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Providing comprehensive data and in-depth analysis of political, financial and economic risk.
Report includes: BMI's Core Views, 10-year Forecasts, BMI's Economic Risk Index, Political Stability and Risk
Index, Long-term Political Outlook, Operational Risk Index, SWOT Analysis and Structural Economic Sections
Why you should buy this report
Understand and measure the political, business environment and operational risks to your company
Gain insight on emerging trends that could support, strengthen or disrupt your activities in the market
Benefit from 10-year macroeconomic forecasts and insight into the structural characteristics of the
economy
Get the long-term political outlook and explore possible scenarios for change
Core Views
2016 will be a relatively positive year for the Egyptian economy, as the currency stabilises and
investment returns to the county.
The fiscal and net export position will improve significantly on the back of fuel subsidy reform.
Subsidy cuts will likely be watered down if public unrest occurs on a significant scale, however, the
bulk of reform will remain in place.
Hikes to domestic energy prices will push consumer price inflation back into the double digits by the
end of the year.
Egypt's geopolitical importance will ensure that even if an IMF agreement is delayed for longer than
expected, further foreign aid commitments will materialise around the turn of the year. Western powers
such as the US and EU have an interest in ensuring the North African country does not experience a
more pronounced economic and political crisis. However, it will be donations from the GCC which
keeps Egypt afloat this year.
Parliamentary elections in Q415 will result in a fragmented legislative with minimal Islamist presence.
Major Forecast Changes
We now expect sharper depreciation in the Egyptian pound over the coming year, reaching
EGP8.8000/USD by end-2016.
Key Risks
A failure to secure external financing (whether through the IMF or bilateral aid) raises the risks of a
disorderly devaluation of the Egyptian pound.
Terror attacks, or disturbances caused by the Muslim Brotherhood could have a significant impact on
investment and tourism figures.
Economic Activity (Egypt 2010-2019)
Indicator
2010
2011
2012
2013
2014e
2015f
2016f
2017f
2018f
2019f
Nominal GDP, 214.1
230.7
259.5
255.0
282.0
291.2
303.7
323.3
346.5
369.5
USDbn
Real GDP
5.5
1.4
1.3
2.2
2.2
2.6
4.1
4.8
4.5
4.2
growth, % y-oy
GDP per
2,789
2,954
3,268
3,159
3,436
3,492
3,585
3,758
3,968
4,171
capita, USD
Population,
82.0
83.8
85.7
87.6
89.6
91.5
93.4
95.2
97.0
98.8
mn
National Sources/BMI

Summary

Table of Contents

Product Description

Executive Summary
5
Core Views
5
Major Forecast Changes
5
Key Risks To Outlook
5
Chapter 1: Political Outlook
7
SWOT Analysis
7
BMI Political Risk Index
7
Political Outlook
8
Insurgency To Remain Greatest Threat To Government
8
Table: Political Overview
8
Long-Term Political Outlook
9
Four Scenarios For The Coming Decade
9
Chapter 2: Economic Outlook
13
SWOT Analysis
13
BMI Economic Risk Index
13
Economic Activity
14
Fragile Growth To Solidify
14
Table: Components Of GDP (% Of Total)
14
Table: Private Consumption Forecasts
14
Table: Government Consumption Forecasts
15
Table: Fixed Investment Forecasts
15
Table: Net Exports Forecasts
16
Fiscal Policy
17
Fiscal Position Starting To Improve

17
Table: Fiscal Policy
17
Balance Of Payments
18
Slow But Steady Turnaround Ahead
18
Table: Current Account
18
Exchange Rate Policy
20
EGP - Slower Pace Of Depreciation Coming
20
Table: BMI Currency Forecast
20
Islamic Finance
21
Islamic Banking: Slowdown In Place
21
Chapter 3: 10-Year Forecast
25
The Egyptian Economy To 2024
25
Policy Uncertainty Weighs On Outlook
25
Table: LONG-TERM MACROECONOMIC FORECASTS
25
Chapter 4: Operational Risk
27
SWOT Analysis
27
Operational Risk Index
27
Operational Risk
28
Table: Operational Risk
28
Market Size And Utilities
29
Table: Middle East And North Africa - Market Size And Utilities Risk
30
Interstate Security Risk
33
Table: Middle East And North Africa - Interstate Security Risk
34
Chapter 5: Key Sectors
37
Pharmaceuticals & Healthcare
37
Table: Pharmaceutical Sales , Historical Data And Forecasts
38
Table: Healthcare Expenditure Trends, Historical Data And Forecasts
39

