ARCHIVES HISTORIQUES
DELACOMMISSION
COLLECTION RELIEEDES
DOCUMENTS "COM"
COM(77)465
Vol.1977/0147

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COMMISSION OFTHEEUROPEAN COMMUNITIES
COM(77 )465final .
Brussels .4October 1977
COMMISSION COMMUNICATION TOTHE COUNCIL ONTHE
GUIDELINES OFCOOPERATION BETWEEN THE COMMUNITY
AND THEMASHREQ COUNTRIES
COK(77 )465final .

COMMUNICATION TOTHE COUNCIL
InanExchange ofletters contained intheFinal Act oftheCooperation
Agreements signed with Egypt ,Jordan andSyria theCommunity stated that
itwas prepared toundertake ,inconjunction with those countries ,the
preparatory work onsetting cooperation intrain and toappraise projects ,
aspart offinancial andtechnical cooperation ,sothat decision may be
adopted assoon astheAgreements enter into force .
Pursuant tothis Exchange ofletters theCommission issubmitting inthis
communication proposals ontheposition tobeadopted bytheCommunity
within theCooperation Councils ,which ,according toArticle 5(1)ofthe
Agreements andArticle 9(1)ofProtocol H°1tothose Agreements must
define theguidelines ofcooperation and the specific objectives offinan­
cial and technical cooperation .These proposals have been drawn upinthe
form ofdraft Cooperation Council decisions .Their content will have to
beapproved bythe two parties concerned atmeetings oftheJoint Commit­
tees setupunder theInterim Agreements pending their formal adoption by
theCooperation Councils after the entry into force oftheAgreements .It
iswith theguidelines approved inthis manner asastarting point that the
preparatory work foreconomic ,technical and financial cooperation will
have tobedone ,onthebasis oftheExchange ofletters referred toabove .
The Council will find annexed tothis communication notes onthe economic
and financial situation ofthe three countries ;these data were collected
mainly during fact-finding missions undertaken byrepresentatives ofthe
Commission and theEIB .Inaddition ,theBank has collaborated closely in
drawing uptheattached proposals ontheimplementation offinancial and
technical cooperation .
Indrawing upthese proposals theCommission took asastarting point the
idea that Community aid should not ,strictly speaking ,beconsidered as
transfers ofresources but rather assupport formeasures tobetaken to
establish economic cooperation under Article *+oftheCooperation Agree­
ments .Similarly ,theCommission considered that ,forboth political and

economic reasons ,one ofthe principles which itwould bedesirable to
take asabasis forputting into effect financial andtechnical coopera­
tion with |!theMashreq countries would bethefinancing ofoperations
within the framework oftriangular cooperation .
IntheCommission 'sview thework tobedone within theCommunity onthe
basis ofthis communication should beundertaken sothat agreement between
thepartners onthe content ofthe draft Cooperation Council decisions can
still beobtained before 20October 1977 «This would ensure that projects
and schemes are identified and the initial financing requests examined
before the entry into force oftheCooperation Agreements inaccordance
with theExchange ofletters contained intheFinal Act toeach Agreement .

GUIDELINES FORCOOPERATION WITHTHEARABREPUBLIC OPEGYPT
1*Thefollowing objectives aretakenasgeneralguidelines forthe
cooperation toheestablished betweentheCommunity andEgyptforthe
benefitofbothparties :
(i)Development oftraining schemesinordertoincreaseinteralia
Egypt'shumanandtechnical potential ;
(ii)Development oftechnical assistance withintheframework of
integrated projectsinordertoensurethattheobjectives
described belowareeffectively attained ;
(iii)Development ofindustrial andagricultural potentialinorderto
improveproduction andincrease capacity andhelptoestablish
newproduction areasandtherebyimprovelivingandworking
conditions ;
(iv)Promotion ofindustrial cooperation betweenfirms,inparticular
inordertofacilitate thetransfer oftechnology ,thedevelopment
ofprivateinvestment andestablishment ofjointventures ;
(v)Development ofbasicinfrastructure toincreasetheefficiency of
Egypt'seconomic system.
2.Technical andfinancial cooperation willbeputintoeffectin
accordance withthefollowing principles :
(i)EveryeffortwillbenodetoensurethatCommunity aidisusedto
supporteconomic cooperation schemestobeimplemented tinder
Article4oftheCooperation Agreement .
Withthisendinview,specialattention willbepaidtooperations
whichwouldpermitthesimultaneous useofdifferent formsofaid,
inparticular tooperations likelytoattracttechnology ,capital
andotherbenefitsresulting fromtheimplementation ofthe
abovementioned Article 4»
(ii)Community aidmeasureswillbedesignedtoencourage ,ifpossible,
othersuppliers offundstogiveaid,inparticular inthecontext
oftriangular cooperation .

2
3»Onthebasis oftheprinciples described at 1and 2above and in
thelight oftheobjectives ofEgypt 'sdevelopment plan ,theaid
specified inArticle 2ofProtocol No 1totheCooperation Agreement
will beused inaccordance with theprovisions ofthat Protocol to
finance orpart-finance projects andmeasures which correspond tothe
following economic priorities :
I. Training and technical assistance
(i)Technical andvocational training schemes ,particularly totrain
intermediate-level instructors intheindustrial ,agricultural
and tourist sectors ;
(ii)Technical assistance toensure theeffectiveness oftheprocess
ofselecting ,preparing ,executing andadministering projects ;
(iii )Technical assistance with aview tosetting upacentre for
development ,training and industrial ,technological and commercial
information .
II.Development ofproduction
Industry
(i)Modernization anddevelopment ofindustries capable ofmeeting
domestic market requirements under satisfactory economic conditions
and contributing tothe diversification ofintersectoral trade ;
(ii)Development ofindustries using local rawmaterials .
Agriculture
(i)Development ofproductivity andextension ofland suitable for
cultivation (drainage ,irrigation ,soil protection andrevitaliza­
tion );
(ii)Harnessing ofwater ;
(iii )Modernization anddevelopment ofthemarket preparation ,storage ,
transportation ,processing anddistribution ofthemain agricultural
products ,particularly soastorespond intheappropriate manner
tothe needs ofthe local and regional markets ;
(iv)Development offeed-grain production forexport .

III .Basic infrastructure
Development ,ofbasic infrastructure ,mainly infrastructure required to
\
establish newproduction areas and toremove bottlenecks ,
impeding theexecution andoperation oftheprojects referred tounder II.

GUIDELINES FORCOOPERATION WITHTHEHASHEMI TEKINGDOM OPJORDAN
1.Thefollowing objectives aretakenasgeneralguidelines forthecooperation
toheestablished betweentheCommunity andJordanforthebenefitofboth
parties :
(i)Trainingaimedatincreasing thetechnical andoccupational skillof
labour,inparticular inthecontextofschemesofaregional nature.
(ii)Development ofindustries ,inparticular thoserequiring arelatively
highlyskilledlabourforce.
(iii)Promotion ofindustrial cooperation betweenfirms,inparticular in
ordertofacilitate thetransfer oftechnology ,thedevelopment of
privateinvestment andtheestablishment ofjointventures .
(iv)Development ofagricultural production inordertomeettherequirements
ofthelocalandregional market.
(v)Development ofbasicinfrastructure toincreasethepotential ofthe
Jordanian econoiqyandimprovelivingandworkingconditions .
2.Technical andfinancial cooperation willbeputintoeffectinaccordance
withthefollowing principles :
(i)EveryeffortwillbemadetoensurethatCommunity aidisusedtosupport
economic cooperation schemestobeimplemented underArticle 4ofthe
Cooperation Agreement .
Withthisendinview,specialattention willbepaidtooperations which
wouldpermitthesimultaneous useofdifferent formsofaid,inparticular
tooperations likelytoattracttechnology ,capitalandotherbenefits
resulting fromtheimplementation oftheabovement ionedArticle4*
(ii)Communityaidmeasureswillbedesignedtoencourage ,ifpossible,other
suppliers offundstogiveaid,inparticular inthecontertoftriangular
cooperation .

2
3.Onthebasis oftheprinciples described at 1and 2above ,and in
thelight oftheobjectives ofJordan 'sdevelopment plan ,theaid speci­
fied inArticle 2ofProtocol No 1totheCooperation Agreement will be
used inaccordance with the provisions ofthat Protocol tofinance or
part finance projects andmeasures which correspond tothe following
economic priorities :
I. Training and technical assistance
(i)Technical assistance andtraining schemes toenable technical and
vocational training centres ofaregional nature tobeset upfor
the agricultural ,industrial and tourism sectors .
(ii)Training ofinstructors .
(iii ) Scientific research ,inparticular onsolar energy ,the
environment and data processing .
II.Development ofproduction
Industry
Projects aimed atreducing imports and atsupplying theregional market ,
inparticular those involving the use ofnatural resources .
Projefcts tohelp modernize andrestructure small -andmedium-sized firms
inthe private sector .
Agriculture
Projects aimed atincreasing thecountry 'sself-sufficiency infood
orexports toother countries inthe region .
Soil protection and revitalization .
III .Basic infrastructure
(i)Transport infrastructure toimprove theopportunities forexport ,
particularly toneighbouring markets .
(ii)Basic infrastructure toencourage thedevelopment ofeconomic ac­
tivities ,inparticular water supplies fordensely populated areas
orthe opening upofcertain rural areas .

GUIDELINES FORCOOPERATION WITHTHESYRIAN ARABREPUBLIC
H
1.Thefollowing objectives aretakenasgeneralguidelines forthecooperation
toheestablished betweentheCommunity andSyriaforthebenefitofboth
parties :
(i)development oftraining schemesinordertoincreaseSyria'shuman
andtechnical potential ;
(ii)development ofindustrial andagricultural potential inorderto
improveproduction andincrease capacity ,toimprovelivingand
workingconditions andtoreduce regionaldisparities ;
(iii)promotion ofindustrial cooperation betweenfirms,inparticular in
ordertofacilitate thetransfer oftechnology andtheestablishment
ofjointventures ;
(iv)development oftechnical assistance withintheframework ofintegrated
projectsinordertoensurethattheobjectives described aboveare
effectively attained ;
(v)development ofbasicinfrastructure toincreasetheefficiency of
Syria'seconomic systemandrelations withneighbouring countries .
2.Technical andfinancial cooperation willbeputintoeffectinaccordance
withthefollowing principles :
(i)EveryeffortwillbemadetoensurethatCommunity aidisusedtosupport
economic cooperation schemestobeimplemented underArticle4ofthe
Cooperation Agreement .
Withthisendinview,specialattention willbepaidtooperations
whichwouldpermitthesimultaneous useofdifferent formsofaid,
inparticular tooperations likelytoattracttechnology ,capitaland
otherbenefits resulting fromtheimplementation oftheabovementioned
Article
(ii)Community aidmeasures willbedesigned toencourage ,ifpossible,
othersuppliers offundstogiveaid,inparticular inthecontext
oftriangular cooperation .

3.Onthebasisoftheprinciples described ,at1and2above,andinthe
lightoftheobjectives ofSyria'sdevelopment plan,theaidspecified in
Article 2ofProtocol No1totheCooperation Agreement willbeusedin
accordance withtheprovisions ofthatProtocoltofinanceorpart-finance
projects andmeasures whichcorrespond tothefollowing economicpriorities :
I.Training andtechnical assistance
(i)Technical andvocational training schemes,particularly totrain
intermediate-level instructors intheindustrial ,agricultural and
touristsectors ;
(ii)technical assistance toensuretheeffectiveness oftheprocessof
selecting ,preparing ,executing andadministering projects,
II•Development ofproduction
Industry
(i)Modernization anddevelopment ofindustries capableofmeetingthe
requirements ofthelocalandregional marketundersatisfactory
economic conditions ;
(ii)development of industries usinglocalrawmaterials.
Agriculture
(i)Development ofproductivity andextension oflandsuitableforcultivation
(drainage,irrigation ,soilprotection andrevitalization );
(ii)harnessing ofwater;
(iii)modernization anddevelopment ofthemarketpreparation ,storage,
transportation andprocessing ofagricultural products ,particu­
larlysoastorespondintheappropriate mannertotheneedsofthe
localandregional markets.
III.Basicinfrastructure
Development ofinfrastructure aimedatregional development orrelating
totheprojects referred toatII.

ANNEXE I
B0TPT i
ECONOMIC AND FINANCIAL SITUATION

Et1
Et1
u.a.1
USS1CURRENCY EQUIVALENTS
Officiai Rate
u.a.2.25
USS2.56
Et0.44
Et0.39Parallel 'TarketRate
(FromDecember 1,197£)
u.a.1.2o
USS1.43
Et0.79
Et0.70
Abbreviations
TT=million
B«=billion
Weights &Pleasures
metricsystem

-z-
CONTENTS
Page
I.SUMMARY ANDCONCLUSIONS 1
II.GENERAL FEATURES : 7
III.POPULATION ANDE?*PLOYMENT R
IV.RECENTECONOMIC DEVELOPMENTS 9
1.General 0
2.Principal sectorsoftheeconomy 10
3.Structure ofresource use 13
4.Public ,finance 13
5.The "bankingsystem,moneyandcredit 16
6.Pricesandwages 1?
7.Balanceofpayments 20
fi.Theexternal debt 22
V.MAJORECONOMIC SECTORS ?3
1.Agriculture ?3
2.Petroleum andgas 26
3.Manufacturing andmining
4.Power 2o
5.Transport' 29
6.Tourism 30
VI.THE1976-19^0 DEVELOPMENT PLANANDFUTUREPROSPECTS 3Q
Annexes 35

-3-
i_aC®
Table
1.Employment byeconomic sector q
2.GDP bysectoral origin 11
3.GDP :sector shares andgrowth rates IJC6 1975 12
4.Development andstructure ofdomestic resource use 14
5.Investments andtheir financing 15
6.Government revenues andexpenditures 17
7.Monetary survey 1970-1975 19
P. Price indexes 1972 197^ • 20
9.Balance ofpayments 1970 -1975 21
10.Summary ofexternal debt 23
11.Structure ofagricultural production 25
12.Structure ofmanufacturing industry in1975 27
Annexes
1.Commodi bycomposition ofimports (1975'
2.Commodity composition ofexports (1975 ^
3.Major crops andlivestock products :volume andgrowth
4.Output ofselected industrial products

I.SUMMARY AND CONCLUSION
TheArab Republic ofEgypt hasapopulation ofaround 3•*1people and
itextends over anarea ofapproximately onemillion km2.Over $6/£ofthe
country consists ofdesert andalleconomic activity isconcentrated intheNile
Delta region .Thedensity oftheinhabitable area isoneofthehighest inthe
world (more than 1000persons perkm2),andpopulation growth remains very high
(2.2-2.5 fo)increasing theproblem offood supply ,underemployment andurban
congestion .At1975 price andexchange (l)rates ,GNPpercapita wasestimated
atUS$320 .
Prom theearly fifties tothemid-sixties ,economic growth averaged
6iop.a.During these years theimportance oftheprivate sector declined sharpl ;
andEgypt became apredominantly public sector economy .Between 1965 and1974
therate ofeconomic growth declined tojust over 3$p.a.;lack ofeconomic
coordination ,lowproductivity ofthepublic sector ,together with theslowdown
ofagricultural output ,andthe1967 warwere themain factors constraining
economic growth .After the19^7 war ,investments weresqueezed bythediversion
ofresources todefense which ,together with adecline ofcapital inflow ,reduce
gross fixed capital formation to12?\ofGDPin1972 .Thegross domestic savings
rate fell sharply after 1967 andremained below 5£ofGDP .Inspite ofaconsi­
derable effort tomobilise thecountry 'sdomestic financial resources ,largely
bywayoftaxation ,thehigh level ofdefense expenditures andmore recently
thegrowth ofsubsidies ,especially forfood hasledtoagrowing government
deficit .These deficits ,although partly financed byasteady inflow ofArab
grants ,brought about anincrease inthepublic debt with thebanking system .
This ,inturn ,caused arapid rise inthemoney supply andthus exacerbated
domestic inflationary tendencies .Atthesame time ,theslowdown ofoutput and
thedecline ofexports ,coupled with rapidly rising imports produced alarge
trade deficit which has ledtoagrowing external debt inspite oflarge amounts
ofgrants from other Arab States .
After theOctober 1973 war ,President Sadat presented aneweconomic
strategy inhis "October Working Paper ".This strategy isbased onan"open-door'
policy andisinessence anattempt torestructure theeconomy from abasically
centrally controlled system into amore market-oriented one ,with more onsphasis
onpublic sector efficiency ,increased scope fortheprivate sector andencoura­
gement offoreign enterprises .
(1)Officiai rate USS1=El,0.3913

2
Intheshort run ,therealisation oftheneweconomic strategies has
runinto problems ,many outside Egypt 'scontrol .Among these aretheslow progress
towards peace ,which prevents ashift from defense toproductive expenditures ;
theworld recession which ledtolower capital inflows from western countries ;
and therise infood andother import prices which resulted invery sizeable
balance ofpayments deficits .Internally ,itproved difficult toimplement a
rapid change intheestablished bureaucratic structure ,andtostimulate the
long depressed private sector .Foreign investors toowere slow inresponding to
Egypt 'snew economic policy .
Inspite oftheabove mentioned difficulties ,GDPincreased atarate of
around 3$and 6$resp .during 1974 and 197*5 :'thesectoral growth performance
varied considerably from stagnation inagriculture andmoderate expansion in
industry ,tosteady growth intheservices sector .However ,thepublic finance
and external situation ofthecountry suffered greatly during these years .
Thepublic deficit increased from EL534 'Iin1973 toEL,1347 in1975 (<?9^
ofGDP).Inspite oflarge amounts ofgrants from other Arab countries ,theover­
all deficit ofthebalance ofpayments rose towell over US$1B.Theresulting
foreign borrowing brought about asharp increase inthenon-military external
debt toanestimated USS5»1Bbytheend of1975 »repayment obligations in
1975 exceeded 27foofforeign exchange earnings .Furthermore ,duetoanexcessive
recourse toshort term borrowing ,thetime profile ofthecommercial foreign
debt became extremely unfavourable .
Astothestructure oftheeconomy ,available evidence suggests that
inspite ofacertain reorientation inrecent years there aremany problems that
need tobesolved inthenear future ,amongst vihich onemaycite particularly
the following :
-Seasonal andregional underemployment inagriculture issignificant .
Also ,intheurban areas ,andparticularly intheservice sector ,there
appears tobeaconsiderable amount ofunderemployment andemployment
oflowproductivity .Theunemployment problem ofeducated groups has
been partially avoided byautomatically providing jobs inthepublic
sector toalluniversity graduates ,butatthecost ofoonsideraole
overstaffing .Emigration ,especially totheneighbouring Arab countner ,
hasonly recently intensified and ,although itcontributed toeasing
theemployment problem ,ithascreated some shortage ofskilled rranpo .<■-

3
andtechnical staff such astrained economists andengineers .Asa
consequence ,technical assistance isurgently needed inalmost all
sectors oftheEgyptian economy (project evaluation ,planning and
implementation ,management ).
-infrastructure isrelatively well-developed ,"buthasbeen starved of
resources ofinvestment inrecent years which hasledtoaconsiderable
deterioration .Maintenance ,modernisation andextension istherefore
urgently needed ,particularly inports ,power ,transport ,telecommunica­
tions and urban facilities .
-Since 1965 »food production haslagged behind population growth .
Increasing food imports ,both involume andunit value ,combined with
declining exports have widened theforeign exchange gap .Theslow pro­
gress inagriculture (47$ofthelabour force ,24$ofGDP ,33 of
export earnings )resulted from land andwater constraints ,capital shor­
tage ,inadequate price andother incentive policies ,inflexible institu­
tional structure andsub-optimal resource allocation .The sector suffers
from excessive government regulation ,e.g. ofprices ,cropping patterns
andmarketing channels ,andthis haslimited private initiative and
investment .Themarketing andprocessing ofagricultural products remains
aserious handicap toexpansion ofagricultural production .Amajor
result ofpast price policies hasbeen tocause agriculture 'sterms of
trade with industry todeteriorate ,largely asameans oftransfering
resources tothelatter sector .There hasalso been agradual decline
intheproportion ofinvestment intheagricultural sector andthe
supply ofessential inputs (fertilizers ,seed ,research ,extension services' 1'
hasshown very little improvement .Within agriculture resource allocation
hasbeen oriented heavily towards land reclamation ,thus limiting
investment inthe "oldland^' where drainage andsoil improvement have
become major problems .Itappears that land reclamation hasvery often
proved tobeacostly anddisappointing undertaking ,launched inmany
cases without proper feasibility studies andwithout ensuring thefull
productive useofthereclaimed lands .
-Despite some developments inheavy industry (fertilizer ,steel ,cement ),
food processing andtextiles still dominate theindustrial sector ,
contributing more than 50^ofthetotal value ofindustrial output .
Thepublic sector still plays acrucial role inEgypt 'sindustry ,accoun­
ting for90/oofannual industrial investment andformore than 75 of

4
industrial value-added .Private activities have been heavily restricted
and little attention hasbeen paid tothedevelopment ofsmall scale
private industries .Inrecent y«ars ,manufacturing industry hasbeen
held back bylack ofcapital andforeign exchange ,andmany plants have
been operating farbelow capacity because oflack ofequipment ,spare
parts andrawmaterial .There issubstantial wastage of "ma+erial inputs
andtheefficiency isgenerally low .Ontheother hand ,capacity cons­
traints arebecoming increasingly serious inmajor sectors (cement ,
fertilizer ).Agreat number offactories areinurgent need ofrenova­
tion andforeign expertise .Other severe constraints onfurther develop­
ment ofthe industrial sector are' :insufficient overall and inter -
industry planning ,insufficient useoftheprice system asindicator
ofrelative scarcities ,excess ofbureaucracy ,lowmanagement efficien­
cyandslow orinconsistent decision-making ,lack ofdecentralisation
and insufficient influence ofthestate-owned enterprises ondecisions
regarding prices andemployment .
After thewarof1967 »thesystem ofmedium term planning wasabandoned
andreplaced byannual plans .Afresh start towards lengthening theplan period
wasmade with the1976-80 development Plan ,which ,however ,exists only inpreli­
minary draft form and isineffect being executed intheform ofannual plans .
The 197.6-30 Plan isexpected tobefinalized bytheendofAugust 1977 •Themain
macro-economic objectives ofthe Plan are :
-toincrease GDPby11$p.a .(inconstant prices );
-toreduce thecurrent deficit ofthebalance ofpayments toalevel not
exceeding capital goods imports ;
-toincrease theshare ofinvestment to23$ofGDPin19^0 andtoraise
gross domestic savings to19%ofGDPattheendofthePlan period .
Theprojected increase inemployment during thefive year Plan period
isestimated at1.2million ,i.e. anaverage 240000employment opportunities
peryear ,ascompared with theavarage annual incrase inthelabour force of
more than 325000 .However ,taking into consideration themigration oflabour
toneighbouring Arab countries which averaged around 100000p.a .during the
past 3years ,theoverall employment situation should show animprovement .

5
Theplanned amount oftotal investment during thefive year period is
around ELT,P>BorUS$19«9 B(at1975 constant prices ),andthegeneral
investment strategy differs considerably from previous plans .TheI976 -COPlan
emphasizes theneed toimprove andexpand infrastructure ,itgive priority to
projects with ashort gestation period and itstresses theneed tobring to
completion ongoing projects before new ones arestarted .Amuch larger role is
assigned totheprivate sector ,both domestic andforeign ,andgreater priority
isgiven tolabour intensive projects .However ,therelatively lowcapital -
labour ratio implied bythePlan (US$16000perworker )issomewhat misleading ,
asaconsiderable share oftheplanned investment relates toongoing projects ,
where sizeable capital expenditure have already been made .
About 25-30 $oftheplanned expenditures areearmarked fortransport
andcommunication .ThePlan identifies industry asthekeyeconomic sector ,
with agrowth target of12%andanallocation of24$oftotal investment .
Theaim istomodernize existing enterprises ,todevelop export oriented activi­
ties and toassign amuch large role totheprivate sector .High priority
industries are :construction materials ,agro-processing andfood ,textiles ,
chemicals andmetallurgy .Although agriculture wllonly receive 10f'ofthe
planned newcapital formation ,thedevelopment ofthis sector isconsidered of
great importance .Agricultural production isexpected toaccelerate to3$p.a.,
with most ofthis growth tocome from vertical expansion ofthe "oldlands ",
following theongoing efforts toincrease theproductivity (drainage ,soil and
water management ,more intensive cropping "patterns ,research andextension
service ).
Relative toEgypt 'spast economic performance ,andpresent situation ,
thePlan appears tobevery ambitious inboth itsgrowth andsavings targets .
Thegrowth objective of11$p.a.represents asubstantial acceleration over
theaverage 3p.a.realised during 1967-75 *ThePlan aims atfinancing by19^0
more than 80fsofgross investment from domestic savings .'This implies that ,
consumption will have tobecontained anddomestic savings ,which fell to1£
ofGDPin1974-75 andfinanced less than 6$ofinvestment ,will have to
beraised to19$ofGDPin19-0 .Theimplicit marginal savings rate of29 ',■>
isvery high foracountry atEgypt 'sstage ofdevelopment .Although past perfor­
mances areonly apartial guide tothefuture growth potential oftheeconomy ,
asthey have been severely biased byaseries ofunfavourable events ,itstill ,
appears doubtful whether thePlan 'stargets canbeachieved .

