According to its Constitution, Egypt is a social democracy in which Islam is the state religion. President Hosni Mubarak was reelected unopposed to a fourth 6-year term in a national referendum in September 1999. The Cabinet and the country's 26 governors are appointed by the President and may be dismissed by him at his discretion. Egypt is in transition from a Government-controlled economy to a free market system.
Agriculture remains the largest employer and is almost entirely in private hands.
The tourism sector generates the largest amount of foreign currency. Petroleum exports, Suez Canal revenues, and remittances from approximately 2 million citizens working abroad are the other principal sources of foreign currency. These income sources are vulnerable to external shocks. Over the past decade, the Government has enacted significant economic reforms, which have reduced the budget deficit, stabilized the exchange rate, reduced inflation and interest rates significantly, and built up substantial reserves. However, low international oil prices, the 1997 Luxor terrorist attack, and the effects of the Southeast Asia economic crisis all negatively affected foreign exchange earnings in from 1997 through 1999, causing the trade and current account balance deficits to widen and negatively affecting the exchange rate.