Telecommunications
40
Table: Telecoms Sector - Historical Data & Forecasts
41
Other Key Sectors
47
Table: Oil And Gas Sector Key Indicators
47
Table: Defence And Security Sector Key Indicators
47
Table: Infrastructure Sector Key Indicators
47
Table: Food And Drink Sector Key Indicators
48
Table: Autos Sector Key Indicators
48
Table: Freight Key Indicat Ors
48
Chapter 6: BMI Global Macro Outlook
49
Global Outlook
49
Assessing The Aftermath Of Three Key Events
49
Table: Global Assumptions
49
Table: Developed States , Real GDP Growth, %
50
Table: BMI VERSUS BLOOMBERG CONSENSUS REAL GDP GROWTH FORECASTS, %
50
Table: Emerging Markets, Real GDP Growth , %
51

The Egypt Country Risk Report helps businesses with market assessment, strategic planning and decision
making to promote growth and profitability in Egypt. It is an essential tool for CEOs, Chairmen, Finance
Directors/CFOs, Managing Directors, Marketing/Sales Directors with commercial interests in this emerging
market.
An influential new analysis of Egypt's economic, political and financial prospects through end-2019, just
published by award-winning forecasters, BMI Research.
Key Uses

Forecast the pace and stability of Egypt's economic and industry growth through end-2019.
Identify and evaluate adverse political and economic trends, to facilitate risk mitigation.
Assess the critical shortcomings of the operating environment that pose hidden barriers and costs to
corporate profitability.
Contextualise Egypt's country risks against regional peers using BMI's country comparative Risk
Index system.

Evaluate external threats to doing business in Egypt, including currency volatility, the commodity
price boom and protectionist policies.

The Egypt Country Risk Report by BMI Research includes four major sections: Economic
Outlook, Political Outlook, Operational Risk and Key Sector Outlook.

Economic Outlook:
How will the Egypt' economic policy-making and performance impact on corporate profitability over
2015-2019?
BMI provides our fully independent 5-year forecasts for Egypt through end-2019 for more than 50 economic
and key industry indicators. We evaluate growth, and also forecast the impact of economic management.
Economic Outlook Contents
The Egypt Country Risk Report features BMI's forecasts with supporting analysis for 2015 through to end2019, set against government views and BMI's evaluation of global and regional prospects.
Key Areas Covered:
Data:

Full 10-year forecasts with data - for key macroeconomic variables including GDP (real growth and
per capita), population, inflation, current account balance and the exchange rate.
BMI's comprehensive Risk Index system - rates each country worldwide for economic and political
risk, and rates the business environment, within a global and regional context.

Written Analysis:

Economic Activity - real GDP growth, employment, inflation, consumption (retail sales and
confidence).
Balance of Payments - trade and investment, current and capital account.
Monetary Policy - interest rate trends (bank lending and deposit rates) and inflation (producer price
and consumer price).
Exchange Rate Policy - currency controls, foreign investment flows, exchange rates and foreign
exchange reserves.
Fiscal Policy - macroeconomic strategy and policies, government finance and tax reforms.
Foreign Direct Investment - approvals, inflows and climate.
External Debt - debt profile (short and long-term plus public and private sector obligations).
Global Assumptions - forecasts for each year to end-2019 covering: major commodities, growth in
key regions, inflation, and interest and exchange rates, in the United States, Japan, China and the
eurozone.

Key Benefits

Rely upon BMI's 100% independent forecast scenarios for Egypt and underlying assumptions - we
take no advertising and are privately-owned.

