jordan69.30.1
6Oman66.7-0.7
7Kuwait62.50.2
8Saudi Arabia62.1-0.1
9Morocco60.11.8
10Lebanon59.3-0.1
11Tunisia57.70.4
12Egypt55.22.3
13Yemen53.7-1.8
14Algeria48.9-1.9
15Iran41.81.5


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