These doubts arise notonly because oftheambitious macro aspects ,butalso
because atpresent itwould appear that notenough projects have been suffi­
ciently studied andadvanced tothe stage ofimplementation .
Thegross foreign exchange requirements for1977-pOarecurrently
estimated atabout US$12.1 Bofwhich US ?•3.6Bin1977 alone .V'ithout
creating very serious external debt problems ,this high level offoreign
exchange requirements could only besatisfied ontheassumption that ,inthe
next fewyears ,theinternational community will continue toprovide financial
assistance atfavourable terms .
Inthe longer runhowever ,Egypt 'seconomic potential would appear to
bemore promising for thefollowing reasons :
-thelarge domestic market ,thekeygeographical location ,askilled
labour force ,lowwages andtheexistence ofvaried rawmaterials will
encourage further industrialisation ;
-there-opening andthe physical expansion oftheSuez Canal aswell a
theSumed pipelines should provide considerable foreign exchange revor .
Revenues from theSuez Canal areprojected torise from about US^3
in1976 toUS$700 TT(1975 prices )by19"0 (8%oftotal foreign
exchange earnings );
-thefuture oilproduction ofEgypt will probably substantially excec :!
domestic requirements thus allowing anincrease inoilexports worth
anestimated US$2.5M(30/£•oftotal foreign exchange earnings );
-tourism seems tohave aconsiderable potential (projection :US$SCO
in19p0i.e. 7$offoreign exchange earnings );
Egypt isincreasingly exporting skills intheform ofqualified labour
andthis maypermit anincreasing flow ofremittances .
However ,itisclear that these development prospects hinge toalarL-o
extent ontheprogress towards peace intheMiddle East andonthecountry 's
ability toattract external capital andtechnology .Furthermore ,aconsideraol
effort isnecessary inorder torealize thestructural changes which theGovnr
ment intends toenforce during thePlan period ,namely :
-ensure amore efficient resource allocation through amore consistent
overall planning effort andanimproved coordination ineconomic polio
and decision making ;
-contain consumption andincrease national savings ;
-redesign thecountry 'sprice andexchange rate policy inorder to
reflect more effectively economic scarcities andtobring about an
improved allocation ofresources .Thereduction ofprice subsidies
andtheadjustment intheinterest rate structure isofconsiderable
importance ;
-improve theefficiency ofthepublic enterprises ;
-improve thetime-profile ofexternal debt .

7
II.GENERAL FEATURES
1.Geography and Physical Resources
TheArab Republic ofEgypt ,with anarea ofapproximately onemillion km?,
lies inthenorth-eastern corner oftheAfrican continent .Over 96$ofthe
territory consists ofdesert andmarches ,andonly about 3.5%ispermanently
settled ;with anestimated 1976 population ofaround 3^ thedensi t.yofthe
inhabitable area (Nile valley andtheDelta )is10B5persons per*km2 ,oneof
thehighest intheworld .
Theclimate isgenerally warm andarid ,with rainfall ranging from 200nm
inthenorth (Alexandria )to80mmorless inthesouth .Asaresult ofdeficient
rainfall ,agricultural activities largely depend onirrigation waters from the
Nile .Major crops arecotton ,rice ,wheat ,maize ,sugar cane ,many types offruit F
andvegetables .
Egypt appears tohave sizeable oilandgasreserves ,atpresent notyet
completely assessed .Oilproduction ,which totalled approximately 16Mtin197-i
isprojected at35 tby19^0 •Present gasproduction isabout 1.2 Bm3which
covers local requirements .
Minerals presently being exploited include phosphate ,manganese ,iron ore
andsalt .Very sizeable phosphate deposits (concentration ofphosphoric acid
around 30ft)have been identified atIiamrawein andAbuTartur (l3t),butplans
fortheir exploitation areatanearly stage ;other recent discoveries include
copper ,lead andzinc .
Although thetransport infrastructure isrelatively well developed ,
modernisation andextension isurgently required .Arailways network of4000km
andaroad transport system of26000km,12000ofwhich arepaved ,connect
Cairo with themain centers ofthecountry .River transport isextensively used ,
especially intheDelta .

8
Themain ports ofthecountry areAlexandria ,Port Said andSuez .
Cairo andAlexandria are -themajor airports oftheco"untry equipped tointerna­
tional standard .
III .POPULATION AND E"*PLOY?TENT
Egypt 'spopulation isestimated ataround 38Min1976 ,anditsgrowth
rate lies inthe2.2to2.5$range .Emigration toneighbouring Arab countries ,
especially ofskilled people ,hasbecome important inrecent years ;some
estimates putthenumber ofEgyptians living abroad ataround 1million persons .
This braindrain hascreated some shortages oftrained manpower .
Table 1
Employment byEconomic Sector
Agriculture
Industry (l)
Services1970 1973
Thousands of ^
%persons 'Thousands of ^
persons r
■A048 48.9
1672 20.2
2554 30.-94212 46.6
1907 21.1
291^ 32.3
TOTAL 8274 100.0 9037 100.0
(l)includes construction ,utilities andtransport .
Total employment wasestimated tobeover 9-in1975•Thestructure of
employment ,asshown inTable 1,reveals that theagricultural sector ,absorbing
nearly half ofthetotal labour force ,isstill byfarthemost important source
ofemployment .
Duetoasteady migration ofmanpower anda grov /ingoverstaffing ofpublic
services ,asaresult ofadeliberate Government policy ,unemployment isat
present low .Underemployment however ,both inthepublic sector andinagricul t.n -<
isconsiderable .Infuture years ,itisexpected that theunemployment problem
will inevitably become more serious ,duetotheyoung ageofthepopulation and
thelikely drop inthesize ofthearmed forces .

9
IV.RECENT ECONO'TIC DEVELO PMENTS
1.General
From theearly fifties tothemid-sixties ,economic growth averaged
around 6$p.a.During these years ,theimportance oftheprivate sector sharply
declined andEgypt became apredominantly public sector economy ,notonly bymeans
ofownership ofthemajor factors ofproduction ,butalso through extensive
control ofallsectors ,including agriculture .
During theperiod between 1965 and1974 economic growth declined tojust
over 3$ Thelack ofcoordination inplanning ,thelowproductivity of
therapidly expanding public sector ,andtheslowdown ofgrowth inagricultural ■
output ,were themain factors constraining economic growth .The 1967 warexacer­
bated these difficulties ,asmilitary expenditure rose rapidly andinvestments
were further reduced .Ahigh level ofpublic expenditure ledtoagrowing
Government deficit which ,although partly financed byasteady inflow ofArab
grants ,brought about anincrea-sing public indebtedness with thebanking system .
This inturn caused arapid rise inthemoney supply andthus strengthened the
internal inflationary ,tendencies .Atthesame time ,theslowdown ofoutput and
thedecline ofexports ,coupled with rapidly rising improts ,produced alaxge
trade deficit .Asaresult ,theexternal debt increased rapidly inspite oflar^
capital transfers from other Arab States
TheOctober 1973 warbrought about radical changes intheinternational
political andeconomic climate ,andgave anopportunity toGovernment toinitiate
structural changes intheEgyptian economy .These changes were incorporated
inSadat 's"October Working Paper "presented in1974 1andarebased ontheso-
called "open-door "policy .Inessence ,this policy isanattempt torestructure
theeconomy ,transforming itfrom abasically Government controlled system into
amore market–oriented one ,with less central control ,more emphasis onpublic
sector efficiency (inGovernment andenterprises ),increased scope fortheprivav
sector ,andencouragement offoreign enterprise .
Intheshort run ,therealisation oftheneweconomic strategies hasgot
into problems ,many outside Egypt 'scontrol .Among these aretheslow progress
towards peace ,which prevents ashift from defence toproductive expenditures ;
theworld recession which ledtolower capital inflows from western countries ;

10
andtherise infood andother import prices which resulted invery sizeable
balance ofpayments deficits .Internally ,itproved difficult toimplement a
rapid change intheestablished bureaucratic structure ,andtostimulate the
long depressed private sector .Foreign investors toowere clow inresponding to
Egypt 'sneweconomic policy .
Theabove mentioned difficulties didnotinfact constrain actual growth
ofGDPwhich increased by6$in1975 thanks totheeffort ofreconstruction and
repairs .Thesectoral growth performance varied considerably from stagnation in
agriculture andmoderate expansion inindustry ,tosteady growth i-ntheServices
sector .However ,theexternal position andthepublic finances' suffered greatly
during this period .Inspite oflarge transfers from other Arab countries ,the
foreign borrowing necessary tobalance thecurrent account defici tbrought abo t.
asharp increase intheexternal debt toanestimated USt5.1Bbytheendof
1975 }repayment obligations in1975 were ashigh as27%ofthetotal foreign
exchange earnings .Furthermore ,duetoanexcessive recourse toshort term
borrowing ,thetime profile ofthecommercial foreign debt became extremely
unfavourable .
2.Prin cipalsecto rsoftheeconomy
In1975 Egypt 'sGDP ,measured incurrent prices ,reached ELA653 'T
(USZ11^90*01equivalent toapercapita income ofEL125 (around US$350)(l \
Thedevelopment ofGDP ,bysector andmeasured inconstant prices ,isillustra­
ted inTable ?.
Asshown inTable 3»theprimary sector ,including agriculture and fishe­
ries ,showed amarked decline initsgrowth rate over theperiod 19^1 and197%
Thereasons forthis aremanyfold ,butinadequate price andincentive policies
coupled with capital shortages ,aswell asland andwater limitations have been
singled outastheprincipal factors constraining thegrowth ofagricultural
output .
Thesecondary sector maintained agrowth rate exceeding that ofG?P in
spite ofsevere difficulties .Lack ofcapital andforeign exchange ,coupled ,
with shortages ofspare parts andrawmaterials have played animportant role
inlimiting thegrowth potential ofthis sector .Theneglect ofsmall andmedian
scale industries andtherestrictions onprivate initiatives have further ,
constrained economic activity .
(1)ConvertedattheofficialrateofUS$-Et0.3913.

TABLE2-GROSSDOMESTICPRODUCT,ATCONSTANTPRICES
(inn!lllonofEpounds;1969/70prices)
1969/701 1973 1974 1975
(preliflintry )I
PrimarySector 771.9 815-4 817.5 837.5
ISecondarySector707.5 815.7 815-5 950.1 I
I•industry,mining,petroleum 542.0 647.4 671.8 751.8
I•electricity 41.8 56.0 60.4 69.8
I•construction 123.7 112.3 83.3 128.5
ITertiarySector1073.4 1444.2 1539.6 1696.9
I•Transport,communications,storage 130.9 163.5 180.2 241.3
I•Tradeandfinança 229.0 313.6 350.3 386.S
I•Houslng 118.2 124.0' 127.1 130.0
I♦Publicutilities 11.7 16.5 18.7 20.0
I•Government Aotherservices 583.6 826.6 863.3 919.1
IGDP,atfactorcost2552.8 3075.3 3172.6 3484.5
1)YearendingJune30
Source:MinistryofPlanning

TABLE3-G0P:SECTORSHARESANDGROWTHRATES:1966-1975
(Calculated fromdataexpressedinconstantterms)
Sectors Sharesin60P
I Grrp.ha.Rftes
1966 1971 1974 1975 1961/66- 1956/71 1971/75
(Preliminary )
IPrimary28 29 26 24 4.0 2.0 1.7
(Secondary26 30 26 27 8.8 5-36.0
I•Induitry♦aming 21 23 21 22 7 5 2
I•Electricity 1 2 2 1 14 15 11
I.Construction 4 5 3 4 17 3 -11
ITertiary46 41 48 49 4.1 4.7 6.3
GOP 1C0 100 100 100 6.0 3.0 3.5
■■• I·■■
I...
Source:MinistryofPlanning

13
Onthecontrary ,thetertiary sector including transport ,trade and
Government services ,hasshown *atendency toaccelerate itsgrowth rate chiefly
thanks tothewidening ofpublic sector activities
3.Structure ofResource Use
Table 4illustrates thedevelopment and structure ofresource use for
thelast five years ;allfigures areincurrent prices .During this period ,
thenational resource useconsistently exceeded GDP ,growing from 105 'foofGBP
in1970/71to125$in1975 *This trend generated large deficits ontheexternal
resource balance ,which caused arapid increase ofexternal debt ,inspite of
thefact that Egypt received sizeable tranfers ,mainly from Arab oilproducing
Gulf States .
Domestic consumption hasbeen allowed togrow atanestimated 11$p.a.',
compared toGDPgrowth ofaround 9 measured incurrent prices .Asaresult ,
itsclaim ondomestic resources increased from 92$in1970/71totheentire
GDPin1974 }inthefollowing year ,thecountry 'sconsumption even exceeded its
domestic product .
Gross investment throughout these years stagnated atarelatively lov;
level ,claiming onaverage 13foofGDP .In1974 »gross investment increased to
185&ofGDP ,torise further to24$ofGDPin1975 *Available data indicate
that during theperiod 1970 and1975 »we.ll over 90$oftotal investment was
undertaken bythepublic sector .Private investment expenditures appear tohave
been limited toagriculture andhousing .
Asgross domestic savings dropped from 8$toless than 1^ofGDP
between 1970 and1975 ,fixed investment hadtobefinanced mainly from capital
transfers andexternal borrowings ,asshown inTable 5«
4.Public finance
Thepublic sector inEgypt consists ofthecentral Government ,local
governments andpublic authorities .Government owned companies aretreated as
autonomous agencies ,andtheir financing iskept outside theGovernment budgetary
system .
Thefinancial situation ofthepublic sector hassince 1970 /71been
characterised byagrowing imbalance between revenues andexpenditures .

TABLE4-DEVELOPMENT ANOSTRUCTURE OFOOMESTIC RESOURCE USE
(incurrentprices)
1970/71I
j1971/721973 1974 1975
Lni11ion %Lmi11(on %\*million % Lai11ion%Lai11ion X
•GrossDomesticResourceUse 3354 105 3591 105 4004 107 4736 118 5744 125
Consumption 2939 92 3151 92 3504 94 4013 100 4624 101
ofwhichprivate 2115 (66)(2223) (65)2427) (65)2836) (70)(3327) 92
GrossInvestment 415 13 440 13 500 13 723 18 1120 24
ofwhichflxed (355) 11) 365) (11)(462)I(12) 643) 16) (940) (20)
•ExternalResourceBalance(a) -150 -5)-169 -253 -710 -18-1144 -25
Importa(-) -476 15-494 -14-650 -17-1364 -34-1757 -38
Exporta 326 10 325 9 392 10 654 16 613 13
»GrossDomesticProduct(1♦2) 3204 100 3422 100 3746 4025 100 4600 100
•NetFactorService/Income(a) -22 6 -121 122 3
•GrossNationalProduct(3♦4) 3182,993428 100 3734 100 4056 101 4722 103
aurce;MinistryofPlanning,andCentralBank
(a)Exports,laportsandNetFactorServiceIncome(Table9)wereconvertedfromUSdollarsIntoEpoundsattheofficialrate.Thecalenderyeardatafor1970,1971and1972
wereusedtocalculatetheapproximate 1970/71and1971/72datatoconformtoGOPstatistics.

TABLE5-INVESTMENTS ANDTHEIRFINANCING
(Inamion*ofEpounds,currentprice*)
1970/71 1971/72 1973 1974 1975
Investment 415(13) 440(13) 500(13) 723(18) 1120(24)
ofvhieh-capitalfonction 355(11) 365(11) 462(12) 643(16) 940(20)
•ttoek■ove«ente 60(2) 75(2) 38(1) Θ0(2 180(4)
Financlnq 415 440 500 723 1120
ofvhleh-doaestlesaving*(1) •262(8 272(8) 253(?) »(1.4) •29(0.6)
-netfactorIncome*(1) -22 6 -12 30 122
-external resources orchangeInreserve* 175 162 259 637 969
Notes:a)Figuresbetweenparenthesis Indicateratioto6DP
Source:MinistryofFinanceandIMF
(1)Doaestic Savings,plusoralnusNetFactorServices' Income•National Savings

16
Themain reasons have been thecontinuing need forheavy defence expenditures ,
andthepolitical decision toprotect consumers from rising food costs through
budgetary subsidies .
Asshown inTable 6,current revenues increased over theperiod from
EL869Min1971 toEL1946Min1975 »corresponding to27%and33$ofGDP
resp .Therevenue structure didnotchange much over these years ,with direct
taxes contributing 16$oftotal revenues ,indirect taxes 43$andtransfers
from public enterprises around 25$.Thestructure ofcurrent expenditure would
appear tohave changed ,chiefly asaresult oftherapid rise inprice subsidy
payments ,which in1975 accounted for3^$oftotal current expenditure .
However ,thepresence ofthe "Emergency Fund Deficit "hides theimpact that
defense expenditures have onthe structure ofGovernment finance .This Fund
receives most ofitsincome through Arab grants andcovers special defence and
reconstruction expenditures .
Government savings have been negative in1974 and1975 »while public
investment rose toEL913 *4in1975t equivalent to20$ofGDP .Theresulting
deficits which increased more than threefold ,androse from 10 ofGD?in1971
to25foin1975 ,have been financed mostly through domestic borrowing (debts
with thebanking system ,social insurance andpension funds ,savings andpostal
certificates );however ,inrecent years increasing useofexternal sources has
been made .
Asnomention ofArab grants ismade inthebudget itwould appear
legitimate toassume that theentire amount oftransfers (over US31Bin1/73:
were allocated totheEmergency Fund thus indicating that defence expenditure ;;
could possibly absorb alarge amount oftheArab grants received byEgyr' -.
5.TheBanking System ,Honey andCredit
Thebanking system inEgypt comprises theCentral Bank ,four con -L-nerci&i
(nationalised )banks ,several specialised investment banks ,andagrowing nuncer
offoreign orjoint venture private banks ,"onetary control isinthehands c:
theCentral Bank which almost exclusively relies oncontrolling monetary exyhr.s :
bychanges inthebank 'sloan/deposit ratio ,atpresent amaximum of65 ,.

17
TABLE6-GOVERNMENT REVENUES ANDEXPENDITURES :1970/71-1976
(inaillionsofEpounds)
1976IStructure iinS
1970/711972 19731974 1975Prel.1970/71II1976
Actual
CURRENTREVENUEOFTHECENTRALGOVERNMENT 869 903 10131180 15411946100 100
ofwhich:DirectTaxes 143 146 161176 226 31716 16
IndirectTaxes 362 375 396430 629 83642 43
LocalGovernaent 56 58 6065 92 876 4
PublicEconomicSector 188 181 264335 381 49322 25
Other 120 143 133174 213 21314 12
CURRENTEXPENDITUREOFTHECENTRALGOVERNMENT 702 792 9531327 1691[1796100 100
ofwhich:CentralGovernaent 615 688 714779 885 1071 88 60
LocalGovernment 46 42 5161 91 101 6 5
PublicEcon.Sectors 41 62 9587 93 1246 7
Subsidies 93400 622 500 28
GOVERNMENT SAVINGS 167 111 65-147 J150
INVESTMENT EXPENDITURE (-) 358 414 451565 913 850
EhtRGENCY FUNDDEFICIT(-) 127 225 1433i_J234I250
.318-528-534
mmm-746~1347-950-100100
FINANCED BY:
DOMESTIC BORROWING (net) 318 510 483652 1154 770100 81
ofwhich:SocialInsurance andPensionFunds 188 214 224245 253 27059 28
SavingsCertificates 23 32 3843 50 547 6
PostalSavings 3 9 10 18 17 19 2
JihadBonds 14 13 3
BankingSysteft 79 77.183314 0040425 43
Other 25 164 1529 34 239 2
EXTERNAL BORROWING (net) 18 5194193 180 19
Source:MinistryofFinanceandIMFreports

Thespecialised investment banks include 17regional Agricultural and
Cooperative Credit Banks ,twomortgage banks andanindustrial development bank .
Thelatter ,theDevelopment Industrial Bank ofEgypt isnewly formed joint
venture between government ,theBank ofAmerica andtheInternational Finance
Corporation .
Asshown inTable 7»domestic liquidity hasbeen growing ,over theperiod
considered ,atarate well above that ofGDP .Theresulting twofold increase
ofthequantity ofmoney andquasi-money incirculation contributed significantly
totheinflationary forces atwork inthecountry .Themonetary ,expansion was
fuelled byarapid growth ofdomestic credit .Claims onGovernment rose sharply
after the1973 war ,aspublic savings disappeared andthegrowing development
expenditures had tobeentirely financed through borrowing .Likewise ,claims on
theprivate sector started torise after 1973 mainly asaresui s,ofmore liberal
import regulations and asurge inconstruction activities .
Interest rates are fixed bytheCentral Bank inclose cooperations with
Government :they arerarely used asatool ofeconomic policy and thediscount
rate wasunchanged for14years .However ,in197^itwasraised from 5to6
and itwasfurther increased inearly 1977 "tothepresent 7fj.Hates onsavings
deposits andpostal •savings books have been increased to0,^;inorder toencou­
rage savings ,these earnings have recently been made taxexempt .
Interest rates inEgypt arewell below therate ofprofit andtend to
lead toaserious misallocation ofresources ,causing distortions intheeconomy .
Itistherefore recognised bytheGovernment that ,inorder topromote increased
domestic savings andamore efficient allocation ofcredit ,itisnecessary to
raise substantially the level ofinterest rates .
6.Prices and ^'ages
Egypt hasmade extensive useofprice subsidies andadministrative
controls over wages andemployment initspursuit ofsocial objectives .This
policy hascreated acomplex system ofprice andrent controls ,subsidies (l^
andrationing schemes .Itseconomic consequences areaprice andwpge £,truc',urr
that areunable toprovide guidance forefficient resource allocation .
0
*'%
(l)Price subsidies increased from Ei-93^ 1973 toELC22 Tin19f-3
(3^ofGovernment current expenditures or13y,ofGilp).

TABLE7-MONETARY SURVEY s1970-1975
(millionsofEpounds)
1970 1971 1972 1973 1974 1975Structure (X)
1970 1975
MONEYSUPPLY (liabilities )
Money 783 846 989 1205 1503 1863 51 57
ofwhich:currency (525) (559) (631) (777) (948) 1156) 34) (35)
QuasiMoney 346 319 356 432 617 703 23 21
Sub-tota_l :doaesticliquidi •1129 1345 1637 _2_120 2556 74 78
OtherItems 395 447 477 537 610 722 26 22
ofwhich:counterpart funds (146) 150) 151) (151 (142) 171) (10) 5)
government deposits (120) (144) (148) 148) (219) (243) 8 8)
capitalaccounts 114) 135) (155) 164) (172) (192) (7) (6
LIABILITIES •ASSETS 1524 1612 1822
■■■■m2174 2730 3288
■■■■■100
•••00
■a1
Β
COUNTER ITEMS(assets)
ForeignAssets(net) -232 -333 -308 -165 -219 -1049 -15 -32
ClaiuonGovernoent (net) 1172 1327 1460 1656 2050 3095 77 94
ClaimsontheEconomy (net) 523 549 553 531 788 1093 34 33
Unclassified 61 69 117 152 111 149 '4 5
Source:CentralBankofEgypt,andIMF

20
Ameasure oftheimpact ofprice control isgiven bytherelatively
small increases intheavailable price indexes shoxm inTable R.
Table R
Price Indexes :1972-1976 (June )
1973 1974 1975 1976
(june ^
Consumer Index forUrban Population
(foannual changes )7.2 10.4 9.9 7.7
ofwhich :Pood &beverages 10.2 15.2 12." 11.0
Wholesale Index
(fcannual changes ^10.5 12.4 5.9 4.0
Source :Central Agency forPublic ."obilisation andStatistics
Wages andsalaries arecontrolled byGovernment chiefly asamean toimprove -i,
thedistribution ofincome .Controls aremainly based onstatutory wage minima ,
fringe benefits andincentive bonuses .
7.Balance ofPayments
Egypt 'sbalance ofpayments ,asshown inTable 9,ischaracterised by
agrowing trade deficit which isonly partly offset byearnings from services
andunrequited transfers .Although inrecent years thecapital account hasoften
been positive ,theoverall orbasic balance hasshown agrowing deficit ,rising
towell over US$1Bin1975 .Gross external reserves ingold andforeign
exchange attheendof1976 were only US$350 'f,hardly sufficient tocover one
month ofimports .Net "foreign exchange assets however showed arapidly rising
negative balance reaching EL1050orUSJ2.7Bin1975-
Inrecent years imports have increased rapidly andin1973 "they total !cJ
US$4.5B,equivalent toalmost 3n$ofGDP .Theincrease inimports canbe
mainly attributed totherapid rise inforeign prices ,coupled with thecouniry'e
chronic deficit infood stuffs that in1975 accounted foraround 25<•ofthe
total import expenditure .Preliminary 1976 figures indicate that expenditure
onimports will likely decline inabsolute terms ;however ,itisexpected tiv.t
export revenues will still barely cover half ofthecost ofimports .