Exploit the benefits of BMI's comprehensive and reliable macroeconomic database on Egypt,
sourced and fully maintained by BMI from an extensive network of private sector, government and
multilateral contacts.
Gain key insights into the current and future direction of government economic policy, which
could significantly affect your company's business prospects, from BMI's team of analysts and
economists.

Political Outlook:
What are the political risks to doing business in Egypt over the next 5-years?
BMI's Egypt country Risk Index evaluates the short- and medium-term threats to political stability.
Political Outlook Contents

SWOT Analysis for the Egypt Market - Political Strengths, Weaknesses, Opportunities and Threats
facing Egypt.
Political Stability and Risk Assessment - BMI's Risk Index assesses explicit short- and long-term
risks to political stability; latest positioning and trends for Egypt's risk are compared with regional and
global averages.
Current Administration and Policy-making BMI assesses the threats to the continuity of economic
policy, and likely changes to the business operating environment.
Long-Term Political Outlook BMI examines the structural risks to the stability of Egypts political
system and the dominant public policy issues likely to affect decision-makers, and outlines scenarios
for how the state could evolve in the medium to long term.

Key Benefits

Benchmark Egypt's risk profile against its neighbours, the global and regional average, allowing easy
comparison of risks between key business markets.
Identify, evaluate and anticipate political and security risks to the business environment, and to
your company's current operations and future plans.
Gain valuable insights into government and policy-making, through BMI's specialist team of
analysts and economists, and their network of private and public sector sources.

Operational Risk
What are the current operational risks and difficulties associated with doing business in Egypt?
The Operational Risk section gives an evaluation of current risks and difficulties associated with operating in
the market. It also provides a brief overview of the regional Operational Risk Index which benchmarks Egypt
against its neighbours.
Operational Risk Contents
The chapter provides a summary of the main threats in the country, within:

Labour Market Risk (Education; Availability of Labour; and Labour Costs)

Logistics Risk (Market Size and Utilities; Quality and Extent of the Transport Governance)
Trade and Investment Risk (Economic Openness; Government Intervention; and Legal Risks)
Crime and Security Risk (Crime; Terrorism; and Interstate Conflict risks).

The report also drills down in greater depth to address key issues in one of the following segments most critical
to the market:

Transport network, economic openness, cost and availability of labour, crime risks, bureaucratic
environment, market size and utilities, and interstate conflict.
Assess your companys exposure to country specific operational and business risks, using BMIs
insight on the current dangers of operating in the market.
Evaluate Egypts risk profile against its regional peers, helping you understand the markets strengths
and weaknesses in relation to other countries.

Key Sector Outlook*

Which industry sectors in Egypt will grow fastest, and where are the major investment opportunities in
the market?
BMI identifies investment opportunities in Egypt's high growth industries including automotives, defence &
security, food & drink, freight transport, infrastructure, oil & gas, pharmaceuticals & healthcare and
telecommunications & IT.
Key Areas Covered:

Market Overview - Size and value of each industry, including recent sector developments and major
industry key performance indicators (KPIs) that have impacted company performance.
5-year Industry Forecasts - Forecasts for each year over 2015-2019, using BMI's proprietary industry
modelling technique, which incorporates key domestic and international indicators - including
economic growth, interest rates, exchange rate outlook, commodity prices and demographic trends - to
provide fully integrated forecasts across and within each industry.
Demand- and Supply-Side Data/Forecasts - BMI's industry data covers both the output of each
industry and the domestic demand, offering clear analysis of anticipated import/export trends, as well
as capacity growth within each industry.

Key Benefits

Target strategic opportunities in high growth industries, which are benefiting from global mega
trends, and thus offer strong investment and growth opportunities.
Compare the growth path of different industries to identify which are best placed to benefit from
domestic and international economic prospects, and which have historically suffered from volatile
growth trends - a key indicator of future risks.

*Not all Country Reports contain the Key Sector Outlook chapter. Please enquire above for more information.

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Egypt
In-depth country-focused analysis on Egypt's economic, political and operational risk environment,
complemented by detailed sector insight.

