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					                         Recent Developments in the
                            Egyptian Economy




Ministry of Investment
      Sep 2009
                                Growth & Investment




Source: Ministry of Economic Development
                                           Unemployment Rate




 Source: CAPMAS
                                                               2
                                    Growth & Investment
                                          Comparative Sectoral Growth Rates (Semi annual)

30                    2008/2009    2007/2008                                                                                               27.9

25

20                                                                                                                  18.35
                                                                                               14.9
15
                                                                                       9.4
10                                        7.95                    7.85
            6.85                   6.05
                                                           4.8                                                  4
5                   2.15                                                                                                            1.35
0
            Oil gas Gas
        Petrol &and Extraction    Transportation
                                   Transportaion        Manuf acturing
                                                   Transformation Manufacturing      Construction
                                                                                  construction & Building     Suez Canal Receipts
                                                                                                            Suez Canal Receipts        Tourism
                                                                                                                                     Tourism

     Source: Ministry of Economic Development
                                                                   Quarterly Growth Rates




    Source: Ministry of Economic Development                                                                                                      3
                                 Public vs. Private Investments


                                       Private Investment / Total Investment




                        Private vs Public Investment                Private investment as percentage of GDP

          EGP Billion




Source: Ministry of Economic Development                                                                      4
                Establishment of Corporations (Weekly)




                                                         5
Source: GAFI – Ministry of Investment
              Establishment of Corporations (Monthly)




Source: GAFI – Ministry of Investment                   6
                                Foreign Direct Investment




Source: Central Bank of Egypt
                                                            7
                                                                                                                                               Fiscal and Monetary Policies

                                                                                                                                                                                                                                                                      Fiscal Deficit/ GDP
                   15.0%
                                                                                                                                                        9.5%
                   10.0%                                                                                                                                                                                                                                                                    8.2%                                7.3%                                        8.00%
                                                                               10.4%                                                                                                                                   9.6%                                                                                                                          6.6%                                                     8.0%
                    5.0%

                    0.0%
                                                                        2002/03 2003/04 2004/05 2005/06                                                                                                                                                                                                                 2006/07 2007/08 2008/09b 2009/10
                                                                                                                                         Interbank Rates                                                                                                                                                                                               Net International Reserves
13.65                                                                                                                                                                                                                                                                          13.                                 40                                                               34.6 33.43 33.05
                                                                                                                                                                                                                                                           13                                                      35                                                                                32.17             31.18 31.2
12.65                                                                                                                                                                                                                                       12.                             12.5%                                                                                           28.6
                                                                                                                                                                                                                                    1                                                                              30
                                                                                                                                                                                                                                        11.5%                                                                                                                       22.9
11.65                                                                                                                                                                                                                                                                                                              25
 Interest Rate %




                                                                                                                                                                                             10.75%
                                                                                                                                                                                                 11                                                                                                                                                         19.3
                                                                                                                            10.5%                                                                                                                                                                                  20
                                                                 10.25% 10%                                                                                                                                                                                                                                             15.1 14.2 14.1 14.8 14.8
10.65                                                             10.75%                                                                                                                                                                            11 11.
                                                                                                                                                                                                                                                        10.5%                                                      15
  9.65
                                                                                                                                                                                                                                                 10.
                                                                                                                                                                                                                                    1                                                                              10
  8.65                                                                                                                                                                                                                                           9.5%                                                               5
                                                                                                                                                                                                                9
                                                                                                                                                                                                                                                                                                                    0
  7.65                                                                                                                                                                                                                                                                      9




                                                                                                                                                                                                                                                                                                                                                                                            Jan-09




                                                                                                                                                                                                                                                                                                                                                                                                                                 May-09
                                                                                                                                                                                                                                                                                                                                                                                                     Feb-09

                                                                                                                                                                                                                                                                                                                                                                                                              Mar-09

                                                                                                                                                                                                                                                                                                                                                                                                                        Apr-09
                                                                                                                                                                                                                                                                                                                                       2002

                                                                                                                                                                                                                                                                                                                                              2003

                                                                                                                                                                                                                                                                                                                                                     2004
                                                                                                                                                                                                                                                                                                                         2000

                                                                                                                                                                                                                                                                                                                                2001




                                                                                                                                                                                                                                                                                                                                                             2005

                                                                                                                                                                                                                                                                                                                                                                     2006

                                                                                                                                                                                                                                                                                                                                                                             2007

                                                                                                                                                                                                                                                                                                                                                                                     2008
                                              14/12/2005
                                                           14/02/2006




                                                                                                               14/10/2006




                                                                                                                                                                                                                                    14/04/2008




                                                                                                                                                                                                                                                                                         14/12/2008
                    14/08/2005
                                 14/10/2005



                                                                        14/04/2006




                                                                                                                            14/12/2006
                                                                                                                                         14/02/2007
                                                                                                                                                      14/04/2007