TABLE9-BALANCEOFPAYMENTS:1970-75'(InmillionsofUSdollar,.)21
1971 1972 1973 1974
I1975
CurîiTNTtransactions
Importscif -1244 -1286 -1664 -3491 -4497
Exports fob 850 814 1003 1674 1V>9
Tradobalane» -., -394 -472I-661 -1817 -292'-)
Travel 53 73 96 I 161 227
Shipping -7 -2 -23
SuezCanal L 85
Allother 82 !901-56 -47 -141
NonFactorServices (net) -36 -21|SAJ 110 143
Workers Remittances 6 ei 86 I 189 367
Interest onDebts -82 -75 -146 -206 -309
Commissions .Oividend » 20 22 29 77 75
OwnExchange Imports 16 168
FactorServices (net) -5628I-31 !
I L 76301
I-G.TOSiSCWICCS -485 -466 -654 -1632 -2
Unrequited Transfers 279 295"--""■■•""■" F"
731 1305•■ ■■■Γ
1C79
(ofwhichGovernaient ) (268) (289) (725) 1264) 353)
II-01Ρ9ΓΝΤ #ΤΟ',,'ΝΤ -206LI-*?6 --401
CAPITAL TRANSACT IONS
McdiumS,LongTer»Loans(net) -26 79 40 -147 257
Suppliers' Credit 60 44 -117 -12 83
Otherlte*s 7 28 -4 -39 3â
IN-CAPTAI ArCO'J'IT Li: 151L:*L.J 373
ErrorsandOmissions 8 -7r~
-10 -13 «•••(2)
IV-OVrSAtt 0"^ASIC°AlAMCt -157 -27 -14 -537 -1
1)Totalsmaynotaddduetorounding
2)IncludedinOtherItemsunderCapitslTransactions
Source:CentralBankofEgypt,IMF

22
Asshown inTable 9,thevalue ofexports doubled inI974 andI975 as
compared with 1971/72,reaching some US$1"569.14 in1975 ,equivalent to13y.
ofGDP .TTost ofthis growth canbeattributed toprice increases .Agricultural
exports ,ledbycotton ,arestill dominant accounting forover 33^oftotal
exports invalue terms .Yarns andtextiles ,andpetroleum follow inorder of
importance .
The data presented inTable 5underline theimportance oftheunrerui ted
transfers and theworkers' remittances inoffsetting thetrade deficit asthe
twoitems together accounted forapproximately 90/«oftotal export receipts
during 1974-75 •
Ananalysis ofthedirection oftrade reveals that Egypt 'smajor supplier -
areWestern Europe and theUSA ,while theUSSR share ,although still supplying
almost 20f:oftotal imports ,hasdeclined inrecent years .Onthecontrary ,
most ofthecountry 'sexports continue toflow toEastern Europe a.nd inparticu­
lartheUSSR ,generally inthecontext ofbilateral agreements .
Recently ,inaneffort aimed atcurbing imports andencouraging expor .?,
theexchange rate system hasbeen restructured onatwo-tier basis .The official
rate (worth 76^more interms offoreign exchange than theparallel rate ) it-
used forthepayment oftheimports ofstrategic commodities ,while anyother -
type ofimports has tobepaid using themore expensive parallel rate .Atprcsr.r.t ,
approximately 75'J-ofimports aretransacted ,attheparallel exchange rate .
ft.The External .Debt
Asshown inTable 10,theexternal non-military debt wasestimated ax
US£5.7BbytheendofSeptember 1976 ,whereas thecorresponding service
payments totalled US5950Mequivalent toadebt service ratio ofalmost 30
Inaddition ,Egypt hasmade increased recourse toshort-term bank credit of
which some US$1023 "1were outstanding commitments attheendof1975•
Although this figure hadbeen reduced toanestimated USS°.97 *Thyyear-en :t
1976,these short-term obligations areputting increased pressure onEgypt 's
external liquidity position .Government intends tousethelarge amounts of
unrequited transfers obtained in1977 toeliminate these bank credits andso
improve thetime profile oftheexternal debt .

23
Table 10
Summary ofExternal Debt (non-military )
(million USdollars )
End ofperiod 1974 1975 September 1976
Debt ,disbursed andoutstanding 2760 5101 5670
Debt Service Payments 55B 680 950
(ownestimate )
Export Earnings
(goods ,non-factor services ,
remittances ) 2297 2565 3175
(Government
estimate )
Debt Service Ratio (7-) 24.3 26.5 29.9
Source :IBRD External Debt Tables (1975 )anc*information supplied hvGovernment .
V.TTAJOR ECONOMIC SECTORS
1.Agriculture
.Value-added ' 24 <•.\ofGDP
Exports 33$oftotal exports(l )
Employment 46'$ofthelabor force
Agricultural activities inEgypt arelimited totheNile valley and the
Delta area .Thetotal cultivable land represents 2.5^ofthenational territory »
andcovers 14.5 "ha,incl .the1.4 haof"newland "gained since the
completion oftheAswan dam .Itisimportant tounderline that thearea under
crops isalmost double thecultivable lands ,duetotheyear-round availability
ofwater .
Although theland reform ofthesixties left agriculture inthehands
oftheprivate sector ,itradically changed thestructure andorganisation of
agricultural production .Farmers have been groupelin cooperatives andfarm sizes
have been limited to100haperfarmer ,with theresult that 95*ofholdings
areless 12ha.Furthermore ,cropping patterns arepartly decided bymeans of
administrative procedures limiting thechoice ofthecooperatives andthefarmers .
(1)Ifprocessed .agriculturalproductsareincluded,thenagriculture accountedfor66.5%ofexpbrts:
seeAnnex2. *'

2'i
Table 11andAnnex 3show thestructure of output :vegetables ,
cotton andcereals aretheprincipal crops .Cotton isoffundamental importance
totheEgyptian economy ,providing about 24#oftotal exports intheform ofra.:
cotton andover 30#asyarn andtextiles .Thedomestic production ofcereals
does notcover internal demand andimports offoodgrains have ,inrecent years ,
accounted forthebulk offood imports .Chiefly duetothedeficit offoodgrains ,
imports ofagricultural products (EL750 ?4)areconsiderably larger than the
exports generated within thesector (Et430 *t).
Agricultural output increased atarate of4^p.a.from 1956 to1?55 ;
since then ,growth hasslowed down andduring thelast decade theincrease in
output hasbeen below 2>0p.a.Onapercapita basis ,agricultural production has
therefore steadily declined .Annex 3indicates that cotton production fell
somewhat inrecent years ,while output ofcereals hasstagnated sincel()6n/rJ0
after rapid growth intheearly sixties .Production offruits andvegetables ,
theprices ofwhich are notcontrolled ,hasgenerally increased .Livestock
products have also shown steady growth ,although meat andmilk production has
not kept upwith population growth .
The slow agricultural progress canbeexplained byland andwater cons­
traints ,capital shortage ,inadequate price andincentive policies ,inflexible
institutional structure and sub-optimal resource allocation .The sector suffer .?
from excessive Government regulation ,e.g. ofprices ,cropping patterns and
marketing channels ,which haslimited private initiative andinvestment .
Ingeneral ,Government price andmarketing policies have notsufficiently
encouraged production ofthemajor crops .Asaresult ofpast price policies ,there
hasbeen adeterioration ofagriculture 'sterms oftrade with industry ,largely
asameans oftransfering resources tothelatter sector .Thesupply ofessential
inputs (fertilizer ,seed ,research ,extension services )hasshown very little
improvement ,andthe level ofinvestment intheagricultural sector has
gradually declined .Furthermore ,theallocation ofinvestments hasbeen orients .
heavily towards land reclamation .These newirrigation andland reclamation
projects have proved tobeextremely capital intensive ,andgiven the shori'i-v ?
offunds ,theemphasis onhorizontal development ofagriculture hasledto ?.
neglect ofthevertical development onexisting "old-lands ".Thelatter isinrr.~n ;-
respects themore difficult ,because oftraditional cultivation techniques ,
established cropping patterns aridfragmented 1andholdings .However ,itiscilso
themore productive development strategy ,andforreasons having todowiir .so:.

Table1125
Structure ofAgncultural Production
(for1975,incurrentprices)
Value Share
(million fcE) (%)
Vegetable 248 14.6
Cotton 170 10.0
*Maize 141 8.3
Wheat 104 •6.1
Fruits 100 5.9
Rice 98 5.8
SugarCane 59 3.5
Sorghum &Barley 37 2.2
Beans 24 1.4
Onions 19 1.1
Other 120 6.9
Allcrops 1120 65.8
Livestock &Fisheries 581 34.2
TotalAgricultural Production 1701 100.0
ΜΜΜΜ «ΜΜΝΜ·ΙΙ·ΜΜΜ ·ΜΜ·Ι·ΒΜΙ·ΜΜ·ΜΜ ––––1 Ι·––■■■ιηιιιι–ΤΓ
Source;MinistryofAgriculture

2o
exhaustion andrising water tables ,also themore urgent .Projects inthis
category include drainage andsoil amelioration ,which would raise theproduc­
tivity ontheoldlands ,while halting further yield losses .Itappears that
• •
soil deterioration duetohigh groundwater tables isprogressive ,andthat
without corrective action theaffected agricultural lands maybelost altogethe
2.Petroleum and gas
In1976 ,theSinaS oilfields were returned toEgypt andpetroleum
production regained theearly 1970 'slevel ofoutput (16Mtons p.a.).
Domestic requirements arearound 8Mtons ,leaving asizeable surplus forexpor
Intensive exploration isatpresent under way ,andrecent indications tend to
support theGovernment 'sproduction forecast of35 tons p.a.by19^0 (l).
Thepresent production ofgasisover 3m3/day ,butrecent exploration activi
ties indicate that thefuture output could increase considerably .Four refineri
with atotal capacity ofaround 11!Ttons p.a.are intheprocess of'being
expanded andremodernized after having suffered severe wardamages .
3.Manufacturing andmining
Value-added 20.>cofGDP
Exports 35$ total exports
Employment 13$ labour force
Thelong term growth rate ofthesector ,although tending towards •*5-
decline "over time ,hasbeen well over 5P«a.,chiefly thanks totheGovernmen
effort aimed atdeveloping import substitution activities .Asaconsequence ,
thestructure ofthemanufacturing sector (seeTable 12andAnnex /()isoharac -
»
terized bythepredominant position ofagro-based industries such astextiles ,
beverages jfood andcigarettes .These industries account forover 61^ofgross
value-added ofmanufacturing andcontribute 63$ofthesector 'sexports .
Most ofthelarge andmedium scale enterprises arepublicly owned ;
theyaccount for75f>ofindustrial value-added and50>>ofannual investment .
Employment inthepublic sector industry hasbeenestimated atover600000
people .Theroleoftheprivate sector islimited tosmall andmedium scale
units notably in textiles ,foodandleather goods .Recent measures aimed
atencouraging private initiative should intheshort /medium termtendtoprcr -.
newactivities intheprivate sector .
(1)Thiswouldleaveanexportablesurplusofabout25Htonsby1980equivalenttoanestimated US#2.5
atpresent,prices(almost30%ofprojectedforeignexchangeearnings).

Table 12 -Structure ofManufacturing Industry (1)in1975
INDUSTRIAL SECTORPRODUCTION PUBLIC
SECTOR
OWNER -
SHIP (%)EXPORTS
GROSS
VALUE
Million Ei)SHARE
(percent )GROSS
VALUE
Million Efc)SHARE
(percent )
Spinning &Weaving Products 690 30 73 106 46
Foodstuffs 698 31 79 39 17
Chemicals 267 2 76 .16 '7
Engineering Products 221 0 82 •19 8
Metallurgical Products 165 7 89 1 5
Building Materials 93 4 82 4 2
Wood Working 40 2 0 11 5
Leather Products 87 40 |
I!'
i .10
TOTAL 2261 00 74 231 00
Source :Ministry ofIndustry andMining
(1)Not included inthese statistics are thefollowing industrial sectors ,
which are those notunder thedirect responsibility oftheMinistry
o.fIndus tryandMining
:defense ,cotton ginning ,flour milling ,hakery production ,teapacking ,
printing ,pharmaceuticals andproduction ofvillage industries .These
arenotunder thesupervision oftheMinistry ,buthave been allocated
toother ministries ororganisations .

2o
Inspite ofserious difficulties caused byshortages ofcapital and
foreign exchange ,manufacturing hasproved tobeoneofthemost dynamic sector
oftheeconomy .Even so,thesector 'sdevelopment hasfallen short ofitspoten
tial ,which isusually considered significant chiefly duetotheavailability
ofawell-trained labour force ,alarge domestic market andacentral location
vis-a-vis the entire Middle East market .
Thelack ofplanning andexcessive centralisation indecision-making
greately added tothedifficulties encountered bythesector .Asaconsequence ,
many plants have been working below-capacity ,productivity has in*general been
lowandequipment suffered from lack ofmaintenance andrenewal .Furthermore ,
thehaphazard planning hasbrought about serious bottlenecks resulting in
shortages ofimportant intermediary inputs such ascement and fertilizers .
The destruction anddislocations caused bythewars exacerbated these constrain
and ,ifthejr have provided short-term burst ofrepair andreconstruction ac.tivi
ties ,they have also severely limited thelong-term growth ofthesector .
The complex system ofprice controls ,incentives andregulations caused further
difficulties ,hiding relative scarcities behind anintricate burea.ucrat.ic syste
ofinterventions .
Mining activities arelimited totheextraction ofiron ore ,with an
output of2.4Mp.a.androck-phosphate with amodest annual production inthe
region of0.5 *T.Thephosphate isatpresent used domestically for theproduc­
tion offertilizers .Recent prospecting hasidentified newsizeable phosphate
deposits inthewestern .area ofthecountry with aphosphoric acid content of
around 30^:theeconomic feasibility oftheix *exploitation isnowbeing slucii
4.Fower
Thepower sector ,completely nationalised in ,isdominated cythe
Aswan hydrosystem which provides 63£ofthe3P-60 generating capwc ?tyofIn
country .Oilandgaspower plants provide theremainder .TheAswan power eyste -
together with thethermal units areinterconnected andform theso-called Un:f :.
Electric Power System ofEgypt .
Thetotal domestic consumption ofelectricity readied 9." in197 )
foranaverage percapita consumption ofabout 26;k'-h .Thefuture growth rate
ofdemand forelectricity hasbeen estimated atapproximately 10>p,a .

29
Inthemedium-term ,itisexpected that therequired additional capacity will
beprovided byeither oilorgas-fired plants although afeasibility study for
anuclear power station isnowbeing prepared .
Inrecent years ,thesector hasencountered difficulties duetotheage
ofsome oftheoil-fired plants ,andtheconflicting demand onthewaters ofthe
Nile between irrigation ,navigation andpower generation .
5.Transport
Egypt hasawell-developed transport system ,butitisinurgent need
ofmodernisation andexpansion .The road network consists ofover 12000 km
ofhighways ,mostly tarred ,linking themajor centers ofthecountry .Therail­
waysystem ofsome 43P'5 links Cairo with Alexandria ,Port Said ,themajor
centers intheDelta area andAswan .TheEgyptian Railway Corporation owns and
operates thesystem ,which in1974 carried fl.7 TTpassengers androughly 2.5
tons/kilometers offreight (compared toalmost 3.3 -It/kmin1970/71)•
Maintenance hasbeen poor andreplacement ofrolling stock intermittent ,v;ith
theresult that theeffciency andcapacity ofthesystem have declined .During
thenext fewyears ,Government intends tomodernize rolling stock ,andcarry­
outmuch needed maintenance andrepair activities .
Inland-water transport also plays animportant role .Although themain
artery istheNile ,which isutilized forthetransport ofheavy orbulk products ,
the dense network ofcanals intheDelta area provides essential transport
linkages .
Themajor ports ofthecountry areAlexandria ,Port Said andPort Suez ,
although thelatter areonly nowresuming their past importance 5their reno­
vation andexpansion arepart oftheSuez Canal ?!aster Plan .Theport ofAlexan­
dria (capacity 13Mt)isbeing modernized andexpanded ,andanewport (20 t)
isbeing constructed west ofAlexandria ,tobecommissioned by197 <V79 »
Theport ofSafaga ontheRedSea isalso being expanded ,mostly formineral
exports and imports .
TheSuez Canal wasre-opened inJune of1975i andearnings reached about
US *>3^0Min1976 «Contracts have recently been signed forthewidening ofthe
Canal ,toallow passage ofships upto150000 t,ascompared too0000 t?vt
present (l).Thecost oftheexpansion programme isestimated atUS$1.13of
which around 60 foreign exchange .Arecent addition tothetransport s^cicr
(1)RevenuesfromtheSuezCanalareprojectedtorisetoabout.US3700Hin1930(around8%ofprojected
foreignexchangeearnings).

30
isthe320kmSumed (Suez-Mediterranean )oilpipeline ,which became operational
early 1977 .Full capacity ofthefirst stage ,some 40IItperyear ,isexpected
tobereached bytheendof1977 orearly 197^;expansion to60Mtisenvisaged
atalater date .Thepipeline carries crude oilfrom Suez ,atthesouthern end
oftheSuez Canal ,toAlexandria where theoil istranshipped into small tankers
!
fordelivery tofinal destinations intheMediterranean basin .Sumed thus competes
with thevery large crude carriers transporting oilfrom theArabian Gulf around
theCape andwith smaller tankers capable ofusing theSuez Canal .
6.Tourism
Although tourism hasseverely suffered from theunstable political situa »
tion ofthearea ,thesector hasundergone arapid growth andhasprovided a
significant inflow offoreign currency .Inthelast twoyears ,thenumber of
visitors hasincreased significantly (l*1people p.a.)andforeign exchange
receipt rose toover US8225 *1.The future growth ofthesector ishowever
severely constrained byanacute shortage ofhotel accomodation andtrained man­
power .Tosolve these problems theGovernment isplanning toestablish ahotel -
training school and toincrease the total number ofhotel beds from i\200C to
over 60000 .The latter capacity increase would besufficient toaccomodate by
19°0 more than 1.5 *■people andwould generate anestimated foreign exchange
inflow ofUS$600Mperyear .
VI- 197 ./:-f'0DEV^LOP'TOfT PLAN AJraFUTURE .PROSPECTS
After thewarof19^7 » "thesystem ofmediurn-term planning wasabandoned
andreplaced byannual plans .Afresh start towards lengthening theplan period
wasmade with the197^–°-0Development Plan ,which ,however ,exists only ina
preliminp.ry draft form and isineffect being executed until now intheform
ofannual plans .ThePlan isexpected tobefinalized bytheendofAugust 1977 .
The main macro-economic objectives ofthe Plan are :
-toincrease GDPby11£p.a.(inconstant prices );
-toreduce thecurrent deficit ofthebalance ofpayments toalevel
notexceeding capital goods imports ;
-toincrease theshare ofinvestment to23^ofGDPin19"0 andtoraise
gross domestic savings to19£ofGDPattheendofthePlan period .

31
Theprojected increase inemployment during thefive year plan period
isestimated at1.2million ,i.e. anaverage 240000employment opportunities
peryear ,ascompared with theaverage annual increase inthelabour force of
325000 .However ,taking into consideration themigration oflabour toneigh­
bouring Arab countries which averaged around 100000 p.a.over thepast three
years ,theoverall employment situation should show animprovement .
Theinvestment strategy ofthe1976-pOPlan differs considerably from t
previous plans .Itemphasizes theneed toimprove andexpand infrastructure ,an
intheindustrial sector itgives priority toprojects with ashort-gestation
period .Theneed tobring tocompletion ongoing projects before newones are
started isemphasized .ThePlan also assignes amuch larger role totheprivate
sector both domestic and foreign .
Ingeneral ,theGovernment 'spolicy istogive priority tolabour
intensive projects .However ,therelatively lowcapital-labour ratio implied
bythePlan (USS16000perworker )issomewhat misleading ,asaconsiderable
share oftheplanned investment relates toongoing projects ,with sizeable
capital expenditure already disbursed before thePlan period .
Theplanned amount oftotal investment during thefive-year period is?
around EL7.P3orU?$19.9 B(at1975 constant prices ^which will beallocate
tothe different sectors asfollows :
Agriculture 10^
Industry 24'p
Electricity 6$
Transports andcommunications 2o%
Other (construction ,housing ,
public services ) 34p
100 fc
Although agricultur ewill only receive 10,oofthenewcapital format !o
thedevelopment ofthis sector seems tohave ahigh priority .Growth ofagrxcul
tural production isexpected toaccelerate to3p.a.rTuch ofthis growth is
supposed tocome from vertical expansion ofthe "oldlands ",following theon­
going efforts toincrease itsproductivity (drainage ,soil andwater manygcrcerv' .
more intensive cropping pattern ,'research andextension services ).Theaimis
nottoachieve self-sufficiency atanyprice ,buttoguide growth inthedirec­
tion where improvements inproductivity canbeachieved ,where therural sector
resources canbemobilized andwhere export possibilities canbeexploited ".^

32
Alarge proportion oftheinvestment expenditure allocated tothis sector is
earmarked foragricultural infrastructure projects (land reclamation ,water
management ,land conservation ;flood control )while theremainder will beshared
between crop development ,animal husbandry andfishing .
ThePlan identifies industry asthekeyeconomic sector "(growth target :
12io).Theaimistomodernize existing enterprises ,todevelop export-oriented
firms andassign amuch larger role toprivate sector .High priority industries
are :construction materials ,agro-processing andfood ,textiles ,chemicals
andmetallurgy .Inparticular ,thetypes ofprojects andindustries which are to
beencouraged are those which :
-aim attherenewal andreplacement ofoldplants ;
-aimattheremoval ofbottlenecks (construction materials ,fertilizers );
-have export potential intheregional Arab andEuropean markets orwill
substitute forexisting non-luxury imports orimports anticipated tobe
necessary fordevelopment }
-entail processing oflocal rawmaterials ;
-arerelatively non-capital intensive andlabour intensive ;
-arequick-yielding inthesense ofgenerating apositive netforeign
exchange contribution rapidly ;
-contribute toabetter integration between industry andagriculture and
assist toincrease productivity inthelatter (fertilizers ,tractors ,
farm implements ).
Thedevelopment ofthepower sector isconsidered tobeofgreat impor­
tance .Inorder tocover thepredicted growth inelectricity demand ,thepresent
generating capacities would beexpanded byapproximately 1900 "*Wand the
transmission system would beextended .
The economic infrastructure isrundown and isbecoming aconstraint on
thecountry 'seconomic development .Therefore ,itsrenovation andexpansion is
very urgent ,andabout 23-30$oftheplanned expenditures areearmarked for
transport andcommunication s.Theprincipal projects ,which will bestudied
orimplemented during thePlan period ,are :
-widening oftheSuez Canal andexpansion andmodernisation ofthe
harbours ofSuez ,Alexandria ,Port Said andSafaga ;
-expansion oftheEgyptian fleet by65ships (between 4000-3*3000tons
each );
-construction oftwohighways between Egypt andtheSudan (.Berenice -
Port Sudan :625km ;Aswan -Khartoum :1200km);

33
-modernisation ofexisting railways andconstruction ofnewrailway
lines "between Egypt andtheSudan ,andbetween theAbuTartu phosphate
mines andtheharbour ofSafaga ;
-construction ofthemetro inCairo (l);
-modernisation andexpansion ofthetelephone network inCairo andother
regions ofEgypt .
Relative toEgypt 'spast economic performance ,andpresent situation ,
thePlan appears tobevery ambitious initsgrowth andsavings targets .
Theoverall growth objective (ll$p.a.)represents asubstantial acceleration
over theaverage 3yop.a.realised during 1967-75 .ThePlan aims atfinancing
inI9S0 more than 80$ofgross investment from domestic savings .-This implies
that consumption will have tobecontained anddomestic savings ,which fell to
1$ofGDPin1974/75an<ifinanced less than 6ft,ofinvestment will have tobe
raised to19foofGDPin19?>0 .Theimplicit marginal savings rate of29$is
very high foracountry atEgypt 'sstage ofeconomic development .Although past
performances areonly apartial guide tothefuture growth potential ofthe
economy ,which hasbeen severly biased byaseries ofunfavourable events ,it
still appears doubtful whether thePlan 'stargets canbeachieved .
These doubts arise notonly because oftheambitious macro aspects discussed
above ,butalso because atpresent ,itwould appear that notenough projects
have been sufficiently studied andadvanced tothestage ofimplementation .
Even ifGovernment would succeed incurbing consumption and import
expenditures ,andinrealising thecountry'*s export earning potential ,itwould
still have very considerable foreign exchange retirements :
-tofinance current imports :
-tosupport thedevelopment programme ;and
-tofulfil itsdebt service obligations .
Thegross foreign exchange requirements for1977-^0 arecurrently
estimated atabout US$12.1 Bofwhich US$3.6Bin1977 alone ,',/ithout
creating very serious external debt problems ,this high level offoreign exchar ,r
requirements could only besatisfied ontheassumption that ,inthenext fe-.T
years ,theinternational community will continue toprovide financial assietar.cs
atfavourable terms .
(l^^hisproject appears tohave been dropped from thepriority listing .

Inthe longer runhowever ,Egypt 'seconomic potential would appear to
bemore promising for the following reasons :
-thelarge domestic market ,thekeygeographical location ,askilled
labour force ,lowwages and theexistence ofvaried rawmaterials will
encourage further industrialisation ;
-there-opening and thephysical expansion oftheSuez Canal aswell as
theSumed pipelines should provide considerable foreign exchange revenue
Revenues from theSuez Canal areprojected torise from about USc350 '
in1976 toUSS700M(1975 prices )by19°0 (80 ~/ooftotal foreign
exchange earnings );
-thefuture oilproduction ofEgypt will probably substantially exceed
domestic requirements thus allowing anincrease inoilexports worth
anestimated US$2.5 (30$oftotal foreign exchange earnings );
-tourism seems tohave aconsiderable potential (projection :USJ-cCOM
in19'q0i.e. 7$offoreign exchange earnings );
-Egypt isincreasingly exporting skills intheform ofqualified labour
and this may permit anincreasing flow ofremittances .
However ,itisclear that these development prospects hinge toalarge
extent ontheprogress towards peace intheMiddle East and onthecountry 's
ability toattract external capital andtechnology .Furtheivnore ,aconsiderable
effort isnecessary inorder torealize thestructural changes which theGovern­
ment intends toenforce during thePlan period ,namely :
-ensure amore efficient resource allocation through amore consistent
overall planning effort and animproved coordination ineconomic policy
and decision making ;
-contain consumption andincrease national savings ;
-redesign thecountry 'sprice andexchange rate policy inorder to
reflect more effectively economic scarcities and tobring about an
improved allocation ofresources .Thereduction ofprice subsidies and
theadjustment intheinterest rate structure isofconsiderable
importance ;
-improve theefficiency ofthepublic enterprises ;and
-improve thetime-profile ofexternal debt .