Egypt is a crucial market for many of our clients. Its economy is the third largest in the Arab world after Saudi
Arabia and the UAE. The country has strong ties with the West and has played an important negotiating role in
the Israel-Gaza conflict. Egypt's main export is crude petroleum and the country also boasts a thriving textiles
industry. We ensure our clients make sound investment decisions in Egypt, using our risk-assessed total analysis
model. Our teams keep our clients informed of the latest market moves and political developments as part of our
'top-down' and 'bottom-up' perspective. Our expert views are supported by our interactive data and forecasting.
We also provide in-depth analysis on 23 of Egypt's most important industries. Our analysts will make sure you,
as our client, have the edge in Egypt.

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Latest products and reports

08 September 2015
Egypt: Investors tapping range of opportunities despite challenging operating
environment Country Risk Report
Investors have pointed to wide-ranging business reforms in March 2015, and the discovery of an offshore
supergiant gas field in August, as positives in Egypts investment climate. Yet, foreign businesses face a number
of challenges. In addition to growing security concerns, foreign companies have to contend with a challenging
operating environment as a result of Egypts inefficient bureaucracy. The extent to which President Abdel Fattah
al-Sisi continues to rely on the military to execute large-scale projects such as the new Suez Canal Zone
Development project underscores the institutional shortcomings of the Egyptian bureaucracy.
A deceleration in the pace of structural economic reforms constitutes an additional concern. Although the
development of the Zohr gas field will provide a boost for the Egyptian economy from 2017 onward, a short and
medium term decline in foreign exchange reserves could temper investor confidence. The gas find may also
cause the government to delay painful economic reforms.
Verisk Maplecrofts Country Risk Report on Egypt provides comprehensive coverage of key political,
regulatory and security issues as well in-depth analysis of the countrys economy, human rights landscape and
environmental issues. The report also draws extensively on a broad range of indices, maps and Verisk
Maplecrofts Global Alerts Dashboard.
Contact info@maplecroft.com for more information

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Latest product news
Advisory Services

Country Risk Report - Egypt

Maplecrofts latest Country Risk Report for Egypt provides forecasts for the business environment and
comprehensive analysis of the key risks affecting companies operating in the country.
Instability shows no sign of abating in Egypt in the short- or medium term and companies should be aware that
this will continue to adversely impact the legislative agenda, the economy and business confidence. Rapidly
mounting economic challenges pose a significant risk to the countrys long-term political stability. As the failure
to secure a vital loan from the International Monetary Fund (IMF) compounds the crisis, volatility in the
political landscape is likely to increase and pose a high risk of disruption to business operations and
investments.
Furthermore, the report states that authoritarian tendencies of the Muslim Brotherhood have become more
apparent in 2013, and will likely provoke an increasing popular backlash against the government. Crucially, the
judiciary continues to play an overtly political role in opposing the government. With no solution on the
horizon, this fractious relationship is likely to have a long-term negative impact on the Egyptian legal
environment.
The near-term prospects for the Egyptian economy hinge on developments on the political front and whether or
not the government can reach agreement with the IMF regarding a US$4.8bn credit facility. International
investors are closely watching IMF negotiations and treating progress, or the lack thereof, as a barometer for the
governments will and ability to enact structural economic reforms. These are necessary to help stave off a crisis
in Egypts balance of payments and a further devaluation of the pound.
As Egypts negotiations with the IMF progress, the country is likely to enter a period of fiscal austerity, with
little room for stimulus in the short term. In addition, monetary easing is unlikely as the central bank continues
with its policy to defend the pound. As such, the short-term growth outlook is bleak.

