conomies Fund was also placed at the
free disposal of the Egyptian government. The General Reserve Fund
ceased to exist, but for the better security of the bondholders a
reserve fund of L1,800,000 was constituted and left in the hands of the
Caisse to be used in the highly improbable event of the land tax being
insufficient to meet the debt charges. Moreover, the Caisse started
under the new arrangement with a cash balance of L1,250,000. The
interest of the money lying in the hands of the Caisse goes towards
meeting the debt charges and thus reduces the amount needed from the
land tax. The bondholders gained a further material advantage by the
consent of the Egyptian government to delay the conversion of the loans,
which under previous arrangements they would have been free to do in
1905. It was agreed that there should be no conversion of the Guaranteed
or Privileged debts before 1910 and no conversion of the Unified debt
until 1912. Such were the chief provisions of the khedivial decree, and
in 1905, for the first time, it was possible to draw up the Egyptian
budget in accordance with the needs of the country and on perfectly
sound principles.

In the system adopted in 1905 and since maintained, recurring and
non-recurring expenditure were shown separately, the non-recurring
expenditure being termed "special." At the same time a new General
Reserve Fund was created, made up chiefly of the surpluses of the old
General Reserve, Special Reserve, and Conversion Economies funds. This
new fund started with a capital of L13,376,000 and was replenished by
the surpluses of subsequent years, by the interest earned by its
temporary investment, and by the sums accruing by the liquidation of
the Daira and Domains loans. During 1905 and 1906 about L3,000,000 was
paid into the fund through the liquidation of the Daira loan. From
this fund, which had a balance of over L12,000,000 in 1906, is taken
capital expenditure on remunerative public works in Egypt and the
Sudan, and while the fund lasts the necessity for any new loan is
avoided. The greater freedom of action attained as the result of the
Anglo-French declaration of 1904 enabled the Egyptian government to
advance simultaneously along the lines of fiscal reform and increased
administrative expenditure. Thus in 1906 the salt monopoly was
abolished at a cost to the revenue of L175,000, while the reduction of
import duties on coal and other fue