ANNEXES

_virt–
Annex 1
Commodity composition ofimports (1975)
US$Million %
LiveAnimals,AnimalandVegetable Products ,
Food,Beverages andTobacco I) '913.7 20.3
Fats,Oilsanditsproducts ,Fuelsand
MineralProducts 1) 477.2 10.6
Chemicals ,RubberandLeatherproducts 658.9 14.7
Wood,Paper,Textileproducts 327.9 7.3
Machinery andEquipment 727.6 16.2
BasemetalsandArticles Thereof 429.3 9.5
Miscellaneous Manufactures 86.8 2.0
Others 707.8 . 15.7
Sub-total 4329.2 96.3
OwnExchange Imports 167.9 3.7
s,c.i.f. 4_497^2
Source :Central BankofEgypt
1)IfoneassumesthatroughlyhalfoftheimportsunderFats,Oilsetc.
areinfactfoodproducts ,thenfoodimportsrepresented around25%
ofthetotalvalueofimportsin1975.

-àï-
Annex 2
Commodity composition ofexports (1975 )
(Payments Basis )
(US%Million ) (%)
Agricultural products 525 .3 33.4
ofwhich :Cotton 1) 370.7 23.6
Rice 54,5 3.5
Onion 18.9 1.2
Potatoes 6.7 0.4
Citrus 40.8 . 2.6
Others 33.7 2.1
Yarn and textiles 477.5 30.4
Other industries 378 .1 24.1
Food preparation 42.2 2.7
Chemicals 62.7 4.0
Petroleum products 164.3 10.5
Metals andEngineering 49.7 3.2
Others 59.1 3.7
Others 190.4 12.1
TOTAL E_X_P_0_R_T_S 100.0
Source :Central Bank ofEgypt
1)Ifoneincludes "Yarn andTextiles' ,then cotton earned 54%oftotal
value exports in1975 .

-à*-
MAJORCROPSANDLIVESTOCK PRODUCTS :VOLUME ANDGROWTH (1)
(3yearaverages )
CROPS .1960/62 1964/66
COOOt)1968/70 1972/74 1960/62-1964/66 1964/66-1968/70
(averageannualgrowthrate.1968/70-1972/74
inX)
Cotton(unginned ) 1240 1409 1365 1331 3.2 -0.8 -0.6
Maize 1771 2150 2352 2521 5.0 2-3 1.8
Rlee(pnddy) 1556 1834 2583 2343 4.2 8.9 -2.3
Wheat 1509 1412 1434 '1779 -1.7 0.4 5.5
Sorghua 631 802 864 836 6.2 1.9 -0.9
Beans 260 364 286 289 8.8 -5-9 0.3
vegetables 3637 4647 5171 5511 6-3 2.7 1.6
Sugarcane 4523 4849 6635 7360 1.8 8.2 2.6
Citrusfruit 319 530 705 904 13.5 7.4 6.4
Oatesotherfruits 380 354 343 470 -1.7 -0.8 8.2
Onions 511 673 483 582 7.1 -3-8 4.8
LIVESTOCK PRODUCTS
I
Meat 241 257 279• 299 1.6 2.0 1.8
Milk 1388 1469 1565 1666 1.4 1.6 1.6
Poultry 75 85 91 105 3.2 1.7 3.6
Eggs 32 41 50 56 6.4 5.1 2.9
1)Growthrateshavebeenderivedfromthe3-year"Mid-point"averagedata,calculated above,wheretheperiodbetweenthe«id-pointsis4years*
Source:MinistryofAgriculture

H-
OutputofSelected Industrial Products
(Inthousands ofmetrictonsunlessotherwise stated)Annex4
1975
1970 1973 1975INDEX
(1970=100'
Spinning andweavingproducts
Cottonyarn 169 182 181 107
Cottontextiles 112 118 122109
Foodstuffs ,etc.
Sugar > 581 633 526 91
Cheese 132 135 153116
Preserved fruitsandvegetables 20 24 24120
Cottonseed oil 150 160 161107
Oilseed cakes 643 600 720 112
Softdrinks (millions ofbottles) 614 600 784 128
Beer(millions oflitres) 13 32 29223
Chemicals ,etc
Sulphuric acid 35 23 36103
Paper 131 146 139106
Superphosphate 447 419 520116
Ammoniumnitrate (31%) 381 210 400 05
Tyires(thousands ) 770 860 923120
Engineering products
Cars(units) 4241 5590 1576273
Trucks(units) 1201 518 435119
Tractors (units) 1078 243 390129
Buses(units) 407 413 305 75
Refrigerators (thousands ) 54 39 109202
Televisions (thousands ) 58 49 77133
Metallurgical products
95 Reinforcing iron 230 226 219
Steelsections 108 87 106 S8
Steelsheets 40 167 211528
Building materials
94 Cement 3830 3617 3584
Buildingbricks(millions ) 782 797 700 95
Source:Ministry ofIndustry andMining

JORDAN
ECONOMIC AND FINANCIAL SITUATION

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CONTENTS
Page
SUMMARY ANDCONCLUSIONS 1
1.GEOGRAPHY 5
2.POPULATION ANDEMPLOYMENT 5
3.RECENTECONOMIC DEVELOPMENTS g
(a)Growthandoriginofnationalproduct g
(b)Consumption ,savingandinvestment 9
(c)Publicfinance 11
(d)Money,creditandthehankingsystem 13
(e)Prices 13
(f)Foreigntradeandbalanceofpayments 15
(g)Publicexternaldebt 17
4.MAINSECTORS 19
(a)Agriculture 19
(b)Mining 20
(c)Manufacturing 21
(d)Energy 23
(e)Transport 23
(f)Tourism 24
5.DEVELOPMENT PROSPECTS UNDERTHE1976-80 PLAN 25
(a)Generalremarks 25
(b)Sectoralobjectives 26
Agriculture 26
Miningandindustry 26
Electricity 27
Transport 28
(c)Prospects 29
6.ANNEXES 32
Annex 1:Breakdown ofimportsbyproductandbyprincipal 32
countries oforigin
Annex2:Breakdown ofexports "byproductandbyprincipal 33
countries ofdestination
Annex3sBreakdown byindustryofvalueaddedofthe34
manufacturing sectors

-V
EXCHANGE RATEON31JUBE1977
1Jordanian diñar(JD)=2.69u.a.orUS$3.05
1u.a. =JD0.37

-yi-
SUMMARY AJTOCONCLUSIONS
2TheHashemite KingdomofJordancoversanareaofalmost100000km.The
arrivaloflargenumbersofrefugeesafterthe1948and1967warsadded
tothedemographic growthratehaveresulted inafivefold increaseinthe
population overthelasttwentyyears.Thepresentpopulation isputat
itwomillion •
Only%ofJordan'sterritoryisarableland,andtheonlynaturalresource
workedisphosphate ,reservesofwhichareestimated at3000milliontonnes.
Muchhasbeendonetodeveloptransport infrastructure ,particularly as
aresponsetothedifficulties occasioned bytheclosureofthefrontiers
withneighbouring countries .
Thecountrysuffered aconsiderable losswhentheWestBankwasoccupied
in1967*andpercapitaGNP,estimatedin1975atUS$630,islowerin
realtermsthanthe1966figureforthewholecountry.Onlysince1970
hastheeconomybeguntoberebuiltonnewfoundations .
SincethenGDPhasbeengrowingatapproximately j}>ayear.Theadded
valuebreakdown hasremained moreorlessthesameforthevarioussectors
(agriculture :10$;industry:20$;services :70$in1975)?despite
asharpincreaseinphosphate production andmanufacturing ,services continue
todominatethepicture,owingtothelargescaleofpublicadministration
andtransittrade.
Aidfromforeigngovernments and,morerecently,anincreaseinremittances
fromforeignworkershavestimulated private demandandmadeitpossible
topursueanexpansionist budgetary policy,resulting ingrossdomestic
expenditure whichexceeded GDPby36$in1971andby53$1975*This
Unlessotherwise indicated statistics donotapplytotheWestBank.
^Unlessotherwiseindicatedgrowthratesrefertoincreasesinreal
terms.

upsurge indemand hasmeant that prices have risen faster ,theincrease
probably averaging 1%perannum over thelast four years .
There hasbeen amarked improvement ingross fixed asset formation ,which
reached 27$ofGDPin1975 »compared to16join1966 ;theGovernment 's
liberal policy hasencouraged private investment ,andpublic investment
conmmitted bytheState hasbeen atahigh level (56$ofthetotal in1975 )»
particularly intheindustrial sector .
Thefact that allcapital goods have tobeimported (33$oftotal imports
in1975 )an<lthestructural shortfall inagricultural products (cereals ,
vegetables ,meat )make itdifficult toimprove thetrade balance .Exports
still cover only onefifth ofimports ,inspite ofincreased sales tonearfcy
Middle Eastern countries (4C$ofexports )andtherising selling price and
export volume ofphosphates ($60million ).Theproliferation ofgrants
andloans from external sources ($380 million in1976 )andtheinflow of
remittances from emigrant workers ($340 million in1976 compared toonly
$14million in1971 )areenough tokeep thebalance ofcurrent payments
insurplus ,andnetcapital inflows ,generally linked tothefinancing
ofinvestment projects ,aregenerating asteady increase ingold and
foreign currency reserves ,which stand attheequivalent ofsixanda
half months *imports .
Theexternal debt ,although large inproportion toGDP (33$in1975 )»
isnotunduly burdensome .Itconsists largely ofloans onhighly
favourable terms andservicing accounts fornomore than jf0ofexports
ofgoods andnon-factor services .
Thecurrent Five-Year Plan (1976–80)hassetaGDPgrowth target of12$
perannum .Economic development istobebased onexternal demand soas
toincrease exports andthus reduce thedependence ofthebalance ofpayments
andthebudget onforeign aid.Priority isgiven togrowth inagricultural
production (torise ty7$ayear )andinthemining andmanufacturing
sector (torise by2&foayear ).

-3-
Thesetargetsappearextremelyambitious andcould "becut"byfluctuations
inagricultural production ,theextensionofirrigatedareasfalling
behindschedule,andthecurrentdifficulties ontheinternational phosphate
market.Thegrowthofmanufacturing industry,moreover,couldhechecked
duringtheearlyyearsofthePlanperiodhyashortageofcapacity,
andgrowthisalsovulnerable "becauseoftheneedtorelyonMiddle
Easternexportmarkets.TheGulfmarkets 1absorption capacityisopen
toquestioninviewofthebigexporttargetssetbytheMediterranean
countriesinparticular .Allthismeansthattheoverallincreasein
GDPwillprobablyfallwellshortofthePlantarget.
ThePlanprovidesforfixedinvestmenttotallingfa.300million1,implying
anaverageannualincreaseof13$over1975>however,sincethebulk
oftheseinvestments aretobemadeintheearlyyearsofthePlanperiod
theyarelikelytocomeupagainsttheobstaclerepresented bytheinadequacy
oftheadministrative andtechnical back-upneededtoprepareandimplement
asufficient numberofconcreteprojects.Three-quarters oftheinvestments
aretobefinanced byforeigncapital,,mainlyintheformofgrants.The
rapidgrowthofremittances fromemigrantworkers(theamountrecorded
in1976,thefirstyearofthePlanperiod,wastwicethatforecast)should
coverthebalanceoncondition thattheStatesucceedsinmobilizing private
sAvingstofinanceinvestment .
Jordanhasanumberofcomparative advantages whichitshouldbeableto
exploit:
(i)certainmineralresources (phosphates ,potash);
(ii)thechancetodevelopaprocessing industrybasedonthesecommodities ;
(iii)alabourforcewhich,fortheregion,iswell-qualified .Atthe
moment,however,thehighwagesofferedintheGulfStatesaretying
uppartofthislabourforceJ
"1975pricesandexchangerates.

-4-
(iv)£hemostefficient administration amongtheMashreqcountries ;
(v)keenbusinessmen withexperience intrading;
(vi)closeness tothemarketsforfoodstuffs andindustrial products.
Exploitation oftheseadvantages couldmakedevelopment ofthecountryan
easierprocess.Development mainlydepends,however,onthepolitical and
militarystability ofthearea,whichwillremainprecarious untilpeace
andsettledfrontiers aresecured.Finally,itisclearthatJordan's
futureeconomic andfinancial viability willtoanexceptionally large
extentdependonthecontinuation ofmassiveinflowsofforeigncapital
andremittances .

1.GEOGRAPHY
TheHashemite Kingdom ofJordan isbounded "bySyria totheNorth ,Iraq
andSaudi Arabia tothe East andSouth ,andIsrael totheWest .Ithas
a20kmcoastal strip atthehead oftheGulf ofAqaba .Thecountry covers
anarea of100000km^.
TheGhor valley ,through which runs theJordan andtheDead Seatrench ,
hashot ,humid summers ,andvegetables ,citrus fruit andbananas have
gained ground attheexpense ofcereal crops .Thehigh eastern wall of
thevalley overlooks avast plateau ofsteppe anddesert .Only of
Jordan 'sterritory isarable land .
Sofar,theonly mineral resource discovered insignificant quantities is
phosphate ,which hasbeen extracted since 1963 atRusayfa tothenorth-east
ofAmman and ,more recently ,atElHassa inthesouth .Reserves areput
at3000million tonnes .Some potash isextracted from theDead Sea ,
andthere arealso iron andcopper oredeposits ,untapped asyet .
Transport infrastructure hasbeen considerably developed over thepast
twenty years ;Jordan nowhas4100kmofasphalted roads ,and 340km
ofrailways ^.TheportofAqaba hasbeenmodernized since theearly
1960s ,andnowhasanannual capacity of'3.2million tonnes ofphosphate
and600000tonnes ofordinary goods .There aretwocivil airports ,atAmman
andAqaba .
2.POPULATION AMD EMPLOYMENT
Anestimated 2million people live ontheEast Bank .Thenatural population
growth rate isoftheorder of ayear ;this hasbeen supplemented bythe
influx ofrefugees after the1948 and1967 wars .which hasmeant that the
1Unless otherwise indicated ,statistics apply only totheEast Bank .

-6-
EastBank'spopulation hasincreased five–foldintwentyyears.Integration
oftherefugeesintotheindigenous population hasgivenrisetoconsiderable
problems.Forty-three percentofthepopulation liveintownswithover
10000inhabitants ;Ammanhasapopulation ofover600000.
Fortypercentofthetotalpopulation isofworkingage,buttheworking
population isonly380000,i.e.lessthan20^ofthetotal.Unemployment
apparently affectsonly2?jooftheworkingpopulation ;thereisconsiderable
underemployment infarming.Anestimated 5000workersleftthecountryforthe
ArabGulfstatesin1975*
Table1:Breakdown bysectoroftheemployed workingpopulation (in
1270 1915
Primary : 38.2 19.5
Secohdary : 11.6 18.5
Tertiary : 50.2 62.0
100.0 100.0
Adisproportionately highpercentage oftheEastBankworkingpopulation is
employedinservices.Thesectoraldistribution haschangedrapidlyin
recentyears,mainlyowingtotheincreaseinthenumbersofconstruction
workersandpublicworks-operatives inthesecondary sectorandmilitary
personnel inthetertiary sector.
3.RECENT ECONOMIC DEVELOPMENTS
(a)Growthandoriginofnationalproduct
2FromI960to1966GDPgrewatasteadyQf0ayear.The1967warandthe
annexation oftheWestBank–whichaccounted forsome35-4Ofoofthevalue
addedproducedinthecountry–putastoptoexpansion .Thelossof
earnings andthefloodofinhabitants crossingtotheEastBankaccountfor
thefactthatin1975»percapitaGNP,putat$630,wasactuallylowerin
realtermsthanthe1966figureforthewholeterritory .
1Excluding mining,whichcomeswithinthesecondary sector.
^Unlessotherwiseindicated,allgrowthratesareworkedoutinrealterms.

ir)
i«Mt2.'JQRffiJOF_SROSS OCMESTIC PRODUCT fFASTDAVVl
Inaiuionsof dinarsateveragaconstantpricesfor1971-72
Averags
1971-721973 1974 197SAverag*annualgrowthrati
In%from
1971-72t.1975%oftotal
Aversg*
1971-72
•âgrloultur *
-Induitry
•Miningand«annfacturlng
•Construction
*Electricity andvstsr
•Sinrleti
•Transportation adcossiinications
•Trad*
•BankingendfInane*
•Ownsrship ofdwlllngs
•Publicadministration anddeftnet
•Othtrservice*
GDPatfactorcost23.0
29.5
19.0
8.0
2.5
120.5
16.0
32.5
3.0
11.5
40.0
17.5
173.017.9
SS.4
23.4
10.0
3.0
123.»
16-a
53.3
3.0
11.5
40.θ
17.7
177.927.1
39.5
27.2
9.0
3.5
132.4
17.9
36.1
3.8
12.5
42.0
20.1
199.020.9
202.010,
6
16
4.513.3
17.0 20.1
11.0 13.2
4.6 5.0
1.4 2.1
69.7 69.4
9.3 9.1
18.8 18.β
1.7 2.5
6.7 6.6
23.1 21.8
10.1 10,6
100.0
Soueca:Niiloml PlirwlM Council,
i
i

Tabla3%NATIONALP^CDUCTANCITS'JSnE;:TeANK)
Inciiilionsofdinarsataverageconstantpricssfor197V72%oftotalJ
Average
1973 1974Average
1971-721975
|1971-72
Consuiptlon 222.7 254.1 264.3 V11.2 11A.Ï 130.»
-prrjats (157,7) 1S0.1) (155.2) (217.4) (33.9) (94.5)
-Govîrnuent (55.0) (74.0) (98.1) (83.8) (33.3) (16.4)
Investaint " j45.0 42.0 49.2 50.8 j[23,122.1
arossdocusticsxpsndituri 267.7 |
I276.1 313.3 I352.0 137.3 153.0
'.esoureigap -72.? -70.9 -87.7 -122.0 -37.3-53.0l
tExportsofgoodsandnon-factorservices 34.9 51.7 56.4 80.9 17.9 35.2
-laportsofgoodsandnoivfactorservices r–107.ft •122.8 -144.1 -202,9 -53.2 -63.2I
arsesdoMstltproduct 195.0 203.2 225.8 230.0 100.0 100.0
letfactorinccatfroaabroad 10.5 17.8 22.6 41.5 5.3 18.0
Srossnationalproduct 205.3 223,0 248.4 271.5 105,3 113.0
IncludingrsaltlanwsfronJordaniansworkingabroad.
^2!!N»tlon»X?l«nnlngCouncil.
I
00
1

-9-
Therecoveryofproduction hasbeenhindered byfrontierincidents occuring
upto1970,foreigntradeproblems causedbytheclosureoftheSuezCanal
and,temporarily ,oftheSJrrianfrontier andseveredroughtpractically every
secondyear.Theeconomyhasbeenrecovering slowlysincetheearlyseventies ,
aidedatfirstbythegrowthoftheconstruction sectorandincreased demand
forconsumer goodsand,morerecently ,byexpanding phosphate production ,
therisingpriceofphosphate andstrongdemandforagricultural products
andmanufactures inneighbouring PersianGulfmarkets.Thecivilwarin
Lebanonin1975indirectly boostedJordan'sbankingsectoranditsservices
ingeneral.However,thegrowthtargetssetinthe1973-75Three-YearPlan
havenotbeenachieved (GDPannualgrowthtarget8/,about4f0achieved )•
In1976theexpansion ofconstruction andindustry gaverisetoanincrease
of%inGDP.
Thesectoral breakdown ofGDPisdetermined byvalueaddedintheagricultural
sector,whichvariesconsiderably fromyeartoyear(up51$in1974»down
23$in1975»down9fain1976),andcanthusaccountforaslittleas10%or
asmuchaslj/oofGDP.Thedevelopment ofmanufacturing andphosphate mining
havesignificantly increased theindustry'sshare(20$ofGDPin1975)»but
thetertiarysectorcontinues todominatethepicture (69J0ofGDPin1975)owing
tothesizeofthepublicadministration andthescaleoftransittradeactivities .
(b)Consumption ,savingandinvestment (seeTables3and4)
Themassiveinflowofgrants,whichcomechieflyfromArabcountries andthe
UnitedStatesandaccounted fortheequivalent of61%ofGDPin1975»enables
Jordantomaintain awhollyartificial economic equilibrium characterized by
alevelofgrossdomesticspending (consumption +investment )whichin1975
exceeded GDPby53%•Thissituationispartlyduetothehighlevelofmilitary
spending,whichaccounted for17%ofGDPin1975?itcannoteasilybeanalysed
intermsoftheusualeconomiccriteria ,beinglargelydependent onpolitical
factors.Consumption exceeds GDPby2Of0onaverage;thisimbalance was
particularly markedin1975»whenGDPwasexceeded by31%»Thisisarecent
development ,whichappearstohavebeenstimulated bytherapidgrowthof
remittances fromJordanian workersabroad;theseaccounted for2Gf0ofprivate
consumption in1975(asagainstonlyin1972).

Tableh1FINANCING OFINVESTMENT
Inmillionsofdinarsatcurrentprlcas •%oftotal
1971 1972 1973 1974 1975 1971 1975
•»lmtfamt «4.0 46.0 55.0 80.0 94.0 100.0 103.0
•Governwnt
•Private(ft«3o)
("•a.)(17.4)
(23.6)(24,0)
(51.0)i4S,0)
(34.0)(ss.ar
(41.0)(-1
(-)(56.4)
(43.5)
»'Nationalswings
fwhich-Oowstlesayings *
,Netincoiefro#abroad-13.9
(-25,6)
LU-20.9
(-31.7)
<1C-8)-5.8
(-25.6)
(^-9)-3.8
(-34.6)
l*L3 .i-26.8
(-39.1)
f>?.3)-31.6
(-53.6,
I22.0ι-23.5
(-94.8,
i-6^5]
►flsscure»cap(-) jI-57,9 -66.9I
-63.8 I-s\a --?0.3 -1ÎV6 -129.5
Uaraqultid transfers (nst)
•officiai
•privato36.6
(31.9)
(4.7)68.3
(59.1)
(9.2)64.6
(34.5)
(TJ.1)86.8
(75.6)
(11.2)139.8
(128.5)
(11.3)83.2
(72.5)
(10.7)148,7
(136.7)
(12.0)
capitalInflow 7.6 7.T (.5 10.8 22.5 17.3 23.9
ZChangsinexternalassets
(inertast:dtcraasa:+)13.7 -8.5 -10.3 -13.8 -41.5 51.1 -44.1
1Includingrsilttancss froienigruntworkers.
Including -tinbalanetofpayiants1t«a"errorsandMissions".
Sou'-ea:NationalPlanningCouncils

-11-
Atcurrentprices,theproportion ofgrossfixedcapitalformation in
GDProsefrom16foin1966to27$in1975«Thisimprovement wasmade
possible bythevolumeoftransfers fromabroad,andismainlytheresult
ofasharpriseinpublicinvestment (from33$ofthetotalin1971to
56%in1975).
Untilrecentyearshousingconstruction andpublicworksaccounted forthree-
quarters oftotalinvestment .Newindustrial projects haveprobably now
increased theproportion ofproductive investment .
(c)Publicfinance(seeTable5)
AmajorfeatureoftheGovernment 'sbudgetisthesubstantial sharecontributed
bygrantsfromabroad,accounting for^Ofooftotalrevenueonaverage.Since
1973*however,theincreaseinthetaxonexported phosphates hasledtoa
rapidriseindomesticrevenues (upto33$ayearatcurrentprices).
Military expenditure stillaccounts foraquarteroftotalspending ,although
itisdecreasing inrelative tcirms(from6jfoin1969)>currentnon-military
expenditure hasrisenrapidly,particularly from1973to1975»becauseof
theadjustment ofcivilservicesalaries.
Theexpansion ofpublicinvestment ,whichledtoatrebling ofcapital
expenditure infiveyears,hasnotbeencoveredbybudgetsavings.If
military expenditure andacorresponding amountofforeignaidareleftout
ofaccountitcanbeseenthatbudgetsavings (definedasthebalanceof
domesticrevenues-currentnon-military expenditure )areabletofinance
onlyadwindling proportion ofcapitalexpenditure :
1969 1972 1975 1976
60f0 l&Jo 1% 2%
Despitetheconsiderable inflowoftransfers ,therefore ,theStatehasbeen
obligedtohaverecourseincreasingly toexternal borrowing andnational
privatesavings.