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Egypt Trade and Investment Risk Report

BMI view:
BMI View: Egypt is one of the less attractive destinations for trade and investment in the MENA region. The
country lacks a well-defined and implemented legislative environment, and has relatively weak intellectual
property rights. That said, there have been some improvements on this front as of late, which should continue
with the entrenching of President al-Sisi's administration. We have awarded Egypt a score of 45.6 out of 100 for
the overall BMI Trade and Investment Risk Index, placing it 12th out of 19 MENA states.
Egypt's poor infrastructure and convoluted, over-regulated labour market is an unattractive proposition,
deterring potential foreign direct investment (FDI). In addition, the market is relatively closed to investors,
which hinders the country's ability to capitalise on its innate advantages, namely its geographic proximity to
Europe, Asia and the growing economies of Sub-Saharan Africa. Although recent reforms should improve the
business environment and prospects for foreign investment, these will require time to take effect. At present,
Egypt is only ranked in the middle of the pack regionally for the Economic Openness pillar of BMI's Trade and
Investment Risk Index, in 11th out of 19 MENA states, with a score of 52.6 out of 100.

Egypt has a relatively low tax burden and payment procedures have seen significant clarification. In addition,
tax breaks are available for certain investments, particularly in terms of real estate. However, the excessive
length of time to pay these taxes leads to considerable delays and costs. Additional risks are presented by the
limited availability of domestic credit, which is further damaging worsening consumer confidence, in turn
impeding demand for imported retail goods. Egypt consequently scores poorly for the Government Intervention
pillar of BMI's Trade and Investment Risk Index, with 42.9 out of 100 placing it seventh from bottom out of 19
MENA states.
Another key impediment to trade and investment in Egypt is the weak rule of law. Anecdotal evidence and
official measures indicate that the rule of law in the country has worsened in the past few years off the back of
significant political instability. Low-level corruption and graft is widespread in Egypt, and was considerably
worsened by the Arab Spring. This is coupled with the improved ease of doing business within Egypt's
bureaucratic environment which, despite still being slow and costly, earns the country its highest score in
the BMI Trade and Investment Risk Index, placing 10th out of 19 MENA countries for Legal risks, with a score
of 41.2 out of 100.
Middle East And North Africa - Trade And Investment Risk Index
Economic
Government
Lega Trade And Investment
Country
Openness
Intervention
l
Risk
Source: BMI Trade And Investment Risk Index
UAE

68.4

70.1 72.1

70.2

Qatar

54.4

65.1 76.0

65.1

Saudi Arabia
Bahrain
Jordan
Oman
Israel
Lebanon
Tunisia
Morocco
Kuwait
Egypt
Algeria
Iran
West Bank And
Gaza
Iraq
Syria
Yemen

61.2
57.2
67.9
59.2
62.5
65.9
55.7
58.8
51.1
52.6
42.0
28.4

63.2
64.7
60.7
58.3
52.3
65.3
55.6
55.7
58.7
42.9
27.8
42.5

62.8
65.2
53.1
61.8
58.4
36.8
54.5
47.8
40.3
41.2
39.1
32.2

62.4
62.3
60.6
59.8
57.7
56.0
55.3
54.1
50.0
45.6
36.3
34.4

29.6

42.2 29.0

33.6

39.2
21.7
26.5

28.5 30.4
42.6 32.1
32.1 33.2

32.7
32.1
30.6

Libya

35.5

20.8 15.1

23.8

BMI's Operational Risk Index quantitatively compares the challenges of operating in 201 countries worldwide.
The index scores each country on a scale of 0-100, with 100 being the lowest risk state. The entire index
consists of 20 sub-index scores and 79 individual surveys and datasets, which all contribute to the headline
score. A full methodology can be found at the end of the report.

http://www.eulerhermes.com/economic-research/country-reports/Pages/Egypt.aspx

EGYPT
RETURN OF THE DEEP STATE

Download the full report

including graphs and images

GENERAL INFORMATION
GDP
Population
Form of state
Head of government
Next elections
COUNTRY RATING D4

USD259.5bn (2012 estimate)

80.72 million (World ranking 16, World Bank 2012)
Republic
Interim administration backed by the military
Undergoing political transition, presidential and parliamentary polls in 2014