                                                                                                                                                                                             14/10/2007
                                                                                                                                                                                                          14/12/2007
                                                                                                                                                                                                                       14/02/2008


                                                                                                                                                                                                                                                  14/06/2008
                                                                                                                                                                                                                                                               14/08/2008
                                                                                                                                                                                                                                                                            14/10/2008
                                                                                                                                                                   14/06/2007




                                                                                                                                                                                                                                                                                                      14/02/2009
                                                                                     14/06/2006
                                                                                                  14/08/2006




                                                                                                                                                                                14/08/2007




         Source: Ministry of Finance
                                                                                                                                                                                                                                                                                                                                                                                                                                          8
                               Fiscal and Monetary Policies




14.0%
                    Annual inflation Rate             11.7%        25%                                                                                                                                                             Aug 08
12.0%                                                                                                                          YoY change in CPI                                                                                   23.60%
        11.1%                                      11.4%
                                                           10.9%
10.0%     9.1%                                                     20%
                 9.3%
 8.0%                                                                                                                                                                                                                     16.40%
                    7.3%                                           15%       17%                                                                                                                                             14.30%
 6.0%                   6.2%                                                                                                                              11.80% 12.82%
                                               4.9%                                                                                                                                                                   11.70% April 09
                                                      4.2%         10%
 4.0%                          3.8%
                           3.1% 2.8%        3.2%                                                                                                                                                                    June 09
                                                                                                                                                                                                                          9.00%
 2.0%                                   2.4%                                                                      4.70%                                                                                  6.80%
                                    2.4%                           5%

 0.0%
                                                                   0%
                                                                                  Oct-04


                                                                                                    Apr-05


                                                                                                                      Oct-05


                                                                                                                                        Apr-06


                                                                                                                                                           Oct-06


                                                                                                                                                                             Apr-07


                                                                                                                                                                                               Oct-07


                                                                                                                                                                                                                 Apr-08


                                                                                                                                                                                                                                   Oct-08
                                                                         Jul-04




                                                                                                             Jul-05




                                                                                                                                                 Jul-06




                                                                                                                                                                                      Jul-07




                                                                                                                                                                                                                          Jul-08


                                                                                                                                                                                                                                            jun09
                                                                                           Jan-05




                                                                                                                               Jan-06




                                                                                                                                                                    Jan-07




                                                                                                                                                                                                        Jan-08
                                                                                                                                                                                                                                                9
                                External Sector




                                    Current Account




                                                      10
Source: Central Bank of Egypt
                              External Sector




Source: Ministry of Finance
                                      Source: Central Bank of Egypt




Source: Ministry of Finance          Source: Central Bank of Egypt    11
   Trading Indicators 2004 - 2008


Value of Trading            Volume of Trading




                                                12
Risk & Return analysis for S&P Board Market Index- BMI



           Risk & Return analysis for S&P Board
               Market Index- BMI (2004-2009)




                                                         13
Egyptian Market since 2004


           Annual Return




          EGX30 Index




                             14
P/E Ratio & Market Capitalization




                                    15
                Net Portfolio Investments and Foreigners & Arabs Trading




                              Net Trading of Foreigners and Arabs in The Egyptian Market
 US$ Million

2000
                                                        1,475
1500
                1,114                                                             1,095
                               954
1000

 500

   0

 -500

-1000
                                                                                             -1,025
-1500
               2004/05       2005/06                   2006/07                   2007/08   July - Mar
                                                                                             2009       16
The Asset Management Program




                                   Proceeds of the Program
                     EGP Million
                 16000                    14612
                                                  13607
                 14000
                 12000
                 10000
                  8000             5643
                  6000                                    3983
                  4000                                             1541
                  2000    543
                     0
                         2003/04 2004/05 2005/06 2006/07 2007/08 2008/09
                                                                  to date

                                                                 17
          Financial Sector Reform Program
               Phase I: 2005-2008

                     Improve the soundness and efficiency of the financial
   Reform            sector through comprehensive structural and financial
   Objective         reform, which would ultimately boost economic growth
                     and development as well as enhancing competitiveness,
                     and financial innovation.


                     1.   Reforming the Banking Sector
Main Components
 of the Reform       2.   Restructuring the Insurance Sector
    Program          3.   Deepening the Capital Market
                     4.   Developing a well-functioning Mortgage Market
                     5.   Activating other Financial Services


