ASSESSING THE PERFORMANCE OF MONETARY POLICY UNDER ECONOMIC REFORM AND STRUCTURAL ADJUSTMENT PROGRAM: THE CASE OF EGYPT

This paper assesses the performance of monetary policy in Egypt during the periods following the introduction of economic reform and structural adjustment program (ERSAP). It sets out to answer the question: Why couldn’t the central bank of Egypt (CBE) achieve the goal of price stability under the ERSAP? The study compares economic performance as of the nineties decade with both its counterpart in Germany, during the same periods, and with the economic performance of the Egyptian economy during the periods before the nineties, i.e. 1975-1990. The study concluded that the CBE could bring the rate of inflation down nevertheless, the rate of growth of both unemployment and real GDP has been worsened and price stability still far reaching. The failure to achieve price stability is explained by two reasons, namely, a conflict between monetary policy objectives and a chronic budget deficit financed by issuing new money.