Strengths

Weaknesses

Large domestic market and

strategic position between the regional

Middle Eastern and African markets
Relatively diversified economy and
sources of FX generation: including oil and

gas, tourism, Suez Canal and a

manufacturing base
Although an IMF facility is proving
time consuming, financial assistance from
the US and the region (particularly the
GCC) remains supportive
External debt repayments are

comfortable

Nascent political system, with untested

abilities of new government to implement
policies and retain support within the country.
Recently unseated elected head of state and
uncertain political transition
Regional uncertainties (relationship
with Israel, contagion risk from Syria and Irans
nuclear programme)
Poverty and lack of job prospects, two
underlying reasons behind pressures for regime
change, have not been tackled effectively
The difficult and protracted political
transition has slowed the rebound in economic
performance, with consumption and investment
(domestic and foreign) awaiting clarity of
policies

ECONOMIC OVERVIEW
Growth momentum depends on the political transition
Growth of GDP in North Africa fell markedly in 2011, particularly in Libya, and registered only +1.8% in
Egypt, after over +5% the year before. All sectors of the economy were adversely affected by the period of
demonstrations, strikes and regime change and by the uncertainties that followed. In particular, tourism was
badly affected, with visitor numbers and sector earnings down sharply. Widespread demonstrations have
dwindled in intensity and levels of activity have therefore increased, but only moderately. Uncertain governance
(changes to the electoral timetable) and policies (with several key reversals) continued into 2012, so that
domestic consumption and investment were constrained and foreign investment very limited. GDP growth in
that year is estimated at around +2.2% and a further political upheaval in mid-2013 again disrupted economic
activity, with GDP growth last year of only +2%. Most of the factors impeding higher growth in 2011-13 remain
evident in the early part of 2014, although business confidence has improved moderately under the militarybacked government. EH expects GDP growth of +2.8% in 2014 but this is markedly below potential. Growth of
+4% is possible in 2015 but GDP forecasts are dependent on stability being maintained (election uncertainty and
militant attacks provide downside risks) and are therefore tentative. Since the fall of the Mubarak regime in
2011, economic policies have been uncertain, reflecting the inexperience of new leaderships and an inability to
counter the economic deterioration while meeting expectations of the population. With the fall of the Morsi
government in July 2013 and installation of a military-backed interim administration, activity levels have picked
up, although lingering uncertainties have only been partially assuaged. Until elections are held and a civilian
government is in place, an IMF financial support package is unlikely. In the interim, the Egyptian economy is
reliant largely on the GCC countries, which have provided injections of liquidity and supplies of oil and oil
products.
Inflationary pressures exacerbated by EGP weakness, reflecting economic uncertainties
Average annual inflation was over 7% in 2000-08 and remained elevated through to the time of the political
transition, ending 2011 at 9.5%. The social impact of high prices will remain a key concern of the government
as it attempts to limit further protests. A policy of subsidy reduction is difficult to implement against such a
background. Moreover, EGP depreciation and a high import propensity (Egypt is an exporter of crude oil and
gas but requires inflows of refined energy products and it is the worlds largest wheat importer) will keep

