MUBARAK AND HIS DEBT.

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP88G01116R001001490003-4
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 11
• Document Creation Date: December 23, 2016
• Document Release Date: June 22, 2011
• Sequence Number: 3
• Publication Date: August 5, 1986
• Content Type: MEMO

Declassified in Part - Sanitized Copy Approved for Release 2013/05/08: CIA-RDP88GO1116R001001490003-4
EXECUTIVE SECRETARIAT
ROUTtNN,SLIP
ACTION
INFO
DATE
INITIAL
1
DCI
2
DDCI
X
3
EXDIR
4
D/ICS
5
DDI
X
6
DDA
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DDO
X
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DDS&T
9
Chm/NIC
10
GC
11
IG
12
Compt
13
D/OLL
14
D/PAO
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D/PERS
16
VC/NIC
X
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D/NESA
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C/NE
x
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NI0/NESA
X
21
22
Remarks
(ER has no record of earlier reporting
referred to in first paragraph.)
Ex 4j five Secretary
6 August 86
Date
3637 (10-81)
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UNCLASSIFIED when blank - TOP SECRET when attached to Top Secret Document- When d
cover sheet as appropriate. Attach to each CIA and Non-CIA collateral Top Secret document n
CONTROL AND COVER SHEET FOR TOP SECRET
0ached fromdocuin wrtreprade
mkft*W by CIA.
(COLLATERAL)
CIA TOP SECRET CONTROL NUMBER
ER TS 0161 86
Office Number Year
CIA COPY/SERIES NU
ER
Series
DOCUMRNT DATE (YYMMDD)
860805
NON-CIA DOCUMENT RECEIPT DATE (YYMMDD)
COLLATERAL TS ATTACHMENT(S)-Con rol Numbers
LOGGED BY.
TSGO/ER
SUBJECT/TITLE:
M and His Debt
CIA ORIGINATOR (Directorate, Office, Division, Branch)
NON-CIA ORIGINATOR (Dept,
Vice President
Agency) ConkA No., Cgiy No.
`
ATTENTION: Access to the attached document is restricted to only authorized r
personnel. For accountability purposes, all designated :lndivi uals
ipients or Top Secret control
are to si 'and da this form.
REFERRED TO
SEEN BY
REFDIRE6 TO
SEEN B
OFFICE
SIGNATURE
DATE
OFFICE
SIGNATURE
DATE
6 AUG.3
16
Remove this sheet upon completion of any action noted below, classify form, and fo
Top Secret Control Officer.
rward to the CIA
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DESTROYED
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DISPATCHED TO (Non-CIA Agency)
BY (Signature)
WITNESSED BY (Signature)
i7 Sip
re)
DIRECTORATE & OFFICE
DIRECTORATE 3 OFFICE
DIRECT
ORATE & OFFICE
DATE
DATE
DATE
12 83 26 $17 r:cev:vua ~O (40)
TOPsier
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EXEC
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WASHINGTON
August 5, 1986
MEMORANDUM FROM THE VICE PRESIDENT
FOR SECRETARY GEORGE SHULTZ
ADMIRAL JOHN POINDEXTER
SECRETARY JAMES BAKER
SUBJECT: Mubarak and His Debt.
Rec ER -6 -Aug-86---
This is an addendum to previous reporting coming out of my
one-on-one with Mubarak.
He presented me with the attached.
He cited his debt situation as "very dangerous", we need
relief "now, urgently".
"I don't want to reach the point when I cannot pay." He
called it "auctioneering" with the people of the U.S.A.
He is paying 14-16% on arms objecting at "too much" and
"destabilizing".
He asked me to ask Treasury "to treat us the same as Mexico".
He talked to Kohl, Thacher, Chirac who, he says, promise to
help.
He urged us to get the IMF to be more flexible.
"Doing more now would create an impossible internal problem."
He cited the decline in oil from $28 per bbl to $6 per bbl
as the main reason for his problem.
Mubarak mentioned he would do more with privitization.
He made a strong plea for transferring the $110 million that
he has coming now. (Today on the way to the airport
Prime Minister Lutfi told me he was announcing the customs
changes next week.
Mubarak, claiming to have made many raforms, kept stating
that he can't make more reforms now. "I desperately need
help". I must avoid a 'crash' with my people."
ER TS 0161 86
Copy I of 9 Copies
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TOP SECRET
Page 2
I had meetings with all the top people in Egypt -- President,
Prime Minister, Foreign Minister, Defense Minister --
all mentioned with great urging the need for financial
help.
GEO E BUSH
cc: Ambassador Pelletreau
Don Gregg
TOP SECRET
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1- Egypt Economy
1-1- Egypt Resources
Egypt is not rich in natural resources, however it does have
a good base for sustained growth.