  Time Frame         2005-2008                                               18
                          Financial Sector Reform Program
                              Main Implemented Reforms of Phase I: 2005-2008
1- Reforming the Banking Sector                                    2- Restructuring the Insurance Sector
                                                                    - Merging Al-Shark and Egypt Re in Misr Insurance.
- Merging six banks.
                                                                    - Establishing the Holding Company for Insurance.
- Settling 65% of public sector NPLs.                               - Restructuring the boards of public insurance
                                                                      companies.
- Privatizing Bank of Alexandria
                                                                    - Establishing a State Fund for compensation
- Divesting 13 cases of public sector banks holdings                - Amending the insurance law and allowing corporation
                                                                      to act as insurance brokers.
  in JV banks.
                                                                    - Raising the minimum issued capital to EGP 60 million
                                                                      for life and non-life insurance companies.
                                                                    - Reducing stamp duties on insurance policies for life,
3- Deepening the Capital Markets                                      property and casualty insurance.
- Establishing a special registrar for qualified auditors at the   4- Developing a well functioning Mortgage Finance
  CMA.
- Introducing Margin Trading, Short Selling, Same Day               - Introducing more flexibility to income recognition rules and
  Trading, Market Making Activity, and Securitization.                regulations.
- Issuing the legislative framework for organizing                  - Reducing the registration fee to a maximum of EGP 2000 .
  Acquisitions.                                                     - Establishing the Egyptian Mortgage Refinance Company.
- Issuing the new Egyptian Accounting Standards in                  - Raising the maximum subsidy obtained from the Mortgage
  compliance with the International Accounting Standards.             Finance Subsidy and Guarantee fund from EGP 10,000 to
- Issuing the legislative framework for combating insider             EGP 15,000.
  trading.                                                          - Activating the role of insurance in mortgage finance activity.
- Issuing regulations to organize and introduce investment          - Standardizing contracts of mortgage finance to facilitate the
  funds, and organize exchange traded funds, money market
                                                                      securitization process.
  funds and real estate funds.                                                                                                    19
- Establish the Nile Stock Exchange (Nilex) for SMEs.
                Financial Sector Reform Program
                     Impact of Reforms of Phase I: 2005-2008
    Insurance             2004/2005              2007/2008               Mortgage Finance                    2004/2005     2007/2008

Premiums/GDP                   0.8%                  1.1%                                                    2 Companies   10 companies
                                                                      Institutions
                                                                                                             and 2 Banks    and 2 banks
Assets                         20                    33.4
Investments                    16.3                  29               Mortgage finance                       16 Million    2.6 billion
Equity                         3.8                   8.5
                                                                      Evaluation experts                         75            117
Volume of Premiums             4.3                   7.4
Paid Claims                    2.4                   4.2              Intermediaries                            203            234

Net profits                    0.6                   1.1              Auditors                                   23            45
Public Companies               70%                   49%
                                                                      Investors                                  3            4371
Market Share


                         Capital Market                        2004/2005                     2007/2008
                Value traded                                    83.7 Billion                 553.2 Billion

                Monthly Average value of trade                   0.6 Billion                  46.1 Billion

                Volume                                         3 Billion Paper             19.9 Billion Paper

                Monthly Average volume of trade              270.9 Billion Paper         1659.3 Billion Paper

                Total acquisitions                              3.64 Billion                 123.8 Billion

                The number of registered investors             875 Thousand                    1.6 Billion
                Financial Sector Reform Program
                      Phase II: 2009 - 2012
                         Phase II of the program comprises generic and sector specific
                             reform measures.
                         The generic reform measures aim at:
                         1. Increasing the efficiency of regulation and shifting it from a
                             rule-based to a risk-based regulation to ensure the soundness of
                             the financial system.
                         2. Improving access to finance.
                         3. Developing the financial culture.
                         4. Developing and deepening the markets through introducing
                             new instruments and encouraging financial innovation.
Main Pillars of the
Reform Program           The sector specific reform measures aim at:

                         1.   Improving bank’s Efficiency for financing economic growth.
                         2.   Developing and deepening the Insurance Market
                         3.   Deepening and improving the efficiency of Capital Markets on
                              both the equity and fixed income sides.
                         4.   Further activation to, and increasing the efficiency of the
                              Mortgage Market
                                                                                          21
                         5.   Activating Financial Leasing and Factoring activities
                            GOE’s Stimulus Package


Measures aiming at boosting economic growth amid the international financial crisis and its negative
implications on developing and emerging countries.

1.   Availing and lowering the cost of credit
-    Reducing interest rates.
-    Exempting credit extended to SMEs from the reserve requirement.

2.   Increasing public spending and subsidies
-    Investing EGP 30 bn in infrastructure projects (budget and PPP)
-    Sales tax exemptions of a magnitude of EGP 1 bn on capital goods.
-    Full Tariff exemptions on imported capital and 250 items of intermediate goods.
-    Increasing Export subsidies by EGP 2.6 bn.

3.   Promoting investments
-    Revising measures that had an adverse impact on investments.
-    Intensifying promotional campaigns.

4.   Supporting the Capital Markets
-    More flexibility on dealing on treasury stocks and tender offers
-    More flexibility in reporting financial investments by companies via amendment of the Egyptian
     Accounting Standard (in compliance with IAS).
                                                                                                       22
5.   Legislative reforms