Tabls5:GENERAL BUDGETOFtheCENTRAL GCVERNME'.T
Iniilllons ofdinars As1oftotalrmnue
1969 1971 197Î 1974 1975 19761 1969 1974[
I1976
(♦)Revenues andgrants 70.9 71.1 91.8 116.2 174.2 154,6 100.0 100.0 100.0
I«Doeesticrevenues 32.5 35.7 46.2 63.2 84.2 110.5 45.8 52.4 71.S
I•Externalgrants 33.4 35.■'S 45.6 53.0 90.0 44.1 54.2 47.6 28.5
I(-)Currentaxosndltura 65.2 50\Z 73.5 104.8 136.3 144.5 I92.0 84-1 935
JofwhichaWbryexpenditure46.2
II42-0 I
I j44.555.3 55.665.2 jJ40.536.0
!(•)Currentbalance !i5"7...Im.4i
;-3.2 11.cI,7-?!
\ i10,1I
I3'° I15.9 6.5
*{-)Capital•xpsndlture 22.5 iU.2
. ιV ^3,2j!A3,4 31.7 j
i33.4 I50.7
(•)Cvarallbalança '-16.3 j
i !Iο '
I*11-8 i
I
I !I-35.3
; I
ί ι•35.3 jI-58.3 i
i j"23-7 i-17.3 j-44.2
j.Fimnctroefthedeficit
j•Domesticborrowing12.1 !i2.2 ;
j i I16.3 |
!i
i.a.jI17,1 I4.0
J♦Externalborrowing4-7I-.6 !I I
I\2A,8.9 j!190jn.o.|6.6 |13.5 j
1tsiinaiid
Source :Central BankofJordan *
ru
I

-13-
Thisledtoatrebling ofthecentralgovernment debtbetween1970and1975»
whichbytheendofthelatteryearhadreached JD175million,i.e.three-
quarters ofGDP.
(d)Money,creditandthebankingsystem
Excessliquidity isthesalientfeatureofJordan'smonetary situation ;it
reflects astrongpropensity tohoard,whichisareactiontothearea's
political instability .Theconsiderable volumeoftransfers fromabroad
hasledtoarapidincreaseinnetexternalassets;,therehasbeenaneven
sharperincrease,however,incredittotheeconomy.Theadjustment of
Treasury bondinterestrateshasenabledtheStatetodivertsomeofthe
privatesectorliquidity tofinanceitsinvestment budget,thecommercial
bankshavebeenaskedtoincreasecredittotheproductive sectors,andinterest
ratesforindustry andagriculture havebeenkeptfairlylow.Mostprivate
sectorcredit,however,goestotradeandconstruction ,inspiteofcontrols
imposedonthistypeofcredit.
AswellastheCentralBank,Jordanhastencommercial banks^andfour
specialist banks.Amongthelatter,onlytheIndustrial Development Bank
andanagricultural creditestablishment dealinlong-term financefor
production .
(e)Prices
Afterafairlylongperiodofpricestability ,Jordaniscurrently experiencing
rapidinflation :
Table6:Annualchange($>)inthecostoflivingindexforAmman
1968 1969 1970 1971 1972 1973 19741915Ì2té
-0.37.8 6.8 4.4 8.0 10.4 20.012.014.3
Thisinflation iscausedpartlybyrisingpricesontheworldmarket,but
chieflybyconsiderable excessdemand,whichisrisingsteeplyandfar
outstrips Jordan'sproduction capacity.
Fourofthecommercial banksareJordanian ,onisIraqi,oneEgyptian ,
oneLebanese,twoBritishandoneAmerican.

Table7:Moneysupplyandprincipalcountsrparts (stendefperiods)
. |naillion»0fdinars As%eftotalaomysupplyI
1969 1971 1973 1974 1973 1976 1969 1974
■Money 9S.2 108,0 159.31
170.2 I213.5 263.61
Θ1.0 79.3 73.4
I-NeaK-aoney 22.S 27.1 36.8 4S.S 59.2 95.3 19.0 21.3 26.6
j-Totaltoneysupply118.8 135.1 175.1 216.7 277.7 338,9 100.0 100.0 100.0I
I•Externalassets(net) 95.2 89.1 103.4 113.3 153.8 204-9 80.1 52.3
I-Credittotheeconomy 36.1 68.2 98,0 122.0 152.6 254.5 30.4 36.3 70.»
I•C'ValasontheTreasury(net) (-10.3)20.0)Î32.9) (32.7) (25.5) 160,1)(-8.7)(15.1) (16.7)
I•C'ai»sonothsrpublicbodles (2.9) (3.3) (5.8) (9.0) 11.5) (17.2) (2.5) (4.2)(4.8)I
I•Clainsontheprivatasactor (43.5)(44.9)(59.3) (80.3) (115.6) (177.2) (36.6)(37.0)(«9,4)I
I"OtherItems(n»t) -12.5|-22.2 -25.3 -18.6 -33.7 -100.8 -10.5 -8.6-28.0I
|TOTALCOUNTERPARTS118.8 135.1 176.1 216.7 277.7 353.9 100.0 100.0 100,0
Sources:IMF,FinancialStatistics *CentralBankofJordan-MonthlyBulletin,

-15-
(f)Foreigntradeandbalanceofpayments (seeTable8)
Theamountofaidreceived "byJordanintheformoftransfers fromabroad
hasenabledthecountrytoincrease importstoaleveloutofallproportion
toitsowncapacity basedonexportearnings ,andalthoughthelatterhave
increased five-fold –atcurrentvalues-since1970exportscoveronly
about20$ofimports(exceptin1974)•
Since1967Jordanhashadtoimportlargequantities ofwheat,fruitand
vegetables ;agricultural produceaccountsfor20-30$ofallimports,
depending onthesizeoftheharvest.Importsofcapitalgoodshaverisen
steeplyoverthelastthreeyears(32$oftotalimportsin1975)inline
withtherapidexpansion ofinvestment (seeAnnex1).
Thegrowthofexports(seeAnnex2)wascheckedbytheclosureoftheSuezCanal
andtheSforrianborder(from1970to1972);thedifficulties wereprolonged
bythecivilwarinLebanonandthedestruction oftheportofBeirut.
Jordan'stradehasnevertheless benefited fromthesteepriseindemand
intheArabGulfstates,whichtake42$ofitsexports,mainlyintheform
offoodstuffs (fruitandvegetables )andmanufactures (cement,chemicals).
Themaingrowtharea,however,isphosphates ,withexportsworth$60million
in1974,1975and1976asagainstonly#10millionin1973*Thisspectacular
progressisduebothtoanincreaseinthevolumeofsales(from1.1milliont
in1973to1.5milliontin1974)andtoariseinworldmarketprices.In
1976phosphates accounted forabout40$oftotalexports.
Thenetbalanceonservices andtransfers for1976wasapproximately
2US$780million,i.e.nearlysixtimesthevalueofexports.Thefigure
forservices andtransfers isrisingsteadily andconsists mainlyofremittances
fromJordanians workingintheGulfStates($340millionin1976,asagainst
only$14millionin1971)andofficialtransfers ($380millionin1976),the
amountandoriginofwhicharedirectly linkedtonationalpolicyandthe
militarysituation intheregion.
4Althoughworldpricesfellbynearly40$in1976,theyarestillmorethan
150$above1973levels.
Sfotcountingre-exports.

Tabls8:BALANCEOFPAYMENTS (1969-76)
(inolIUonsetcurrantdinars)
1969 1970 1971 1972 1973 1974 1975 1976
Ilaports(df) 67.54 65.53 76.19 94.88 107.80 155.68 232.94 297.89
[Exports(fob)includingre-exports j•14.75 12.17I11-44 I17,01 I24*15 49.75 43.88
I66.29
Tradebalance -52.79 -53.36I
I-64.75
I-77.87 I-83.65 -105.93 -154.06 -231.60
Travil,tourlsn(nat) -3.00 -4.5B -3.34 -2.97 -0.57 -0.14 1.96 25.97
Othernon-facbr services -20.24 -0.30 0.47 3.11 3.64 -β.56 -1,01 -15,7$
Interestanddividends (nit) 6.04 6.12 4.77 3.5* 5.08 6.70 9.36 9.23
Workers 1reoittsnces 6.92 3.54 4.97 7,41 14.70 24.13 53.25 114.41
Othernettransfers 47.34 40.65 36.61 68.29 64.50 86.74 139.50 127,30
efwhlch:ArabStates (41.15) (33.07) (19.11) (23,19) 23.66) (46.60) (106.21) (77.59
USA (1.23) (1.38) (12.82) (Î5.95) (30.83) (25.31) (22.32 26.13
I UNOrganizations (3.37) (4.51) (3.56) (6.82) (6.60) (8.86)|(4.42)17.16
Balanceonservices andtransfers 37.06 47.48 43,48 79.18 87.45 103.87 203.06 260,17
Balan»oncurrantaecount -15.73 -5.93 -21.27 1.31 3.80 2.94 19.00 28.57
Privatecapital(nit) o.ao -1.35 -1.28 -0.38 -1.14 1.06 3.50 n.a.
PublieCapital (net)I1,618.02 6.71 7.59 9.82 18.99
Capitalbalança 5.34 0,26 6.74 6.33 6.45 10.88|22.49-24.43
SCRallocations a,96 0.381 II* i
Errorsandooissisr.s ^.33 3.19 1.83 -1.81 2,23 -7.08 9.25 5.94
Netchangeinreserves I
[increase;decrease:+) IL10.92 | 11.82 -6.71 {-12.48 -6.74 I-50.74 -10.08
:CtntralQankofJordan,MonthlyBulletin®

-17-
Moreover,thespectacular riseinearningsfromtourismmadeitpossible
to"bringthetravelaccount "backinto "balancein1975»&surplusof
^75millionwasrecordedin1976.
The"balance oncurrentaccounthas"beeninthe "blacksince1972and
showedasurplusof$85millionin1976.Thecapitalbalanceshoweda
substancial surplusfor1974and1975?thiswasoccasioned "byalarge
increaseinprivatecapitalinflowsowingtotheexecution ofseveralmajor
projects and"bymuchheaviergovernment borrowing abroad.
TheCentralBank'sgrossgoldandcurrencyreserves haveimprovedsteadily
inthepastfewyearsandstoodat$560millionattheendof1976,as
againstonly270millionattheendof1972;however,theend1976
figureisequivalent toonly7irmonths'imports,asagainst 12monthsfor
theend1972figure.
(g)Publicexternaldebt
Prom$170millionin1972,Jordan'sexternaldebthadrisenbytheend
of1975to$330million-thusincreasing slightlyfasterthanGDP:
Table9'Publicexternaldebt(paidportion)aspercentage ofGDP,
atmarketpricesforthecurrent ,year
1221 1221 1221 122A 1221
28.0 29.5 32.9 31.6 33.1
Thisprogression essentially reflectsborrowing fromforeigngovernments ,
mainlyfromDACmembercountries .Theacceleration oftherateof
commitments (non-paidportion:$?0millionin1972,$260millionin1974)
pointstoaconsiderable increaseinthedebtinthenextfewyears.

-18-
Loantermsseemfairlyfavourable onthewhole,sincetheaverage
grantelementfortheperiod 1971-74is5&?°«'Thismeansthatdebt
servicing mustberelatively lowandisinfactcurrently equivalent to
5$ofexportsofgoodsandnon-factor services.
Table10:Servicing ofthepublicexternal debtasapercentage of
exportsofgoodsandnon-factor services
1967 1971 1972
1.6 7.8 7.31973 1974 1975
6.3 4.9 5-0
Whichmeansthatthetermsofanaverageloancouldbefor30years,
withaneight-year graceperiod.

-19-
4.MAIN SECTORS
(a)Agriculture
Value added :10-13%ofGDP,depending onharvests
Proportion oftheemployed working population engaged inthesector :20%
Average annual change invalue added ofthesector :+2.7% from
1971/72to1975 .
Agricultural production hasfallen considerably since theoccupation of
theWest Bank ,which contained 25%ofthecountry *scereal acreage ,45$of
itsvegetable acreage and80%ofitsorchards .
East oftheJordan ,slightly less than 5%oftheland iscultivated ,
mainly intheJordan valley and onthenearby plateaux .Irrigation
channels have been dug inthevalley andparallel totheriver intheGhor
region ,drawing water from theYarmuk ,atributary oftheJordan .
Farms mostly tend tobesmall andextremely fragmented ;6yfocover less
than five hectares andaccount foronly 14$ofthecultivated land .Seventy
per cent offarmers owntheir ownland ,but intheirrigated areas there
appears tobeaconsiderable number ofabsentee owners .The last fewyears
have witnessed therapid development ofcooperative farms ,particularly
intheIrbid district andtheGhor region .
Despite thefact that there isafair amount ofseasonal underemployment
inagriculture ,there appears tobeashortage oflabour fortheharvesting
ofcertain crops ,andaneven greater shortage oftheskilled labour
needed tomechanize the sector .
Thewide variations inagricultural production recorded over thelast
fewyears actually conceal stagnation inthesector ;Jordan ishaving
toimport anincreasing proportion ofthefoodstuffs itrequires ,mainly
wheat ,flour ,milk andmilk products ,eggs andmeat onthehoof ;the
agricultural trade deficit for1976 amounted toalmost $200 million .
Cereal production varies from 50000to250000tayear depending on

-20-
rainfall ,withyieldsrangingfrom2to10quintalsperhectare.There
has "beenaspectacular increase intheproduction ofchickens andeggs
inthelastfewyears,anditwasforecastthatthecountrywould "be
self-sufficient intheseproducts "by1977•Stock-farming accounted for
20to25$oftotalagricultural income(in1973),huthasnotrecorded
anygrowthoverall,duetothescarcity ofpasture andforagecrops.Fruit,
1vegetables andolivesgenerate ahoutone-third oftheincomefromfarming,
amdaccountforpractically allexportsofagricultural products (95$)
andaquarteroftotalexports.Thespreadofcultivation underplastic
nowseemstohavemadeitpossible toincrease theyieldoftheseproducts ,
forwhichthereisaheavydemandintheneighbouring countries .
Allinall,Jordan'sagricultural potential isslight;nevertheless ,it
isstillunderexploited .Thesectorcanbedeveloped intwoways:by•
extending theirrigated areasforfruitandvegetable production ,andby
increasing productivity inthecereal-growingareas.
(b)Mining
Valueadded:5.0%ofGDP
Proportion oftheemployedworkingpopulation engagedinthesector:ifo
Averageannualgrowthfrom1973to197557*0$
Activity inthissectorisconcentrated largely ontheextraction of
phosphate ,whichassaysatbetween64and72%.TheJordanPhosphate Company,
inwhichtheStatehasastakeof83$,holdstheminingmonopoly ,
extracting phosphate atRusayfanearAmmanandmorerecently atElHassa,
100kmfurthersouth.Thissecondminehasraisedproduction capacity
to2.8milliontonnesayear,butthedownturn ontheinternational
phosphate markethasmeantthatJordanhasbeenunabletoincreaseits
exports,andtherefore itsproduction ,asquicklyashadbeenexpected :
1Themaincropsaretomatoes (80000to150000t/year),aubergines
(15000to45000t/year),water-melons (20000to60000t/year)and
citrusfruit(15000to40000t/year).

-21-
Table11:Jordan'sphosphate production andexports (in1000tonnes)
Production Exports
1968 1162 1095
1971 640 651
1973 1081 1089
1974 1675 1469
1976 1700 1630
Source:Department ofStatistics andJordanPhosphate Company.
Jordaniscurrently theworld'sfourthlargestexporter ofrawphosphates ;
itsmainoustomers areIndia,Japan,Austria,TurkeyandtheEast
European countries .
Atpresenttheonlyotherminingactivities consistofstoneandgypsum
quarrying .Studiesarebeingcarriedoutwithaviewtominingpotash
onthebanksoftheDeadSeaandcopperintheFainan;geological surveys
aimedatconfirming thepresence ofmanganese andcopperinthesouthof
thecountryarenowunderway;andin1975811concession wasgranted
toaUScompany.Researchisbeingcarriedouttofindaproductive
methodofextracting theuraniumwhichoccursinphosphate insignificant
quantities .
(c)Manufacturing
Valueadded:10.5%ofGDP
Proportion oftheemployed workingpopulation engagedinthesector:6.3
Averageannualgrowthfrom1973to1975:6.5$.
Twenty-four thousandpeopleareemployedinthissector,approximately
halfoftheminbusinesses withoverfiveemployees .Oilrefining ,cement
production ,metalworkingandcigarette manufacturing arecarriedonby
ahandfuloflargefirms,butmostofthefirmswithmorethanfiveemployees
(1400outof1800)areintextiles andleather.

-22-
Hitherto thelargestfirmshaveenjoyedaStateprotected monopoly
withinthecountry,butthesizeofthedomestic marketisforcingthese
firmstobeginexporting ,mainlytotheGulfStates.
Although therestofthesectorisrunbykeenbusinessmen ,thereis
insufficient productivity .Thehighdegreeoftariffprotection theyhave
hitherto enjoyedandtheverygreatcautionthatisexercised intheissue
ofoperating licences havehelddowncompetition andprobably removedany
incentive totryandimproveproductivity .
TheGovernment nowintendstore-adjust itssectoralpolicybymakingit
easiertosetupnewbusinesses .Largenumbersofapplications forlicences
arecurrently beingreceived .Firmsareencouraged byalawoffering tax
rebates andconcessions ,andtheycanobtainloansoneasyterms.
Thesectorasawholehasanumberofcomparative advantages whichitcan
exploitrapidly :
theexistence ofmineralresources (phosphates ,potash)whichcould
supportabasicindustry ,andagricultural resources which,although
limited,wouldmakeitpossibletoextendthefood-stuff industry ;
agenerally well-qualified labourforce,althoughpartofitisbeing
attracted totheGulfStatesbythehighwagesofferedthere;
efficient administration ;
keenbusinessmen withconsiderable experience oftrading.
Jordan'sindustry couldalsobenefitfromeconomic unionwithSyria,which
iscurrently beingimplemented .Anadditional assetistheproximity of
Jordan'sexportmarketsaroundtheGulf,butthereissomedoubtwhether
demandinthesecountries willcontinuetogrow,andJordanwillcertainly
comeupagainstcompetition fromotherMediterranean countries whichsee
theMiddleEastasanaturaloutletfortheirexports.Becauseofthe
smalldomestic market,Jordan'sindustryisforcedtorelylargelyonexports,
andcautionneedstobeexercised inevaluating themedium-term potential
ofthissector.

-23-
(d)Energy
Jordan obtains itsenergy supplies from theZarka refinery ,afuel-fired
power plant andalarge number ofsmall diesel sets .
Electricity production ,which hasincreased byanaverage of16.5$ per
year over thelast five years ,wasestimated at .410million kWhin1975 *
Thelimited scale ofthedistribution network andthehigh generating
cost ofthediesel sets ,most ofwhich arelocated outside theAmman
andIrbid areas ,actasabrake ontheextension ofeconomic activity
outside these privileged regions .Consumption isstill very low (l85kWh
perannum capita )andindustry accounts forthebiggest proportion ofdemand
(42^),although outside theindustrial centre ofAmman andZarqa the
predominance ofhousehold consumption means -avery lowload factor ,which
increases theaverage production cost .
(e)Transport
Value added :9%of®P
Proportion oftheemployed working population engaged inthesector :
Average annual growth from 1971 to1975 s4»1$ »
Jordan has invested large sums initscommunications network during the
last twenty years andespecially under thelast Plan (1973-75 )*Theincrease
inphosphate exports ,thegrowth oftransit traffic andtheneed todevelop
theport ofAqaba which became apparent when Syria closed itsfrontier in
retaliation after theevents ofSeptember 1970 andwhen theport ofBeirut
wasclosed asaresult oftheLebanese civil war ,have intensified the
need for communications infrastructure .
Therailway network wasextended asfarasAqaba in1975 and "theline can
carry about 1.6million t/year ofphosphate from theHassa mine and
200000tofgoods .Theport itself ,continually modernized since 1959»
hasahandling capacity of3*2million tofphosphates peryear and600000t
ofgoods .Thephosphate loading quays arenotbeing used tocapacity at
present butthose used forhandling theother goods cannolonger cope
with thecountry *srequirements .

-24-
(f)Tourism
ThelossoftheHolyPlacesin1967considerably reducedtheimportance
oftourism(620000visitorsin1966,2000in1969)*TheStatehas
subsequently encouraged touriststocometonewplaces,particularly Petra,
whichissouthoftheDeadSea,andAqaba.Asaresultthenumberofvisitors
hasincreased rapidly,risingfrom290000in1972to1.1millionin1976,
andforeigncurrencyearningsfromtourismreached^180millionthispast
year.Mostofthevisitors comefromtheMiddleEast(lessthan20foare
Europeans )andtouristtrafficisevenlydistributed throughout theyear.
Thedevelopment ofEastBanktourismhasbeensorapidthatthesector
suffersfromalackofinfrastructure andanevengreaterlackofqualified
labour.

-25-
5.DEVELOPMENT PROSPECTS UNDER THE1976-80 PLAN
(a)General remarks
Thecurrent five-year Plan lays thestress ondeveloping theagricultural ,
industrial andmining sectors :
Table 12:Projections ofthe1976-80 Plan
Agriculture
Mining and industry
Construction
Public administration
Other services
GDP1Average annual
growth rate
(*)
1976-80
(forecast )
7.0
26.2
4.1
7.0
11.9Sectoral structure
1975
(real )
10.3
15.6
7.6
19.0
47.6
100.01980
(forecast )
8.3
28.3
5.3
15.2
42.8
100.0
This approach wasadopted inorder todevelop mainly exports ,particularly
totheMiddle Eastern markets .Itforms part oftheGovernment 'slong-term
objectives formaking thebudget andthebalance ofpayments less dependent
upon external grants .Thetrade deficit should belowered to21$ >ofGNP
in1980 asagainst 47$in1975 *
ThePlan provides foraverage annual investment of£460 million ,i.e.
anaverage of28%ofGDPover theperiod inquestion .Public investment
will represent half this amount andsemi-public ventures about 15/^-The
amounts forprivate projects without aState contribution aregiven only
asaguide .
Thesectoral breakdown ofinvestment favours agriculture ,mining and
industry ,particularly thelarge-scale projects .Theamounts earmarked
fortransport andsocial infrastructure arenevertheless higher than in
thepreceding Plan .
Atfactor cost .
2At1975prices andexchange rates

-26-
Thefinancing ofinvestment isbasedontheincrease intransfers "by
emigrant workersandonthedevelopment ofborrowing fromabroad,whereas
external grantsaretobesubstantially reducedunderthePlan.
(b)Sectoralob.jectives
Agriculture
Investments underthePlan:$430million
=18%ofthetotalPlanamount.
Thefirstobjective ofthePlanistoencourage ,aspartofthedevelopment
oftheJordanvalley,thegrowingofexportcropsfortheGulfmarkets
(fruit,vegetables )–thesebeingproductswhichcanbeobtainedinJordan
atcompetitive pricesfortheregion-andtheextension ofstock-farming
andthecultivation offoddercrops.Theacreageundercereals,however,
willbereduced-probably byone-third-inareaswheretheyieldsare
lowesttomakewayforfruitandolivetrees.
Themainincreases inproduction willbeachieved intheirrigated areas,
theextension ofwhichwilltakeuptwo-thirds oftheinvestments .It
isplannedtoincrease thetotalirrigated areafrom30000hectares in
1975 "to62000in1980,mainlybycarrying outprojects intheJordan
Valley ($190million):construction oftheMaqarindam,lengthening
oftheEastGhorCanal,extension ofsprinkler andotherirrigation
methods .
Theothermajorprojects include:
theextension oftheareasplantedwithfruittrees($24million);
therationalization andmodernization ofanunirrigated areaof60000ha
intheIrbidregion ($17»5million).
Miningandindustry
Investments underthePlan:$720million,ofwhich$250millionformining
=30"1oofthetotalamount.
Foreachproject,theamountstobeinvestedduringthePlanperiodare
givenbelow,evaluated at1975prices.

-27-
Thedevelopment objectives inthis sector fall into four main categories :
(i)mining ofphosphate resources ;
(ii)mining ofother resources ;
(iii)development ,with State participation ,ofindustry processing local
rawmaterials forsale onforeign markets (e.g. ,fertilizers ,cement );
(iv)development ,intheprivate sector ,ofmanufactures forexport and ,
toalesser extent ,ofmanufactures tobesubstituted ,under normal
competitive conditions ,forimports .
TheGovernment istherefore primarily committed todeveloping highly capital -
intensive industries using local resources andgeared toexports rather
than encouraging thelabour –intensive branches ofindustry orthose which
could notwithstand international competition .This policy isattuned to
thepresent employment situation ,which ischaracterized byconsiderable
emigration tocountries further south ,abdalso fits inwith thedesire
toimprove thestate ofthebalance ofpayments bydeveloping exports rather
than byencouraging local industry which would beprotected bycustoms
barriers inacountry whose market isinanyevent too -small .
Themain projects included inthePlan are :
theextension ofphosphate extraction capacity ,toberaised from 3.5
million t/year in1976 to6million tin1980 ($75million );
theopening ofapotash mine ontheshores oftheDead Sea ($78million over
thePlan period -atotal cost $141 million ).Mining should start in1982
1
andtheannual capacity isexpected tobe 1million t;
thebuilding near Aqaba ofafactory toproduce phosphatic fertilizers
($190 million )with arawphosphate processing capacity of1.6million t/year ;
anewcement works insouthern Jordan ($67million )with acapacity of
1million t/year ,part oftheproduction being intended forexport ;
theextension oftheZarqa refinery ($122 million ),theannual capacity
ofwhich will increase from 1million tofoilin1975 "t°3.5million tin
1979 .
.... 2Electricity
Investments under thePlan :$134 million
=5.6% ofthetotal amount .
1
This would putJordan inseventh place intheworld .
2
Jordan hasnoknown oilreserves ,butseveral areas areatpresent being
explored .Theequivalent of$14million will begiven over tooil
exploration during thePlan period (this amount isincluded intheinvestments
inthemining sector ).

