earnings and one-fourth of
central government budget revenues in recent years. Consequently,
fluctuations in world market prices can have a substantial domestic
impact. In the late 1990s, Ecuador suffered its worst economic
crisis, with natural disasters and sharp declines in world petroleum
prices driving Ecuador's economy into free fall in 1999. Real GDP
contracted by more than 6%, with poverty worsening significantly.
The banking system also collapsed, and Ecuador defaulted on its
external debt later that year. The currency depreciated by some 70%
in 1999, and, on the brink of hyperinflation, the MAHAUD government
announced it would dollarize the economy. A coup, however, ousted
MAHAUD from office in January 2000, and after a short-lived junta
failed to garner military support, Vice President Gustavo NOBOA took
over the presidency. In March 2000, Congress approved a series of
structural reforms that also provided the framework for the adoption
of the US dollar as legal tender. Dollarization stabilized the
economy, and growth returned to its pre-crisis levels in the years
that followed. Under the administration of Lucio GUTIERREZ - January
2003 to April 2005 - Ecuador benefited from higher world petroleum
prices, but the government has made little progress on economic
reforms necessary to reduce Ecuador's vulnerability to petroleum
price swings and financial crises.

Egypt
Lack of substantial progress on economic reform since the mid
1990s has limited foreign direct investment in Egypt and kept annual
GDP growth in the range of 2%-3% in 2001-03. However, in 2004 Egypt
implemented several measures to boost foreign direct investment. In
September 2004, Egypt pushed through custom reforms, proposed income
and corporate tax reforms, reduced energy subsidies, and privatized
several enterprises. The budget deficit rose to an estimated 8% of
GDP in 2004 compared to 6.1% of GDP the previous year, in part as a
result of these reforms. Monetary pressures on an overvalued
Egyptian pound led the government to float the currency in January
2003, leading to a sharp drop in its value and consequent
inflationary pressure. In 2004, the Central Bank implemented
measures to improve currency liquidity. Egypt reached record tourism
levels, despite the Taba and Nuweiba bombings in September 2004. The
development of an export market for natural gas is a bright spot for