- Fair water resources and enough to increase it agriculture
production.
- Fair industrial capacity and enough to satisfy a good part
of local demand and for export.
- Surplus of skilled workers and technicians, 3 million of them
are still working in the Arab World.
1-2- Egypt Short Term Problems 1986-1988
1- A deficit in the budget which reached 14% of national income,
and should be reduced to 10%.
2- A deficit in the balance of payment which is expected to be
3000 million dollars per year.
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3- An inflation rate of 20% this year and is increasing
steadily.
4- Population growth of 2.7% per year. This year Egypt
expects to have 1.3 million inhabitants.
2- Serious, Courageous Confrontation to Economic Problems
Egypt started a comprehensive program for economic reform
addressed towards these problems.
PROBLEM
Measures Taken
1- Deficit in the
Cutting Expenses
Bud et
1- Cutting government operating expenses by 25%
(Net savings is 400 million).
2- Freezing automatic employment in the govern-
ment for the first time since 1967.
3- Allowing increase of wages by 5% only instead
of 10%.
4- Cutting subsidies by 15% (Net saving is 250
million).
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Problem,
Measures Taken
Increasing Resources
1- Introducing Comprehensive Custom Reform that
will stop all exemptions except those granted
to armed forces. Expected income is
million.
2- Increase of direct taxes (sales taxes) on
consumer durables and luxury goods. Expected
income is 600 million pounds.
3- Increase of gasoline prices by 20% (Second
increase in two Years). Expected income is
150 million pounds.
4- Lifting Control on Prices of Industrial Goods
local travelling and teli-communication and
postal services to allow for full coverage
of cost and a fair margin of profit (Expected
income is 500 million pounds.
5- Elemination of subsidy to air-ticket by
increasing prices of tickets by 60%.
6- Special tax on travelling abroad (10% of the
value of ticket).
7P
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Problem
Measures Taken
2- Balance of Pay-
Three main reasons behind the deficit this
ment Deficit
year and for the next three years:
1- The payments Egypt has to make for U.S.A.,
France, Italy and Spain to serve existing
debt. Egypt borrowed at high interest rates
(ranges between 12% to 16%).
2- The decline in Egypt main resources: Export
of oil and transfers from Egyptian workers
working abroad.
3- The decline in income from tourism. Tourist
traffic to Egypt declined by 40% in 1986._
Measures Taken:
Cutting Demand for Foreign Currency
1- Increasing share of the private sector in
importation at market exchange rate. It is
now more than 60% of total imports.
2- Putting special tax on travelling abroad.
3- Special taxes on imports of consumer luxuries
4- Dollar tax on every article purchased from
the ,free zone.
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,problem
Measures Taken
5- Cutting government expenditure abroad by 25%.
6- Special incentives to Investments with higher
percentage of local components such as
General Motor.
7- Encouraging off-set trade and paying for
imports through exports.
Increasing Country Resources
1- Simplification of exchange rates to help en-
courage exports.
2- Drastic administrative reform to facilitate
exports.
3- Encourage private effort to promote sales of
touristic package and charter flights to
Egypt.
4- Issuing dollar bonds at higher interest rate.
5- Special incentives for purchasing real estate
by non Egyptians.
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Problem
Measures Taken
3- Inflation Rate
1- Cutting the deficit in the budget is hoped
to help reduce rate of inflation.
2- The Central Bank is implementing measure to
control the volume of credit.
3- Drastic management reform will be introduced
in the management of the public firms.
private techniques will be applied.
This is not emough we believe the real
control will come through the strengthening
of the production base in egypt.
U.S.A and Europeans could help a lot here
through massive serious measures:
1- Re-scheduling of debt to allow for the use of
our resources in getting supplies and
material to the production sector.
2- Support Egypt request for stand-by fund from
IMF..
3- Support Egypt request for production sector
loans from the World Bank.
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TER OF STATE FOR ADMINISTRATIVE DEVELOPMENT.
Problem
Measures Taken
4- Support paying back debt'in the form 8f
exports from Egypt.
5- Immediate relief from the burden of military
debt.
6- Technical free-aid in up-grading and
increasing productivity of the agricultural
and industrial sector.
4- Population
Egypt realize the complicated nature of the
population problem, and the difficulties
encountered in controling growth because of
social and religious reasons. However, a com-
prehensive program is being implemented and
monitered. It includes:
1- Making family planning devices available to
every family.
2- Increasing employment opportunities to women,
and extending soft credit to home production.
3- Controling illiteracy since education has
direct relation to number of children in the
family.
4- Implementation of national program for child
health care, since it affects the number of
children born.
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