-28-
Theobjective ofthePlan istoincrease the overall capacity ofthepower
plants from 130MWin1975 "to350MWin1980 ,toorganize andextend the
distribution network ,particularly inorder tosupply alltheindustrial
areas andthose agricultural areas where increasing use isbeing made of
electric pumps andtoconnect about ahundred villages tothenational
network .Among themain projects ,theextension oftheZarqa power plant ,
which hasbeen under construction since 1973 andwill have anadditional
capacity of120MW,will absorb half thetotal amount earmarked forthesector .
Transport
Investments under thePlan :$625 million
=15.79 ^ofthetotal amount .
Transport infrastructure hasbeen developed considerably over the last few
years ,buttherapid growth provided forbythepresent Plan nevertheless
makes itnecessary tomaintain thevolume ofworks atahigh level ,
particularly inorder to:
(i)serve thenewindustrial ormining projects ;
(ii)meet therequirements ofexternal trade andtransit activities ;
(iii)remove thebottlenecks between themajor agricultural areas (in
particular theJordan valley )andtheareas ofhigh food consumption
(Amman -Zarqa ).
Themain projects included inthePlan are :
thepurchase oflocomotives andwagons toincrease thecapacity for
transporting phosphates from theElHassa mine totheport ofAqaba
($44 million );thewidening tostandard gauge oftherailway track
between Amman andtheSyrian frontier (^24million );
2theexpansion ofthecapacity ofthenetwork ofroads leading tothe
port ofAqaba andthe Syrian frontier ;
thebuilding offive newquays atAqaba (including oneforloading
phosphates ),storage silos andthepurchase ofhandling equipment
($90 million );
theextension oftheairports ofAqaba andAmman andthebuilding ofa
newinternational airport near thecapital ($93million ).
Does not include theamount earmarked bythenational airline company for
increasing itsfleet ($125 million ).
>
'Total cost oftheroad projects =2117 million .

-29-
(c)Prospects
Thetargetssetinthe1976-80Planlookparticularly ambitious inthelight
ofthegrowthachievedinrecentyears(4.5%ayearonaverage).
Variations inincomefromagriculture duetoclimaticfactors,anddelays
inincreasing theamountofirrigated land(duetobedoubledoverfiveyears)
could,interalia,slowdownthegrowthinagricultural output(targetset
at7%).GrowthintheminingFactordependsmainlyontheimplementation
ofaprogramme fortheextraction of5*4milliontonnesofphosphate in
1980(asagainstonly1.7milliontonnesin1976);thisprogramme wasworked
outbeforedemandandpricesstarteddropping ontheinternational phosphate
market *Increased production inthemanufacturing sectorisdependent on
thecommissioning ofnewcapacity inindustries nolongerabletokeepup
withdemand.Thismeansthattheindustrial growthratecannotbeexpected
toaccelerate untilthelatterhalfofthePlanperiod.Theoverallvalue-added
growthrateintheminingandindustrial sectorcouldtherefore besomewhere
betweenthePlanprojections (26%ayear)andtherateachievedunderthe
1973-75Plan(10%ayear).
Thevolumeoffixedinvestments underthePlanisf2.300million,i.e.about
32%ofGDPforthewhole1976-80periodasagainst27%underthe1973-75
Plan.Theaverageyearlyincreaseprovidedforisapproximately 13%over
1975»buttheyear-by-yearbreakdown allocates thebulkofinvestment to
thefirstthreeyears,andtheprogramme .willprobablybehamperedbythe
factthatthereisnotenoughadministrative andtechnical capacityavailable
toprepareandimplement asufficient numberofspecificprojects.

-30-
Table13:Financing ofinvestment underthe1976-1980 Plan(forecasts )
compared withactualresultsunderthe1973-1975Plan(based
oncurrentpricesforpastresultsand1975pricesforforecasts )
: -TT>.η^ InJ°â
I1973-1975 1976-1980 1973-1975 I197Ô-19.Î0
Investment229 765 100,0100,0I
INational savings -36,4 171 -15,9 22,3 I
[(ofwhich)Domesticsavings (-149,3)(-117)(-65,2)(-15,3)
I Netincomefrom
| abroadandemigrant
| workers'remittances j(112,9) (288) (49,3) (37,6)
I■Resourcegao -265,4 -594 -115,9 I-77,7
INettransfers 291,2 332 127,2 4V4
I-Netcapitalcontribution 39,8 262 17,4 34,5
JChangeinexternalassets I-65.6 : -23.6 I=I
Including JD243millioninemigrant workers'remittances
Source:NationalPlanningCouncil-FiveYearPlan1976-1990
Takenasawholetheinvestment financing problems donotappearinsoluble .
Theunexpectedly rapidincrease (morethandoubletheamountforecastfor
1976)inremittances fromworkersabroadcouldmorethanmakeupforthe
completeabsenceofdomesticsaving(consumption iswellaboveGDP).The
needremains,however,fortheStatetomobilizeanincreasing proportion
oftheseremittances tofinancepublicinvestment ,■whichinturnmeansthat
amongotherthingsprivateconsumption willhavetobehelddown.Inspite
ofthesemeasures,theStatewillstillbeforcedtoborrowlargesumsabroad,
increasing thepublicexternaldebtandtheservicingrate,whichcouldrise
to10%by1980.
Allinall,bearinginmindJordan'sabsorption capacityandthedifficulties
besettingagriculture andindustry,itlooksasthoughthegrowthinGDP
willbewellbelowthe12fcperannumenvisaged bythePlan.

-31-
Inthelongerterm,thelaunching oftheinvestment projects plannedand
theexploitation ofJordan'snaturaladvantages shouldensurearelatively -
highgrowthrate.Richinmineralsforitssize,well-situated geographically ,
andendowedwithaskilledlabourforceandefficient administration ,Jordan
doesnotlackassetstoaiditsdevelopment .
However,thecountry'ssmalldomestic marketanditsheavydependence on
theneighbouring exportmarkets makeeconomic growthsomewhatprecarious ,
fortheindications arethatdemandinthosemarketswillgrowlessrapidly
inthemediumterm,andtoughercompetition isexpected therefromother
Mediterranean countries inparticular .
Jordan'seconomicsituation cannotbeassessed byapplying theusualcriteria.
Thedevelopment ofthecountry'seconomyconceals fundamental imbalances
whichmakeitseemprobablethattheexceptionally highlevelofdependence
onamassiveinflowofremittances andforeigncapitalwillcontinue.

Anna*iBREAKDOWN CFIMPORTS9YPRODUCT ANDBYPRINCIPAL COUNTRIES OFORIGIN(elf)
InBillions»fdinarsat«urr«ntprim jAvtrsgt|%ofiotal
ι
1959 I
ι ι1972 ]
II J
!1974 |
ι ιl
î1975
iIy»ariy ii
I!
"197% 1975 I1976Incitât*
1969-7521969
I11nonths
8reakdewA byBradset
Foodstuffs,beverages,testablerileandtobaece«
!19.62|
29.56 !44.83 51.94!
I75.17i
17.6 29.0 28.6 22.2
*Wheatandflour J1.78 6.10 7.14 6.82 13.95 j25.1 2.6 4.6 2.9
*L1y*anlial» II3.13 1.13 2.37 3.19 1.73 0.3 4.6 1.5 1.4
Dairypreducte *agga1.83 3.24 I3.88 4.82 5.33 17.0 2.8 2.5 2.1
*Fruitand«getabl»» I2.52 3.89 8.67 9.57 14.44 24.9 3.7 5.5 4.1
*YenetabWoïls I0.54 1.10 1.15 1.26 2.51 15.2 0.8 Ό.7 0.5
Rawaaterlalsotherthanoil I2.75I2-62 4.38 5.87 8.89 ^ I2.8 2.5
011andpttroloraprodwts 13.81I457 5.21 24.89 7.46 36.7 5.6 2J 10,6
Chenleala I3.41 8.05 12.20 14.09 23.7 5.0 52 5,2
Mtchliwr*andtra»»p»rt•quipim13.04 15.59 35.34 74.04 84.35 33.6 19,3 22.6 I31,6
OtherDasafaetvred goods21.09 25.78 I 61.63 73.12 19.6 31.1 27.2 25-4
•textiles.tflething*feotvear 7.83 9.45 11.55 20.05 18.26 17.0 11.6 7.4 8.6
Pair4.03 11.61 16.05 3.44 1.73|-2.65.9 10,3 1.5
Totallaporti67.75 95.31 156.51 234.01264.83J22.9 100,0 100.0 100,0
Braakdtvn by«omtry
•ArabStatuΓ14.36 16.38 !26.45 46.34 n.g.Γ21.521.2 16.9 19.3
•EEC(Nlm)
•US*22.43 26,99 45.63 76.97 22.8 33.1 29.2 32.9
6.23 16.89 17.58 24.18■ 25.4 9.2 11,2 I10.3
•SoliaMst bl**9.43 8.24 14.30 18.7S■ 12.1 13.9 9.1 a.o
•Nor-EECEuropeantoiatrlea [1S.2S3.49 I6.91 16.68(28.2 (22,64.4 7,1
»OtW \ jU23.32 |45.64 51.09■ 29.2 I
ivtfc*: ofStatistic * ofJor<Ufl*

Ann,*2BREAKDOWN OFEXPORTS8YPRODUCTANDBYPRINCIPAL COUNTRIES OFDESTINATION (fob)
InBllntfTYTf tfnarsattvfrantpfifftAvtrajt
y»»rly
laeroas»
1969-75
s%oftotal
1969 1972 1974 19751976
11nonths1969 1974 1974
Breakdown byprodtet
•Foodstuffs,ttbamo,ngotablaotl*
•Fruitandnirta
•Vagotablo »
•ttosratto »6.44
1.45
5.57
0.565.52
1.53
2.50
0.4010.92
4.27
4,89
0.7111.61
6.38
3.24
0.7516.16
7.81
5.05
0.7410.3
28.0
-1.6
5.054.1
12.2
30.0
4.727.7
10.8
12.4
1.6n.a
15.9
6.1
1.t
'Rawnotarial*otbarthanoil
•Ptro»phato»3.85
3.573.72
3.5020.03
19.5320.11
19.5917.70
16.9531.7
32.832.3
30.050,8
49.550.2
48.9
011an<ptirtltmproduis
•Chailtalt
Othorlaaofactarai Slow
•Camt0.04
0.19
1.39
0,480.31
3.06
1.920.13
1.24
7.12
4.080.25
1.95
6.16
1.660.61
3.24
6.21
0,01ft*ft*
47.4
28.2
23.00.3
1.6
11.7
4.00.3
M
18.1
10.50.S
4.9
13.3
4.1
Totaldoraitli«porta J11.92 12.61^ΓΊ 40,08 43.92 22.4 100.0 100,0 100.0
Ra-axport» 2.63 4.40 10.32 6.80 17.64 20.6 23.7 26.2 22.0
Totaloxpart» 14.75 17.01 49.76 48.88 61.56 22.1 123.7 126.2 122.0
Breakdown bycountry
ArabStates
EEC.
Socialist bloc
India
Japan
Othar<«8.51
1.41
1.48
0.04
0,489.15
0.05
0.41
1.41
0.63
0.9618.43
0.06
2.04
6.58
3.79
8.5416.90
1.98
6.39
1.97
1.91
10.93n.a.
■
■12.1
28.6
4.9
90.5
68.471.4
0
11.8
12.5
0.3
4.046.7
0.2
5.1
16.7
9.6
21.742.2
4.0
15,9
4.9
'4.8
27.3
*D«p*rt«®nt ofStatUticft «ndCentralBankofJordan*

A*ne*3:BREAKDOWNBYINDUSTRYOFVALUEADDEDOFTHEMANUFACTURING SECTOR(INCLUDING WESTBANK)
Inthousandsofdinarsatcurrentprices 2oftotal
1968 1970 1972 1974 1968 1974
Γ
|•Foodstuffsandbeverages 3130 35"Ό 3990 3863 16.3 17.3
•Tobacco 890 360 660 1928 3.3 3.7
I•Textiles,clothing,footwear 2430 1790 2500 4560 14.4 13.3
•011refining 2260 II1860 3100 4810 14.0 14.2
I•Otherehealcals 1040 1020 1320 1126 6.1 3.3
I•Mttalprocassing 1270 2236 2590 4833 7.3 1*.3
j•Other3790 4904 7700 10763 34.2 31.7
TOTAL 16910 15940 21860 33887 100.0 100.0
Sourc?'DepartnentofStatistics•

ANNEXTTI
SYRIA
ECONOMIC ANDFINANCIAL SITUATION

-Λ
Ratesofexchange
1u.c.=4«45SL
1USS=3.92SL

-1-
CONTENTS
Page
1.Summary 1
2.General features 5
3.Population andemployment 7
4.Recent economic development 8
4.1 .Introduction 8
4.2 .Thedevelopment oftheprincipal sectors
oftheeconomy 10
4.3 .Thedevelopment ofthemain components of
final demand 12
4.3.1 .Private consumption andincome
distribution 12
4.3.2 .Capital formation expenditure and
itsfinancing 12
4.3.3 .Public expenditure andGovernment
finance 15
4.4 .Money andbanking 17
4.5 .Prices 19
4.6 .Thebalance ofpayments 20
4.7 .The external debt 22
5.Analysis ofthestructure ofthemain sectors
oftheeconomy 24
5.1 .Agriculture 24
5«2 .Secondary sector 27
5.2.1 .Petroleum andmining 27
5.2.2 .Manufacturing 28
5.2.3 .Power 30
5.3 .Tourism 30
5.4 .Transport andcommunications 31
6^Future prospects 32
Annex ALevel ofinvestments andmajor prospects by
sector over the 1977-1980 Plan 35

TABLES * Page
1.Sectoral composition ofGDP 9
2.Comparison between theplanned and theactual
growth rates oftheeconomy over thethird
five year development plan (1971-1976 ) 11
3*GDPbycategories ofexpenditure 13
4.Comparison between theplanned andtheactual
investments during thethird development Plan
(1971-1975 ) 14
5.Central Government accounts 16
6.Monetary situation
7.Wholesale price index 20
8.Balance ofpayments 21
9.External public debt 23
10.Cultivated land use 24
11.Agricultural production bymain crops 25
12.Production ofthemain manufacturing industries
in1971-1975 29
13.Fourth Plan :Sectoral investments 37
Annexes :
1.Labour force bysector 38
2.Main Syrian Exports 39
3.Main Syrian Imports 39

1.Summary
Syria covers anarea ofapproximately 185000km2 ,about 45%ofwhich
isconsidered arable land ytheremainder consists ofbare mountains ,desert
andpasture .Thepresent population isestimated tobearound 8.0Mpeople
growing atarate ofapproximately 3.3%p.a.Income percapita in1976
expressed incurrent prices was 2630SBequivalent to670US
Agricultural resources areimportant .Wheat andbarley arewidely
cultivated and ,onaverage ,theoutput issufficient tocover domestic
consumption .Amongst thecash crops cotton isbyfar themost important
providing ,onaverage ,15%ofthetotal export earnings inrecent years .
Nonagricultural resources areimportant .Oil ,with aproduction of10Mtons
p.a.contributed ,inrecent years ,toapproximately 70%ofthetotal export
earnings .Highgrade phosphates (60/65Z**2^5^ aproduction of1Mtons
p.a.,arebecoming animportant export item .
Since 1963 ,theeconomy ofthecountry hasbeen managed within the
framework ofanational plan .Although theperformances oftheeconomy have
usually fell short theplan targets ,thelong term growth ofGDPaveraged ,
over theperiod between 1963 and1976 ,arate ofincrease of7.3%p.a.(1).
Thegrowth oftheeconomy lifted theincome percapita ,expressed in1963
constant prices from 800 Sfcin1963 to1400 Sfcin1976 which corresponds to
anannual growth rate of4.4Zp.a.Over theperiod considered ,thestructure
oftheeconomy hasundergone some important changes characterized byadrop
from 30Zto18%oftheagricultural sectors' contribution tovalue added ,
coupled with anincrease from 15to20Zoftheshare ofGDPgenerated bythe
industrial sectors .Agricultural however ,absorbing almost 50Zofthetotal
labour force ,still remains themost important sector ,capable ofdeeply affec­
ting thegrowth trend oftheeconomy through unpredictable annual fluctuations
#
ofoutput .
During thelast development Plan ,covering theperiod between 1971 ,
and1975 ,theeconomy grew atarate of10.5 Zp.a.which is2.3%faster
than therate predicted bythePlan .ThePlan 'stargets were amply overtaken ,
chiefly thanks totherapid economic expansion achieved during 1974 and1975 ,
when ,with thehelp ofatenfold increase intheamount offinancial assistance
(1)Unless otherwise stated allgrowth rates refer toaggregates expressed in
real terms .

2
received from other Arab countries (670MUS$in1975),theeconomy rapidly
recovered from theeffects oftheOctober war .Theinflows ofArab grants
were rapidly transferred ontheeconomy through adrastic rise inGovernment
expenditure ,which increased fourfold between 1971 and1976 without however
increasing theinternal debt position oftheGovernment .Theincrease in
public expenditure boosted investments (in1976 these absorbed over 25%of
GDP)butbrought about alarge trade deficit (1.2BUS$in1976 )which ,in
theabsence oftheArab grants ,would have caused asubstantial external debt .
Atpresent thedebt service ratio ,excluding military debt ,is10%indicating
therelatively lowlevel ofexternal indebtedness inspite ofthehigh level
ofconsumption andinvestments coupled -with thesmall internal level of
savings and thelarge trade deficit . '
Ifontheonehand ,theinflows ofArab grants in1974 and1975 allowed
theGovernment tofollow expansionary policies without incurring inanybudge­
tary orbalance ofpayments problems ,ontheother itwould appear tohave
committed theGovernment toafuture pattern ofexpenditure beyond thecountry 's
potential .This hasalready emerged in1976 when Arab grants dropped to450M
UStrapidly causing anincrease intheGovernment indebtedness accompanied
byshort term borrowing and abalance ofpayments deficit of500MUS%.
The structure ofthe1977 /80Plan ,conceived in1974 and 1975 ,when
Syria enjoyed anexceptionally favourable external situation ,would also
appear tobebased onover-optimistic assumptions .Intheagricultural sector ,
thePlan aims atachieving self-sufficiency intheproduction offood products
chiefly through thedevelopment oftheEuphrates irrigation project .Inthe
industrial sector ,theenvisaged development isbased onagreater exploitation
oftheavailable resources such ascotton ,phosphates ,oil andnatural gas .
Theplanned rate ofgrowth oftheeconomy (12Zp.a.)and thePlan 'sinvest­
ments of54BSfc(USt14B),75%ofwhich isassumed tobefinanced by
internal resources ,arebased onexcessively optimistic assumptions about the
Φ
country 'ssavings generation potential .Infact ,thePlan sprojections are
based onanaverage propensity tosave of28Zwhile theactual propensity
tosave ofSyria hasrarely been above 12%.Itwould appear therefore that
thePlan 'starget could only beachieved ifalevel ofexternal assistance
much higher than that assumed inthePlan will beforthcoming .Although itis
difficult tospeculate astowhether other Arab countries will step uptheir

3
grants ,itishowever useful topoint outthat thegapinresources assumed
inthePlan (based aspointed outabove onapropensity tosave over twice
aslarge asthat achieved historically )isalready higher than thelevel of
grants received bySyria inthepeak year of1974 .Beside alltheabove
considerations offinancial character ,thePlan appears tobeover-optimistic
from aphysical point ofview aswell .This isbecause theinvestments
envisaged bythePlan involve arapid implementation ofanumber ofprojects
that atpresent donotappear tohave reached asufficiently advanced stage
ofpreparation .
IfthePlan 'sobjectives appear tobedifficult toachieve ,some
optimism ishowever justified .Theambitious investment programme inthe
agricultural sector ,even ifitsuffers inevitable delays andsetbacks ,
should gradually decrease thedependence ofagriculture onrainfall .This
should avoid theperiodical deficits inthecountry 'sfood grain production ,
andshould goalong way tostabilize farms' output onwhich theagro-based
industrial sector depends .
Theprospects foracontinued fast growth intheindustrial sector
arefavourable ,especially ifthegeneral movement towards theliberalisation
oftrade ,foreign exchange regulations andprivate initiatives ,iscapable
ofbringing back Syrian capitals andtalents that fled thecountry inthe
mid-sixties .This isalready happening intheconstruction sector which has
enjoyed arapid expansion fuelled byanumber ofnewprivate ventures financed
with external capitals .Forcotton andphosphates ,Syria israpidly following
aworld wide trend aimed atlimiting theexports ofunprocessed domestic raw
materials .Tofulfil this objective ,sufficient spinning capacity will be
provided domestically toeliminate ,by1980 ,allexports ofrawcotton ,and
therapid development ofthefertilizer industry should goalong way to
minimize theexports ofunprocessed phosphates .
Thepresently existing light industry (engineering ,paper products ,
tractors ,refrigerators andtelevision assembly )isexpected torapidly
increase itsoutput with theestablishment of5free zones ,located close to
theSyrian /Jordan border andinthevicinity ofDamascus ,Lattakia ,Tartous
and Horns .Theproximity ofSyria tot.heGulf markets ,itsavailability of
manpower andthepresence ofareasonably large domestic market ,should
constitute important additional assets favouring thedevelopment ofthe

manufacturing andfood processing sectors .Furthermore ,thechronic labour
deficit situation inthewealthy Gulf states should provide plenty of
employment opportunities forSyrians thus generating asteady inflow of
foreign exchange .Thefavourable prospects ofnewoilfindings ,thedevelop­
ment ofthephosphates deposits andpossibly those ofiron ore ,should in
thefuture ,gosome way towards helping thebalance ofthetrade account
which however will likely show ,forafewyears tocome ,asubstantial deficit .
Themoderate optimism expressed above however ,inaddition tothe
continuation ofthetrend towards theliberalisation ofprivate initiatives ,
aswell asmeasures aimed atimproving projects' preparation andimplementa­
tion ,isconditional toarapid andpermanent settlement ofthepolitical
situation ofthearea .This notonly will enable theGovernment todivert
towards productive activities alarge amount ofresources (16%ofGDP)at
present spent ondefence ,but itwould also contribute tore-establish a
climate ofconfidence necessary tofully exploit thecountry 'seconomic
potential .

5
2.General features
2Syria covers anarea ofapproximately 185000km ,about 451ofwhich
isconsidered arable land ,theremainder consists ofbare mountains ,desert
andpastures suitable only fornomads »Thefrontiers ofthepresent daySyria
arelargely artificial ,being defined ,-except westwards where thefrontier fol­
lows thecrest oftheanti lebanon hills ,bystraight line drawn between
salient points .
Geographically Syria consists oftwomain zones :afairly narrow western
part formed byafertile coastal plain ,interrupted eastwards byamountain
range ;these mountains ,rising to 1500m.,fall very sharply eastwards toa
flat bottomed valley opening onabroad andopen platform dropping gently
towards theEast andcrossed diagonally bythewide Euphrates valley .
Thepresence ofranks ofrelatively high mountains aligned parallel to
thecoast hasimportant climatic effects .Tempering andhumid effects from
theMediterranean arerestricted tothenarrow western belt ,where theclimate
ismild without wide seasonal fluctuations .Central andwestern Syria ,on
thecontrary ,show marked continental tendencies with amoderately cold winter
with frequent frost atnight .Rainfall isfairly abundant intheWest ,where
theheights oftheland tend todetermine theamount received ;buteast of
thechain ofmountains ,theamount decreases considerably producing asteppe ,
region that quickly passes into true desert ,except close tothebanks ofthe
river Euphratesand itslarger tributaries ,where local irrigation projects have
allowed some cultivation .
Agricultural resources areimportant .Wheat andbarley arewidely cultivated
and ,onaverage ,theoutput issufficient tocover domestic consumption .Fruit
andvegetables arealso wide spread crops ,buttheir production isnotsufficient
andhastobesupplemented with imports .Amongst thecash crops ,cotton isbyfar
themost important providing ,onaverage ,15%ofthetotal exports earnings in
recent years .Agricultural resources arelikely toincrease considerably inthe
«
medium long term ,astheirrigation schemes associated totheEuphrates dam ,will
come tofruition .

6
Non-agricultural resources aresignificant .Oilwith aproduction of10M
tons p.a.,isbyfarthemost important andlikely tomaintain itspredominant
role inthefuture .This isbecause alarge part ofthecountry hasnotyet
been fully explored andthelikelihood ofdiscovering additional deposits is
ranked fairly high .Highgrade phosphates (60%^2^5^'aPr°duction of
1Mtons p.a.,have only recently started tobeexploited .Uranium andiron ore
although notyetcommercially exploited ,arebelieved toexist insufficient
I
quantities topermit their extraction oneconomic terms .
The transport system inSyria isbeing expanded rapidly .Theroad andrail
networks notonly play animportant role inthenational transport context ,
but they arealso part ofanimportant international network oftransportation
linking ,forinstance ,Baghdad andAmman toBeirut viaDamascus .Thenetwork
ofroads ,with atotal of14,00 km,70%ofwhich arebitumenized ,appears tobe
sufficient therailways network however ,with twodifferent gauges ,haslagged
behind and itisonly recently that ,with asignificant extension ofthesystem ,
will becapable ofproviding avalid alternative toroad transport .
Damascus isanimportant international airport ,capable ofhandling the
largest aircraft atpresent inservice ,with anannual level oftraffic of
0.5million passengers .Internal airtransport only plays avery limited role .
Lattakia andTartous areinternational general cargo ports adequate ,after the
planned expansion ,toservice theseaborne transport requirement ofthecountry .
Twoimportant international oilpipelines (onefrom Iraq theother from Saudi
Arabia )cross thecountry ,providing ,when regularly working ,asignificant
contribution tothebalance ofpayments .TheIraqui pipeline terminates at
Banias which isanimportant deep water tanker port .
X
X X

7
3.Population and employment
Thepopulation ofSyria in1977 isestimated tobejust under 8Mpeople
andgrowing atarate of3.3 TLp.a.
f
Theaverage density ofpopulation forthecountry asawhole is43people
2 . .2.perkmor,96people perkmofarable land .During thelast decade there has
been acontinuing movement from village totown ,reflected inaconsiderable
increase intheurban population .Thepopulation ofDamascus andAleppo .,
0.83 Mpeople theformer and0.64 Mpeople thelatter ,have almost doubled
inthelast decade .Rural population remains concentrated mainly along the
coast andinthestrip east ofLebanon ,itsrate ofgrowth of2.1%p.a.has
been throughout thecountry lower than thenational average .
Thecountry 'smanpower (defined asthose between theages of12and65years
old)wasestimated at5.0Hor67%ofthetotal population in1975 .However ,
thelabour force (persons currently employed orseeking employment ),wasesti­
mated at1.8Hinthesame year ,orless than 36 TLofthepotential labour
force .This isprobably duetothevery lowparticipation rate ofthefemale
population andthehigh rate ofschool enrolement andarmy recruts .
Theoccupational distribution ofthelabour force ,shown inAnnex 1,has
notchanged significantly over thelast decade .Thenumber ofunemployed is
estimated tobearound 90000people equal toapproximately 5Zofthetotal
labour force .This number however tends tounderestimate theactual unemploy­
ment ,notonly because alarge number of.--unemployed persons donotregister with
theMinistry ofLabour ,butalso because theunderemployment intheagricul­
tural sector isbelieved tobesubstantial .
X
X X

8
--4.Recent economie development --
4.1 .Introduction
Since theattainment ofindependence in1946 ,Syria hashadseveral
changes inregime which resulted inashift ofpower from groups oflandowners ,
traders andindustrialists toarising group ofofficers ,technicians and
civil servants .This change wasaccompanied byashift oftheeconomy from an
essentially laissez-faire' system toalargely publicly owned andregulated one .
TheBaath Socialist Party came topower in1963 andsince then ithas
given toSyria areasonable degree ofstability ,further consolidated since
thebeginning of1971 when General Assad waselected president .Since then
agradual ,butnoticeable move towards .amore open mixed economy ,inwhich
theprivate sector plays agreater role^hastaken place .
Since 1963 ,theeconomy ofthecountry hasbeen managed within theframe­
work ofanational plan .Atpresent the fourth Plan 1977 /80isbeing
implemented .Ingeneral ,during thefirst twoPlans ,theactual achievements
oftheeconomy have notattained theplanned targets chiefly due toforeign
exchange shortages ,poor preparation ofprojects andanumber ofpolitical
upheavals severly upsetting thedevelopment oftheeconomy .
Inspite ofthis ,however ,thelong term growth oftheeconomy haskept
well over that ofpopulation .Asshown inTable 1,GDPatmarket prices
during theperiod between 1963 and 1976 averaged arate ofgrowth of7.3%.
p.a.(1)with apeak of19%in1974 andatrough of-2.8%in1966 .The
wide annual fluctuation ofGDPhave mainly been caused bythevariations
inyearly output oftheagricultural sector brought about bychanges inweather
conditions .Theeconomic growth ofthecountry lifted theincome percapita ,
expressed in1963 constant prices ,from 800SBin1963 to 1400SIsin1975
which corresponds toanannual growth rate ofpercapita income of4.8%p.a.
Income peifcapita in1976 expressed incurrent prices was 2630 Isequal to
670US£.
Φ
(1)Unless otherwise stated allgrowth rates refer toaggregates expressed
inreal terms .

Table1:SECTORAL COMPOSITION OP60P
(M.5Wconstant1963marketprices)
Structure (X)Growth
rates
1963 1970 1971 1972 197J 1374 1975 1976 {%Ρ·»·)
1963/76 1963 1976
Agriculture '1196 1153 1187 1525 1107 1535 1669 1818 30.1 18.2 3.3
Industry(1) 631 1109 1204 1326 1411 1793 1870 2028 15.8 20.3 9.4
Construction 119 159 205 204 200 239 355 566 3.1 5.712.8
Transport andcooaunlcations 328 623 797 651 950 880 1114 803 8.3 8.1 7.1
Trade 758 998 1040 1150 1100 1320 1668 1929 19.0 19.3 7.4
FinanceandInsurance 81 120 131 156 161 187 47 52 2.0 0.5-3.3
Government . 360 704 815 918 1108 1321 1459 1192 9.0 11.9 9.6
Otherservices 507 750 807 857 901 981 1048 1590 12.7 16.0 9*1
TotalGOP 39Θ0 5616
aa•a■6186
■■■••S6787 6938 8256 9230 9978 100.0 100.0 7.3
aaa
AnnualchangesInGOP00 10.1 9.7 2.2 19.0 11.8 8.1
Source:Centralbureauofstatistics
(1)IncludingManufacturing ,petroleum,miningandutilities
V0

10
During theperiod covered bythethird five year development Plan (1971 /75)
thegrowth oftheeconomy averaged arate of10.5 %p.a.This rate iswell over
that envisaged bythePlan which predicted agrowth of8.2 %p.a.ThePlan 's
targets were amply overtaken chiefly thanks totherapid economic expansion
achieved during 1974 and1975 when ,with thehelp ofatenfold increase inthe
amount offinancial assistance received from other Arab countries ,theeconomy
rapidly recovered from theeffects oftheOctober war .
In1976 ,thegrowth oftheeconomy ,although innetdecline with respect
ofthetwoprevious years ,was still above 8%p.a.Thesharp reduction inthe
level ofgrants received however (down by30%when compared totheprevious
year )coupled with thefast growth inpublic expenditure andimports ,brought
-about anincrease inthedomestic public debt (20%ofGDP)and thedeficit of
thecurrent account ofthebalance ofpayments reached almost 3000MSfc,equal
toover 70%oftotal export receipts .
4.2 .Thedevelopment oftheprincipal sectors oftheeconomy
Asindicated inTable 1agriculture hasshown along term growth of3.3%
p.a.This ,being markedly below thegrowth oftheeconomy asawhole narrowed
the contribution ofthe sector toGDP from 30%in1963 to18%in1976 .Inmore
recent years however ,due toaseries offavourable crops andanincrease in
thearea under irrigation ,theagricultural sector performed better than expectec
and ,asshown inTable 2,theactual growth rate over theplan period (7.7%
p.a.)waswell above that predicted bytheplan (5.2 %p.a.).
Industry ,onthecontrary ,hasshown along term growth rate well above
that ofGDPleading toasignificait increase initscontribution toGDPrising
from 16%in1963 to20%in1976 .Inmore recent years however ,asshown in
Table 2,thedevelopment ofthesector ,inspite ofreceiving thelargest pro­
portion ofinvestments over thethird five year Plan ,hasfallen short the
Plan'sexpedition ,chiefly duetodifficulties encountered intheimplementation
oflarge projects andthedislocations caused bythe1973 war .
Likewise industry theconstruction sector hasincreased atarate well above
that ofGDP .This trend ,inrecent years ,hasfurther accelerated favoured by
theprivate sector 'sliberalization measures andbytheavailability ofcapital
originating inparticular from theremittances ofSyrians working abroad .•

11
Table2:Comparison betweentheplannedandtheactualgrowthrates
oftheeconomyoverthe3rdfiveyeardevelopment plan(1971/76)
Plan Actual
(%p.a.) (Xp.a.)(1)
•
Agriculture 5.2 7.7
Industry 15.8 11.2
Construction 11.5 17.4
Transport andCommerce 9.8 12.3
Trade 3.4 10.8
Finance 4.1 17.1
Government 4.5 15.7
Otherservices 10.5 6.9
GDP 8.2_ 10.5
Source:Stateplanning Commission
(1)GDPfiguresat1963constantprices

12
---Theincrease inthernumber ofGovernment employees andtherises incivil
servants salaries arereflected inthefast growth ofGovernment services that
hasincreased atarate well above that oftheeconomy ,expending itscontri­
bution tovalue added from 9%in1963 to12%in1976 .
4.3 .Thedevelopment ofthemain components offinal demand
4.3.1 .Consumption
Public andprivate consumption have absorbed ,onaverage ,over theperiod
1968 /76,approximately 90%ofGDP .Thelong term trend indicates ,asshown
inTable 3,that theproportion ofnational resources allocated toconsumption
hasincreased over time .This ismainly due totherapid increase inpublic
expenditure that hasgrown between 1970 and 1976 atarate of15.0 %p.a.which
iswell over that ofGDP .
4.3.2 .Capital formation expenditure anditsfinancing
Gross capital formation inSyria hasgrown over theperiod between 1970
and 1976 atarate of23.2 %which isover twotimes that ofGDP .Therapid
rate ofincrease ofinvestment isalso reflected intheproportion ofthetotal
value added absorbed bydomestic capital formation which rose from 14%to
28%ofGDP from 1970 to1976 .
Asshown inTable 4,thecomparison between planned andactual investments
indicates that thetargets ofthe3rddevelopment plan (1971 /75)have been
achieved .Thebreakdown ofinvestments bysector indicates theemphasis put
bytheplan onthedevelopment oftheindustrial sector andtheimportance of
theEuphrates project intheoverall economic development ofthecountry .
Theproportion ofinvestments financed through national savings hassince
1974 sharply declined .Upto1973 national savings ,representing just over
10%ofGDP ,financed onaverage approximately 75%ofthegross domestic in­
vestments .Inthelast few years national savings representing only 5%of
GDP ,covered onaverage only 18%ofthetotal investment expenditure ,the
balance being covered byArab grants .

Table3:GOPBYCATEGORIES OFEXPENDITURE
(M*S»Wconstant 1963«arketprices)
Structure XGrowth !
1970 1971 1972 1973 1974
j1975
i19761970 I|1976IXp.».)
I « ConsuwptlonConsumption 5010 5545 5996 6207 8135 β643 9462 89 95 11.2
Private (3919)(4323)4569)(4527)(5916)(6314)(6936) (70) (69) 10.0
IPublie (1091)(1222)(1427)(1680)(2219)(2329)(2526) 19) (26) 15.0
IGrossdomestleInvestments 788 932 1012 970 1249 2133 2768 14 28 23.2
IPrivate (237) (304) (412) (400) (302) (791) (662) (4) (06) 18.7
IPublie, (551) (628) (600) (570) (947)(1342)(2106) 10) (21) 25.0
INetforeignsector -182 -291 -222 -239-1129 -1546-2252 -3 -23 52.0
GOPatmarketprices 5616 6186 6786 6938 8255 9230 9978 100.0 100.0 10.05
SourcetCentral BureauofStatistics

Table4 Comparison betweentheplannedandtheac.tualinvestments
duringthe3rdDevelopment Plan(1971/75)
(M.SyrianPounds)
Sector Planned
Investments (*)Actual
Investments (**)
Euphrates Project
Agriculture
Industry ,mining,energy
Transport andcommunications
Publicutilities ,services andworks
Trade
TOTAL1593
648
2187
783
1112
125
64481255
631
4136
1177
1599
121
891914.1
7.1
46.3
13.2
17.9
1.4
100.0
(*)1970prices
(**)Currentprices
Source:StatePlanning Commission

15
4.3.3 .Public expenditure andGovernment finance
Domestic revenues have increased atarate of29Zp.a.between 1970
and 1976 ,representing ,attheendoftheperiod ,almost 30%ofGDP .
Asshown inTable 5,themajor source ofdomestic revenues arethe
transfers tobudget ofthepublic enterprise . These have
shown ,chiefly thanks tothegrowth in thesurpluses ofthestate owned oil
company ,afourfold increase between 1973 and 1976 .Thesecond most important
revenue source aredirect andindirect taxes .Theimportance oftaxrevenues ,
asaproportion oftotal Government revenues ,hasdeclined from 46%in1970
to38%in1975 .The third source ofGovernment funds are thenon taxrevenues ;
thelargest item included inthis category are theoiltransit dues paid toSy­
riabyIraq andSaudi .Recently ,due toadispute ontransit rates ,this item
ofrevenues hasbeen drastically cutdepriving Syria from animportant propor­
tion ofits .foreign exchange earnings .
Upto1975 current expenditure rose inline with revenues absorbing
steadily 80Zofthetotal funds available toGovernment .In1976 andin
1977 ,theproportion ofrevenues allocated tocurrent expenditure sharply
increased leaving less than 1%ofrevenues toinvestment expenditure .The
major item ofexpenditure isdefence which hasabsorbed anincreasing share of
Government revenues reaching 60%oftotal current expenditure ornearly 16%
ofGDP .Therelative share ofcurrent expenditure oneducation ,general admi­
nistration andsocial services has ,asawhole ,declined while theallocations
totheMinistry ofSupply earmarked forprice stabilisation purposes have signi­
ficantly increased .
Investment expenditure during theperiod between 1970 and 1976 hasincrea­
sed 7fold from 743MStto5212HSBrepresenting respectively 36%and
46Zofthetotal Government expenditure .Capital outlays have been approxi­
mately equally divided among thethree major sectors :Agriculture andIrriga­
tion ;Industry ,Mining andPower ;Transportation ,Public Utilities andWorks ,
following thegeneral guidelines ofthe 1971 /75development plan .
*
The continuous increase ofboth recurrent anddevelopment expenditure
hasbrought about acorresponding rise intheGovernment deficit .This ,as
shown inTable 5,hasincreased from 9%ofGDPin1970 to20Zin1976 re­
presenting almost 70%ofGovernment domestic revenues .Asshown inTable 5
theGovernment deficit upto1972 wasfinanced through domestic borrowing

TableStCENTRAL GOVERNMENT ACCOUNTS
(M.S.k)
1970 1971 1972 1973 1974 1975 19761977
Budget
Oomestic Revenues 1451 1686 1940 2676 4293 6599 6785 6666
ofwhich:Taxrevenues (671 (719) (985) (1075) (1500) (2347) (2578) (3051)
Nonlaxrevenues (309) (409) (349) (622) (539) (459) (188) (103)
Transfers frompublicenterprises (471) (558) (616) (979) (2254) 3793) (3680) (3297)
Currentexpenditure 1286 1470 1735 2242 3204 5161 6029 6644
ofwhich:defence (764) (894) (793) (1485) (2023) (3280) (3634) (4136)
Government Savings 165
Development expenditure 743 850 936 1098 2393 4502 5212 10403
TotalGovernment expenditure 2029 2320 2671 3340 5597 9663 11241 17047
Overalldéficit -578 -634 -731 -664 -1304 -3064 -4456 -10381
Financing ofthedeficit 578 634 731 664 1304 3064 4456 10381
External borrowing (98) (82) (65) (73) (503) (2402) (3445) n.a>
Oomestic borrowing (481) (341) (503) -733) (-448) n.a* n*a*
Transfers ofaidstothebudget (1324) (801) 1110) n.a. n.a.

17
from thebanking sector ,thereafter large transfers ofexternal aids from other
Arab countries ^notonly enabled theGovernment tocover itsrising deficit
butalso allowed thepublic sector toreduce itsoverall indebtedness with the
national banks .
Thefavourable situation experienced in1973 ,74and 75seem however to
have come toanendbecause ,asshown inTable 5,in1976 ,due totheprevious­
lymentioned drop intheArab grants ,theexternal borrowing ofGovern­
ment sharply increased .Furthermore ,theoverall deficit budgeted forthe
year 1977 isalmost 2.5times aslarge asthat experienced in1976 and ,unless
Sorresponding transfers ofArab aids tothebudget will become available ,the
Government deficit will have tobecovered with borrowings ofunprecedented
size .
4.4 .Money andbanking
Thebanking system inSyria hasbeen nationalized inthesixties .Since
then ,monetary policies aredetermined bytheCouncil onMoney andCredit in
concert with anEconomic Committee headed bytheMinister forEconomic Affairs .
Thepolicy guidelines setbytheCommittee and theCouncil areimplemented on
aday todaybasis bytheCentral bank ofSyria .Monetary authorities ,inthe
implementation oftheir credit regulation policies ,have almost entirely relied
ondirect controls ,notably oncredit ceilings .More recently however ,credit
ceilings have been applied more fexibly anddemands forloans were accomodated ,
provided credits were required forthefinancing ofcertain productive projects .
Atpresent ,thediscount rates vary between 5%forcommercial banks paper and
2.5Zforspecialized credits .Lending rates vary between 4and 9%,while
rates ontime andsaving deposits range between 4and5.75 %.
Atpresent ,thebanking system ismade upby5banks (1).Asallofthen
extend both commercial credits anddevelopment loans ,their specialization
would appear tobebased ontheir sector ofintervention rather than onthe
type ofcredit they grant .Upuntil recently ,although credits from these
banks have increased substantially ,themajority ofthelending hasbeen on
short term maturity while long term lending (more than 5years )hasbeen ne­
gligible .Recent data however indicate that thetrend ofcredit granted by
banks ismoving towards longer term maturities than hasbeen thepractice sofar
04Commercial Bank ofSyria ,*Agriculture Cooperative Bank ,Industrial Bank ,
Real Estate Bank ,Popular Credit Bank .

Table6SMONETARYSITUATION
(M.S.U)
1970 1971 1972 1973 1974 1975 1976
LIABILITIES
|Currencyanddemanddeposit 2341 2502 3151 3797 5540 6933 θ599 '
IQuasimoney(timedepositsetc*) 180213I277317|457 |619|806
TOTAL 2521 2715 3428 4114 5997 7578 9405
ASSETS
IForeignassets -106 -161 -137 1037 1628 1918 14
IClainsoncentralgovernnent 1818 2130 25Θ8 1855 2448 2000 4538
IClaimsonenterprisesandhouseholds 1523 1650 2006 2475 3761 5558I7982
I
IOtheritems -712 -904|-1029-1253|-1840-1858 -3129
TOTAL 2521 2715 3428 4114 5997 7578 9405
Source:CentralBankofSyria
00

19
Upto1972 ,money supply expanded atarate ofover 15%compared toan
average GDPgrowth rate ofabout 12%p.a.atcurrent prices .Asshown in
Table 6thecredit expansion wasmainly generated byrising budgetary deficits
which were financed through borrowing from thedomestic banking system .
Between 1972 and 1976 thegrowth ofmoney supply doubled chiefly due toa
sudden increase inthevolume ofcredits granted totheenterprise andthe
household sector .In1976 ,asshown inTable 6,anoticeable change took place
inthemonetary situation characterized byasudden drop intheforeign exchange
assets held bythebanks ,andadoubling intheindebtedness oftheGovernment
sector which since 1972 didnotshow anytendency toincrease .Theworsening
ofthegeneral monetary situation ,wasbrought about bythealre.ady mentioned
reduction intheaidreceived from other Arab countries without being matched
bycorresponding cuts ingovernment expenditure .
A.5.Prices
Prices inSyria aresubject toGovernment control .Present regulations
besides determining theprices ofthepublic sector 'soutputs fixes theprice
ofapproximately 10basic commodities oflarge consumption often involving
price subsidisations .Afurther price control procedure recently implemented
involves thefixing ofamark-up rate over andabove market prices coupled
with distribution ofrations atlevels just below theaverage percapita con­
sumption ofthese goods .
Existing price indices only have alimited significance .They tend to
underestimate price inflation because noallowances areintroduced forthe
frequent price subsidies .
Infact ,asshown inTable 7,existing indices indicate that prices have
been relatively stable between 1962 and1972 increasing atayearly average of
approximately 3%.More recently ,however ,prices have increased faster ,
chiefly duetothegreater degree ofliquidity oftheeconomy .Further pres­
sure came from thesupply side through increases inthecost ofimports in
line with world wide inflation .

20
Table 7
Wholesale Priee Inde * ■
(73chanpe ^
1970
1971
1972 -5107
1973
197432
14
1975 7
1976 12
Source :Central bureau ofStatistics
4.6 .Thebalance ofpayments
Asshown inTable 8,thebalance ofpayments ofSyria ischaracterized
byagrowing trade deficit that hasrisen from 643MSfc,equal to10%ofGDP ,
in1970 to4685MSfc(1.2BUS$),equal to21%ofGDP ,in1976 .
Inrecent years ,exports have only covered onaverage 55%oftotal imports
inspite ofthefact that Syria 'sterms oftrade have improved asaresult of
increasing crude oilandphosphate prices . Asshown inAnnex 2,the
recent movements incommodity prices have altered thestructural composition
ofSyrian trade ,andfrom 1974 ,crude oilemerged astheprincipal Syrian
export accounting forover 70%oftotal exports .Asshown inAnnex 3,the
structure ofimports hasremained more stable .Inrecent years consumer goods
accounted forapproximately 25%oftotal imports ,while intermediate goods and
capital goods accounted for55%and 19%respectively .Recently ,important
changes have also taken place inthedirection oftrade ofSyria .Upto1972 ,
thesocialist countries were theprincipal trading partners ofSyria ;in1974 ,
thepredominance oftheEastern Bock ontheSyrian trade ceased andWestern
Europe took thelead ,shipping almost half ofSyrian imports andreceiving an
equal proportion ofthecountry 'sexports .

21
Table8-BALANCE OFPAYMENTS
(M.ofSyrianpounds)
i
i1973 1974 1975»
1976 !
I1.GoodsandService*
IExports(FOB) 1339 2914 3441 4141
I I«ports(ClF) -2341 -4176 -5697 -8826
ITradebalance -1002 -1262 -2256 -4685
IOiltransitdues ♦563.2 ♦479.2 ♦505.1 ♦117.8
IShippingandTransport ♦2.8 ♦13.7 -34.9
ITravelandtourisa ♦52.1 -363.1 -296.5 -186.8
IInvestment income ♦12.8 ♦99.8 ♦50.3. -28.5
IGovernment ♦54.6 ♦18.9 -57.3 -13.2
IOthers ♦60.4 -81.2 -178.1 ♦47.2
INetServices ♦746.1 ♦167.3 -11.4 -83.2
IUnrequitedTransfers ♦1530.4 ♦1714.4 ♦2611.4 ♦1765-8
Balance oncurrentaccount ♦1274.5 ♦619.7 ♦344.0 -3002.4
I2*Capitalaccount ♦95 +227 -35 1048
IPrivate -99 ♦62 ♦68 I♦280 I
IOfficiai ♦194 ♦165 -103 ♦768 I
I3*Neterrorsandoaissions -185 -409 -19 50
I4.Overallsurplusordéficit(-) ♦1089 *846.7 ♦379 -1954.4
Source:CentralBankofSyriaandIBRO*

22
Upto1972 ,thetrade deficits were only partially offset byinvisible
earnings ,with theconsequence that thecountry wasusually loosing reserves
with theexception ofsome years when large capital inflows were balancing the
accounts .Between 1972 and 1975 thesituation changed andthegrowing trade
deficits were more than offset byasudden increase inunrequited transfers ,
raising from 200MShin1972 to2"600MSfcin1975 .In1976 ,however ,due
toadoubling ofthetrade deficit ,coupled with asharp reduction inthe
unrequited transfers andadrop intheoiltransit revenues ,thecurrent
accound closed ,forthefirst time since 1971 ,with adeficit of3000MSfc
(0.8BUS$).
Upto1975 ,theincreasing surpluses ofthecurrent account coupled with
thenetcapital inflows in1972 and 1974 have enabled Syria toaccumulate a
significant amount offoreign exchange ".Gross international reserves rose
from theequivalent ofUS$135Mattheendof1972 toUS$700Mattheend
of1975 equivalent tocover 8months ofimports .During 1976 however part of
theexternal reserves were employed tocover thedeficit ofthecurrent account
and ,attheendofthesame year ,gross reserves ingold andforeign exchange
were reduced toUS£430 M.
4.7 .The external debt
Theinformation atpresent available onthesize andthestructure ofthe
Syrian external debt arenotcomplete andoften notentirely consistent .Up
to1974 theexternal debt ,asshown inTable 9,remained lowaround 0.4BUS$.
Debt service repayments were kept around 10%ofthetotal exports ofgoods and
nonfactor services except in1974 when ,due tothesudden increase inoil
revenues ,thedebt service ratio dropped to5%.After 1974 thetotal debt
canonly beindirectly estimated from thesize oftheannual repayments .Arough
estimate would tend toindicate that in1976 thepublic external debt was
approximately 1BUS$andthedebt service ratio around 10%.These indicators
however tend tounderestimate thereal indebtedness ofthecountry ,notonly
because thedata ofTable 9excludes short term borrowings ,butchiefly
because itdoes notinclude theexternal military debt believed tobesubs­
tantial .

Table 9:EXTERN ALPUBLIC DEBT
(M.US$)
Public debt
(*)
(ORepayments
(2)Exports ofgoods and
non factor services
(3)Debt service ratic
(2/3)
1971
1972
1973
1974
1975
1976325
369
317
453
n.a .
n.a .36
39
42
46
71
103337
410
504
893
857
101410.6
9.5
12.0
5.1
8.2
10.1
Source :IMF :Syrian Arab Republic ,Recent economic development
(*)Including undisbursed loan .
N»
10 .

24
5.Analysis ofthestructure ofthemain sectors oftheeconomy
5.1 .Agriculture
Value added generated
Employment
Growth
Investment received
(including theEuphrates
project ):18%ofGDP
:50%ofthe total labour force
:3.3%p.a.(1963 /76)
:21%ofthenational gross capital forma­
tion
Theimportance ofagriculture intheeconomy ofSyria goes beyond the
figures quoted above ,notonly because much ofthemanufacturing sector relies
onagricultural rawmaterials -cotton spinning ,food processing andtextile
leather industries -but also because the distribution and the service indus­
tries ,aswell astheexport earnings ofthecountry partly depend onthe
level oftheagricultural output .Furthermore ,thefluctuations inthelevel
ofproduction oftheagricultural sector caused byrandom weather conditions
significantly affect theoverall economic activities ofthecountry ,causing
sizeable variations indomestic demand andforeign exchange availability that
slow down thegrowth oftheeconomy .
1 Thetotal cultivable area isestimated tobe8.7Mha(46%ofthetotal
country 'ssurface )while theremainder .consists ofbaremountains ,desert and
pastures suitable only fornomads .Table 10shows theland usage .
Table 10
Cultivated land use
(1000ha)
1966-1970 1971-1975 Index (a)
Nonirrigated 25§3 2746 106
Irrigated 480 563 117
Fallow 2899 2568 89
Total 5972 5877 98
(a)66-70-100

25
Table 11shows thebreakdown oftheagricultural ,output bynam crops .Asitcan
beseen ,theoutputs ofwheat ,fruits andvegetables andpoultry have increased
while theproduction ofbarley ,cotton ,sugar beet andmilk hasremained constant
ordeclined .
Table 11
Agricultural production bymain crops
(1000 tons )
1966-1970 1971-1975 Index (a)
Wheat 767 1286 168
Barley 433 465 107
Cotton 373 406 109
Sugar Beet 185 192 104
Vegetables 937 1583 169
Fruits 480 628 131
Milk 529 472 89
Eggs(mln ) 275 411 149
(a)66-70=100
Agricultural production isclosely related tothepattern ofrainfall
distribution inthecountry .Rainfall ishighest inSyria 'snorthern andwestern
portions anddecreases asonemoves totheSouth andEast .Rainfall conditions
range from semi-humid (500/800mmofrain p.a.)where cotton ,wheat ,sugar beet ,
olives andtomatoes arewidely cultivated ,toarid andsemi-arid with ascarce
andunpredictable level ofrainfall (100/200mmp.a.)where dryfarming of
barley ispossible during favourable years only .Much oftheyear toyear
fluctuation incereals production depends onthesuccess ofthecrop inthis
area .

26
Inspite ofthis ,however ,Syria is,onaverage ,selfsuff icient interms
ofcereals andduring favourable years ,thecountry hasanexportable surplus
ofwheat andbarley (200000tons p.a.). This has ,however ,been achieved more
rarely inrecent years than intheearly sixties ,chiefly due totheincrease in
population andthedetrimental effect thatthe land reforms appear tohave hadcn
agricultural output .
Innormal years however inspite ofthecountry 'sdeficit infruits ,vege­
tables ,meat andanimal products ,theoverall external trade balance ofthe
agricultural sector ispositive ,chiefly duetothevaluable exports ofcotton .
Total irrigated area approximately covers 555000haofwhich 150000ha
areunder controlled irrigation from major public irrigation projects ,the
remainder consists ofsmall scale privately controlled works ,subject tocon­
siderable annual fluctuationsin response tothevariations inwater supply .
Although theirrigated area hasincreased inthelast decade and ,with the
implementation oftheEuphrates irrigation scheme ,itshould continue to
increase (theultimate irrigation potential ofthedam is640000ha,this
however isunlikely tobeachieved during this century )rainfed agriculture
still accounts for70%ofthetotal agricultural output .Given thedependence
ofrainfed agriculture onweather conditions ,thestabilization ofSyria 'sagri­
cultural output will still take many years andwill unlikely beachieved before
theEuphrates irrigation schemes will bewell under way .Since 1973 ,when the
damwascompleted ,only about 20000hahave been irrigated andcultivated asa
pilot project .Theslow development oftheirrigated area stands toshow the
complexity oftheproject that involves ,notonly alarge investment ininfra­
structure (land preparation ,roads ,housing ,storage ,facilities ,etc .)fbut
also itrequires convincing thousands offarmers tocome andlive inthis
remote andsemi-arid area .Thegovernment target aiming atirrigating duringthe
next five years 240000haofwhich 135000hawould becultivated ,seems
therefore rather optimistic .
Itshould however bepointed out that themoderate long term growth rate
oftheagricultural output ,only partly reflects thepotential oftheSyrian
agricultural sector .Unfavourable weather conditions in1970 and 1973 ,coupled
with theafter effects oftheland reforms implemented inthelate sixties ,
have notyetreleased thefull productive potential ofthesector estimated to
beamply sufficient toachieve asizeable exportable surplus infood crops .
andselfsufficiency inanimal products ."

27
5.2 .Secondary sector
Value added generated
Employment
Growth
Investment received20ZofGDP
12%ofthe total labour force
9.4%p.â .(1963-1976 )
46Zofthenational gross capital formation
5.2.1 .-Petroleum andother mining
Production ofcrude oilstarted in1968 with atotal output of1Mtons .
Since then production gradually increased reaching 10Mtons in1976 .Although
Syrian crude oilisoflowquality ,duetoitshigh sulphur content ,sofarno
serious difficulties have been encountered inthemarketing ofit,andoil
exports have become since 1974 themost important foreign exchange earner ,
accounting forover 70%oftotal exports .Recently Syria changed attitude to
foreign participation tooilexploration which ,since thebeginning ,wasreserved
totheSyrian OilCompany only with some Soviet assistance .Theknowledge that
Syria has 75000km2ofland offering good prospects foroilexploration ,and
that only 500km2have sofarbeen explored ,hasinduced theSyrian authorities
toopen upthecountry toforeign exploration firms injoint ventures with
Syrian interests .Recently ,theGovernment offered adozen on-shore oilconces­
sions forinternational bidding .Although itistooearly todraw anyconclusions ,
prospects arefavourable totheextent that recently OPEC isdue toconsider
Syria 'sapplication formembership .
Themain Syrian refinery issituated inHorns .The1973 JomKippur war
extensively damaged therefinery installations .These ,after having been repaired
bythebeginning of1975 ,were further expended in1976 toacapacity ofover
5Mtons p.a.Asecond refinery with acapacity of6Mtons ,isunder construc­
tion atBanias ontheSyrian coast .
Since 1972 ,when thephosphates mine close toPalmira ,inthecentre ofthe
country ,began production ,Syria hasexported agrowing quantity ofphosphates
rocks (60%1*2^5^reaching 650000tonsin1974andabout 900000tonsin1975 .
Production isexpected toreach 2Mtons bytheearly 1980 .
Inaddition tooilandphosphates ,Syria isthought topossess quantities
ofchromite ,salt ,atleast 100Mtons of*exploitable iron ore ,andasubstantial
amount ofuranium which isbelieved tobeassociated with Syria 'sphosphates
deposits' . •

28
5.2.2 .Manufacturxng
Inallfour Syrian plans ,industry hasbeen regarded asthespearhead of
thecountry 'sdevelopment .Alarge anddiversified investment programme contri­
buted toitsgrowth which isclearly reflected intherapid rise ofthecontri­
bution ofthesector toGDP (seeTable 1).
Since themid-sixties ,when themain industrial units were nationalized ,
allimportant manufacturing establishments have been grouped into three main
"Unions "(textile ,food ,chemical andengineering )under thecontrol ofthe
Ministry ofIndustry .Thetotal output oftheindustrial units belonging tothe
unions isover 65%ofthecountry 'sindustrial production .Theprivate sector ,
which appears toberevitalizing inresponse totherecent liberalization program­
mefavouring private initiative ,iscomposed mainly ofsmall industrial units
ofthefamily andhandicraft type (69%ofoutput produced units ofless than
10workers ).
Thestructure ofthemanufacturing sector (seeTable 12)clearly reveals
theimportance oftheagro-based industries anditemphasises thelinkages that
exist between thedevelopment ofthesector and thevolume andtype ofagricul­
tural output .Over 30%ofthemanufacturing output isgenerated inthefood and
tobacco processing sector .Another third ofthevalue added isproduced byyarn
andtextile industrial units processing domestically produced cotton .Chemicals ,
cement ,glass andother products share theremaining value added ofthesector .
Inspite oftherapid growth ofoutput ,thesector hassuffered from a
series ofproblems ranging from excessive centralisation ,unsatisfactory coordi­
nation intheplanning process accompanied byashortage ofskilled manpower
often responsible forthefrequent delays intheimplementation ofthelarge
public sector projects onwhich thegrowth ofmanufacturing heavily depended .
Thelarge military effort deeply affected thegrowth ofthesector bytaking
away scarce resources chiefly interms ofcapital andskilled manpower .
Thedestructions caused bythe'wars were usually made good byvery prompt repair
works but ,ifintheshort term they managed tokeep thevalue added flowing ,
they deeply affected andconsiderably slowed down thelong term growth ofmanu­
facturing .Theuncertain ,andattimes hostile attitude toprivate initiatives
that characterized Government policies upto1972 ,stopped themajority of
private sector 'snewventures causing aflight abroad ofcapital andtalents .

29
Table 12
PRODUCTION OFTHE MAIN MANUFACTURING INDUSTRIES
IN1971-1975
Types ofindustry Unit 1975 Index (a)
■Food industries
Canning ton 000 9.8 172
Olive oïl ton 000 33.2 150
Vegatable oïl ton 000 22.2 85
Margarine ton 000 6.7 92
Biscuits ton 000 3.9 .170
Macaroni ton 000 6.0 111
Sugar ton 000 . 117.1 90
Chocolate ton 000 - 1.3 144
Alcohol liquids Mil .meters 12.6 177
Tobacco ,Tombac ton 000 6.7 152
•Textile industries
Cotton yarn ton 000 31.7 135
Wool yarn ton 000 1.2 67
Silk yarn ton 000 2.0 80
Woolen cloth ton 1536 128
Silk and Cotton textiles ton 000 36.7 126
Wool carpets M2000 287 184
Silk carpets M2000 531 135
Stockings Dozen 000 1373 163
Underwear Dozen 000 1274 . 137
Ginned cotton ton 000 141.5 90
•Chemical industries
Rubber shoes Mil .pairs 0.6 60
Plastic shoes Mil .pairs 3.1 125
Fertilizers (Azotic ) ton 000 86
Paints ton 000 4.1 124
Sôàp ton 000 28.9 124
Cement ton 000 994 109
Engineering industries
Liquid gases M3000 170
Glass products ton 000 .25.4
Refrigerators one 52108 279
Washing machines one 17914 111
T.V. sets set 39065 319
Liquid batteries one 81521 355

30
Themovement towards liberalizing theprivate sector ,started in1972 ,
hasslowly gathered momentum ,butupuntil nowhadanoticeable impact only
onconstruction .Itishowever felt thatbusinessmen begin togain confidence ,
andassoon astheGovernment gives more clear indications inwhich industries
itwishes theprivate sector toinvest ,itcanbeexpected that Syrian capitals
and talents will return .
5.2.3 .Power
Theavailable power capacity ofSyria reached 4032MWin1977 andonthe
whole thedevelopment ofpower generation managed tokeep pace *with the
domestic demand ofelectricity growing atarate ofover 12%p.a.Electricity
generation isbased onhydro power forapproximately AO%ofthetotal available
capacity ,while theremaining 60%isbased ongasandoilfired plants .
Thesector ,since themid1960 'shasundergone adrastic reorganisation which
hasunified thenational network upuntil then ,fragmented into anumber of
isolated power systems .Over 45%ofthepower generated isabsorbed bythein­
dustrial sector .
5.3 .Tourism
Syria ,inspite ofpossessing anumber ofunique tourist attractions ,has
effectively opted outoftheboom inworld tourism that hastaken place in
thelast decade ,andthesector hasstarted togrow only from theearly 1970 's.
During the 1960 's,entry tothecountry became increasingly difficult ,andthe
consequent drop inthenumber ofvisitors ,coupled with thedifficulties that
theprivate sector wasfacing ,discouraged anyinvestment intourism .Since
1973 however ,Syria haschanged attitude towards tourism andithasbegan
toencourage itsdevelopment ,soon realizing ,however ,that thelack of
suitable hotel accommodations scared away alarge number ofpossible visitors .
Thenumber oftourists entering Syria hasincreased steadily since 1973 ,
when 450000came ,reaching 618000in1974 and680000last year .Hotel
accommodations amount to18000beds ,most ofwhich require radical innova­
tion .Theshortage ofhotel accommodations hasrecently been made more acute
by theLebanese refugees who tend tooccupy scarce hotel rooms onalong
term basis .

31
5.4 *Transport and communications
Value added generated :8%ofGDP
Employment :4%ofthetotal labour force
Growth :7.1%p.a.
Investment received :13.2%ofthenational gross capital formation .
Thetransport sector inSyria has aparticularly prominent position
intheoverall development ofthecountry ,notonly because thetransit oil
pipelines provide sizeable revenues ,butalso because ,due tothecountry 's
geographical position anditslimited coast line ,thenational road andrail
systems have tobecarefully integrated inawider international network of
transport .This isparticularly true inthesouthern part ofthecountry which
notonly lies within thehinterland oftheport ofBeirut ,but itisalso
crossed byasizeable transit road andrail traffic coming from Jordan and
Iraq andbound toBeirut .
Highways are themost important mode oftransport inSyria carrying
approximately 95%ofthetotal national traffic expressed intons orpassen­
gers /km.Syria 'shighway network comprises about 14 .000kmofwhich approxi­
mately 10000kmareprimary bitumenized roads .The total number ofroad
vehicles inSyria hasonaverage risen atarate of4%p.a.reaching atotal
ofapproximately 65000units in1974 .
TheSyrian railways consist oftwosystems ofdifferent gauge with a
total length ofover 1300km.Thenarrow gauge system (307km)connects Beirut
toAmman viaDamascus .Thestandard gauge system extends over approximately
1000kmfrom theport ofLattakia totheTurkish border viaAleppo .The
network isbeing atpresent considerably expanded toimprove theconnection
oftheeastern part ofthecountry with theports ofLattakia andTartous .
Syria 'smain general cargo ports areLattakia ,with anannual traffic of
1.3Mtons ,andTartous with anannual traffic of0.8Mtons .Both ports are
being expanded :theformer toreach anannual capacity of3Mtons andthe
latter toattain acapacity of2.5Mtons .Banias isadeep water tanker port
capable ofhandling over 20Mtons p.a.ofIraqui oilpumped through theIraqui
Petroleum Companyl'pipeline crossing inanEast-West direction theSyrian terri­
tory andfeeding with crude oiltherefinery atHoms .Asecond pipeline ,coming
from theSaudi Arabian border ,-crosses thesouthern part ofthecountry totermi­
nate atSaida intheLebanon .Atpresent ,theIraqui pipeline istemporarily
inoperative ,duetoadispute between Syria andIraq over transit dues .

Airtransport operations inSyria arecentred around thenewairport in
Damascus ,completed in1969 .Itcanaccomodate thelargest aircraft inservice .
Traffic inDamascus hasincreased atarate ofT%p.a.reaching thelevel of
0.5Npassengers perannum .
6.Future prospects
Syria isatpresent implementing thefourth Development Plan covering
theperiod between 1977 "to1930 .Thetext ofthePlan however ,although already
approved byGovernment ,isnotyetavailable having been subject ,mthelast
fewmonths ,toseveral changes including adrastic reduction intheoverall plan
expenditure .Thepredicted growth ofGDPover thePlan period is12,op.a.which
iswell above that achieved during the3rdPlan when theeconomy enjoyed in
1973 11974 and 1975 anexceptionally favourable foreign exchange situation .
Industry ,construction andtransport ,with -growth rates of16fop.a.,areenvisa­
ged tospearhead thegrowth oftheeconomy ,while agriculture ispredicted to
grow atarate of8%p.a.Table 13aidAnnex 1show thedetailed breakdown ofthe
envisaged expenditure byeconomic sector andbymain projects .
The total capital expenditure envisaged over thePlan period hasrecently
been reduced from 80BStto54BSt(14BUSS),atcurrent prices or40BSL
at1975 prices .Over 75r>of "thetotal planned investments isassumed tobefinan
cedwith domestic savings which implies ,given thepredicted growth ofGDP ,a
propensity tosave intheregion of28 Although thehistorical propensity to
save isdifficult toassess ,duetostatistical discrepancies ,theavailable
evidence suggests that domestic savings have been ranging inthelast fewyears
between 10and15%ofGDP .This would indicate that thepropensity tosave
required tofulfill thePlan 'starget iswell above that achieved i«nthepast
which ,coupled with the -optimistic GDPgrowth assumption ,would tend toindicate
that theimplementation ofthePlan 'sinvestment programme mayrequire alevel of
external resources much larger than that envisaged . Ontheassump­
tion that through restrictive Government policies ,itwould bepossible to
increase thepropensity tosave upto20%,theexternal requirements would be
approximately 1.3BUS$p.a.Although itisdifficult tospeculate asto
whether therequired aids will beforthcoming ,itispossible tosaythat if
grants donotmaterialize ,theexternal situation ofthecountry will deteriorate
andthepresent debt service ratio of10$will rapidly increase .
Beside alltheabove considerations offinancial character ,thePlan
appears tobeover-optimistic from aphysical point ofview aswell .This is
because theinvestments envisaged bythePlan involve arapid implementation of
anumber 6fprojects that atpresent donotappear tohave reached asufficiently
advanced stage ofpreparation .

33
-If -thePlan sobjectives appear't-o bedifficult toachieve ,some
optimism ishowever justified .Theambitious investment programme inthe
agricultural sector ,even ifitsuffers inevitable delays andsetbacks ,should
gradually decrease thedependence ofagriculture onrainfall .This should
avoid theperiodical deficits inthecountry 'sfood grain production ,and
should goalong way tostabilize farms' output onwhich theagro-based indus­
trial sector depends .
Theprospects foracontinued fast growth intheindustrial sector are
favourable ,especially ifthegeneral movement towards theliberalisation of
trade ,foreign exchange regulations andprivate initiatives ,iscapable of
bringing back Syrian capitals andtalents that fled thecountry inthemid-
sixties .This isalready happening intheconstruction sector which hasenjoyed
arapid expansion fuelled byanumber ofnewprivate ventures financed with
external capitals .Forcotton andphosphates ,Syria israpidly following a
world wide trend aimed atlimiting theexports ofunprocessed domestic raw
materials .Tofulfil this objective ,sufficient spinning capacity will be
provided domestically toeliminate ,by1980 ,allexports ofrawcotton ,and
therapid development ofthefertilizer industry should goalong way tomini­
mize theexports ofunprocessed phosphates .
Thepresently existing light industry (engineering ,paper products ,
tractors ,refrigerators andtelevision assembly )isexpected torapidly increase
itsoutput with theestablishment of5free zones ,located close totheSyrian /
Jordan border andinthevicinity ofDamascus ,Lattakia ,Tartous and Horns .
Theproximity ofSyria totheGulf markets ,itsavailability ofmanpower and
thepresence ofareasonably large domestic market ,should constitute important
additional assets favouring thedevelopment ofthemanufacturing andfood proces
sing sectors .Furthermore ,thechronic labour deficit situation inthewealthy
Gulf states should provide plenty ofemployment opportunities forSyrians thus
generating asteady inflow offoreign exchange .Thefavourable prospects ofnew
oilfindings ,thedevelopment ofthephosphates deposits andpossibly those of
iron ore ,should inthefuture ,gosome waytowards helping thebalance ofthe
trade account which however will likely show ,forafewyears tocome ,asubs­
tantial deficit .

34
Themoderate optimism expressed above however ,inaddition tothe
continuation ofthetrend towards theliberalisation ofprivate initiatives ,
aswell asmeasures aimed atimproving projects' preparation andimplementation
isconditional toarapid andpermanent settlement ofthepolitical situation of
thearea .This notonly will enable theGovernment todivert towards productive
activities alarge amount ofresources (16%ofGDP)atpresent spent ondefence ,
but itwould also contribute tore-establish aclimate ofconfidence necessary
tofully exploit thecountry 'seconomic potential .

Annex A
Level ofinvestments andmajor prospects bysector over the1977/19°0 Plan
Table 13shows thebreakdown byeconomic sector oftheplanned investments
asenvisaged bytheFourth Plan .
2.1 Agriculture
Investments intheagricultural sector aredominated bytheEuphrates basin
development programme that will absorb over 8MSt.The Euphrates programme
includes alarge variety ofprojects ranging from land reclamation ,water
distribution ,settlement programmes ,training ,extension ,etc .
Outside theEuphrates basin development ,anaddtional 2'fSLareear­
marked forirrigation andwater resources development including dams andbonifi -
cation works intheOrontes basinj onthebasin oftheAlkhabir river inthe
North ofthecountry ^andontheriver Khabur inthenorth east part ofSyria .
Theremaining 2.9MSfcareearmarked foraseries ofprojects aimed at
thedevelopment ofcrops andanimal husbandry .ThePlan aims atincreasing by
over 50$thecereal production andatachieving selfsufficiency inanimal
products such asmeat ,milk andeggs .While itisnotenvisaged toincrease the
production ofcotton (predicted toremain constant at400000tons p.a.),the
volume oftheoutput offruits andvegetables isplanned togrow over thePlan
period byover 70$,chiefly toprovide thebasic imports toagrowing canning
industry .
2.2 Industry
Theprogramme ofindustrial development envisaged bythePlan emoraces
thefollowing sectors :Growth ofvalue added (%p.a .)
Plan Investments (BSt)-
$oftotal plan expenditure8.0
12.9
23.9
Growth ofvalue added p.a.)
Plan investments (BSt)
%oftotal plan expenditure15.4
11.3
20.8

36
Chemicals : 3newfertilizer plants ofa0.6Mtons capacity each ,
2superphosphates factories ,?.glass factories ,onepaper and o^.e
tyre manufacturing plants .
Textiles : 8newfactories spinning andweaving domestically grown cotton
and insome cases ,producing ready made clothing .
Cement : 11newplants bringing thedomestic capacity ofcement production
from 1.2Mtons to7Mtons .
Food processing :onebrewery ,several fruits andvegetables canning plants ,and
4sugar refining factories designed toachieve selfsufficiency
ofrefining capacity by19^0 .
Mining : thePlan envisages toincrease thepresent output ofphosphates ,
atpresent around 1.2Mtons ,to3Mtons by19^0 .
Power : projects included inthePlan envisage theconstruction ofpower
plants increasing theoverall power generation ofthecountry
byapproximately 5000 TW,approximately 40fooftheincrease
will behydrobased .Anextensive programme ofelectrification of
rural areas isalso envisaged .
2.3 Petroleum and fuels
Plan expenditure (BSt) 8.0
$oftotal plan expenditure 14•?
Oilproduction isenvisaged toremain over thePlan period ,arour.u the
present level ofproduction ranging between 9an(i10Mtons p.a.Anewrefinery
with acapacity ofapproximately 6ITtons isplanned atBanias ,bringing the
country 'stotal refining capacity towell over 11Mtons .
Gasproduction ispredicted tostart by1979/^0with atotal output of
approximately 250 Itm3p.a.
2.3 Transport
Growth ofvalue added (fop.a.) 16.4
Plan investments (BSfc)
$oftotal plan expenditure 10.4

37
ThePlan includes several highway projects andafewtransport studies
atpresent being defined .
Intherailways transport sector ,_thePlan envisages anambitious exten­
sion andrenewal programme ,together with astandardisation oftherailways system
ononegauge only .The port system ofSyria isalso undergoing awide programme
ofexpansion .Thefacilities oftheport ofLattakia arebeing rapidly expanded
with aconstruction ofanewbreakdown and8newdeep water berths .Thecapacity
oftheport will reach 4Htons p.a.bytheendofthePlan period .Theport
ofTartous isalso undergoing animportant extension programme that should
increase itscapacity toover 3»5Mtons .Theports development programme are
atpresent being entirely financed byRussian aids .
Table 13 :FOURTH PLAN :SECTORAL INVESTMENTS
(M.S.fc ,current prices )
Agriculture (1)
Indus try (2)
Energy andfuels
Transport andcommunications
Trade and commerce
Housing andpublic utilities
Services ,administration ,others12,938
11,289
7,986
5,636
1,144
8.085
7.08623.9
20.8
14.7
10.4
2.2
14.9
13.1
54,164 100.0
Source :State Planning Commission
(1)Including irrigation andtheEuphrates project .
(2)Including manufacturing ,mining ,electricity ,water andgas

Annex1:LABOUR FORCEBYSECTOR
Γ 1 1960 1970 1972 1975
(000) II(X) 000) II(X) (000) (X) (000 (X)
Agriculture519 46.0 752 48.0 925I
54 I916 49.8
IManufacturé ng,alning129 11.0 199 13.0 189 11 223 12.1
|Buildingandconstruction58 5.0 115 7.0 106 6 130 7.2
IElectricity ,gas,water,etc.7 0.7 8 1.0 19 1 9 0.4
ICommerce andtrade8.0 145 9.0 141 8 189 10.3
ITransport andcommunIcations39 3.3 64 4.0 65 4 78 4.2
IServices160 14.0 224 ",4.0 223 13 239 13.0
IOthers140 12.0 64 4 42 3 55 3.0
TOTAL1,140 100.0 1,571 100.0 1,7151
100.0 1,839 100.0
Source:Statistical AbstractCentralBureauofStatistics
oo

39
Annex 2:MAIN SYRIAN EXPORTS
1970 1975
M.S.h Ζ M.S.h Ζ
Raw cotton 305 43.7 439 13.3
Wool 15 2.1 30 1.0
Lentils 24 3.4 8 0.5
Fruits andvegetables 28 4.0 37 1.1
Oïl cakes 25 4.1 13 0.4
Live animals 71 10.2 13 0.4
Tobacco 18 2.6 81. 2.5
Hides and skins 9 1.3 23 0.7
Textiles 69 10.0 203 6.2
Phosphates 56 1.7
Crude oil 130 18.6 2377 72.2
698 100.0 3290 100.0
■SB BSBS8 B8SBB sessa
Annex 3:MAIN SYRIAN IMPORTS
1970 1975
M.S. fa Ζ M.S.h Ζ
Fruits andvegetables 60 4.6 125 2.2
Live animals ,meats 22 1.7 83 1.5
Sugar 40 3.1 427 7.6
Other foodstuff 236 18.3 520 9.2
Fuels 107 8.3 357 7.0
Chemicals 190 14.7 842 14.9
Woods andwood products 41 3.2 93 1.6
Paper andpaper products
• *29 2.2 142 2.5
Textiles 2 9.4 360 6.4
Metal andmetal products .208 16.0 889 15.9
Machines andequipment 174 13.6 929 16.5
Transport equipment 64 4.9 826 14.7
Others -
1292 * 100.0 5633 00.0
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