inflationary pressures high in 2014. The central bank will remain cautious in relation to monetary policy,
balancing the inflation/growth dynamics and social imperatives. While aid from the GCC is providing some
support for the EGP (and reserves), currency depreciation is likely to continue and against this background, EH
expects inflation to average 9.9% in 2014 and end the year at around 11.7%. EH expects the exchange rate
system of a managed float of the EGP will be maintained throughout 2014.
Wide fiscal deficits will persist, reflecting limited revenue streams and large social
expenditure commitments
Traditionally-high annual fiscal deficits (-7% of GDP in 2009-10, with subsidy provision a leading cause) have
been heightened because of the current political and economic environment. Annual average fiscal deficit-GDP
ratios are likely to register double digits throughout the period 2011-14. Deficits of this magnitude are not
sustainable and the IMF, if it is to agree financial support, is likely to want strong evidence that whatever
government is in place can implement some austerity measures in this regard. EH believes that only limited
progress will be achievable in relation to fiscal deficits, given the social imperatives of maintaining cheap
foodstuffs and overall stability. Accordingly, a fiscal deficit of around -9% of GDP in 2015 is currently forecast
by EH.
Public debt is increasing
The public debt-GDP ratio had been declining pre-crisis compared with a ten-year average trend and is
estimated to have remained below 70% in 2012. However, with revenue streams limited but spending needs
remaining high, public borrowings will increase and debt is set to rise, perhaps to around 75% of GDP by 2014,
with little likelihood of marked improvement in 2015.
Current account deficits, weak FDI but low foreign debt ratios
The current account balance registered an annual average surplus of 1.5% of GDP in 2000-08 but deficits began
to be registered even before the Mubarak regime change and accompanying economic slowdown from 2011. As
with the fiscal accounts and other economic indicators, current account deficits increased with the onset of
political change, reflecting a combination of disruption to the domestic economy, high propensity to import and
reduced tourism earnings. Foreign direct investment (FDI) is unlikely to recover to inflow levels seen preregime change (Mubaraks fall) until stability and security and a track record of political consolidation are
observable. While some stability has ensued following the fall of the Morsi government in mid-2013, FDI is
unlikely to recover until a new civilian government is voted into power and its policy stance has been assessed.
External debt ratios and servicing of existing obligations were relatively low going into the crisis period. In
2010, external debt/GDP and external debt to total FX earnings were below 17% and 59%, respectively, and
annual debt servicing was below 5% of export earnings. At such levels, obligations are unlikely to present
problems in the short term. However, it remains to be seen what impact existing and ongoing external financial
assistance will have on debt levels. Some of this assistance is in the form of outright grants.

Foreign exchange reserve depletion has stabilised, but FX levels remain fragile
From the onset of the social/political crisis, net international reserves fell sharply from their peak of over
USD30 billion. Currently, they stand at USD17 billion (January 2014 and +25.7% y/y, reflecting somewhat of a
recovery) and provide import cover of around three months, which is the international benchmark minimum
comfort level. However, official foreign exchange reserves (excluding gold and SDRs) are currently only

USD13.2 billion. Recent relative stability in reserves reflects large inflows of aid from the GCC states, including
Saudi Arabia, that have pledged a further USD12 billion in loans, grants and oil concessions. In contrast, the
domestic economic activities that should be responsible for reserve accumulation (including the tourist sector,
associated and other service sectors and the manufacturing industry) remain weak. Accordingly, and in the
absence of a financial support package from the IMF, Egypt will remain dependent on support from bilateral
sources.
Last review: 03/31/2014

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Definitions
April 27th 2015
Sovereign risk
This risk category assesses the risk that the sovereign or an entity guaranteed by the sovereign defaults on its
debts. Sovereign default is defined as a build-up in arrears of principal and/or interest on foreign- and/or localcurrency debt owed by a government or a government-guaranteed entity. The sovereign risk rating is informed
by scores for a combination of political, policy, cyclical and structural variables.
Currency risk

This risk category measures the risk of a devaluation against the reference currency (usually the US dollar,
occasionally the euro) of 25% or more in nominal terms over the next 12-month period. The currency risk rating
is informed by scores for a combination of political, policy, cyclical and structural variables.
Banking sector risk
This risk category gauges the risk of a systemic crisis whereby bank(s) holding 10% or more of total bank assets
become insolvent and unable to discharge their obligations to depositors and/or creditors. A banking crisis is
deemed to occur even if governments restore solvency through large bail-outs and/or nationalisation. A run on
banks facing a temporary lack of liquidity rather than underlying solvency problems is not deemed to constitute
a crisis, provided that public confidence in the banking system is quickly restored. Banking crises are typically
associated with payment difficulties in the corporate or household sectors; bursting of asset price bubbles;
currency and/or maturity mismatches. The rating can therefore serve as a proxy for the risk of a systemic crisis
in the private sector. The banking sector risk rating is informed by scores for a combination of political, policy,
cyclical and structural variables.
Political risk
This risk category evaluates a range of political factors relating to political stability and effectiveness that could
affect a countrys ability and/or commitment to service its debt obligations and/or cause turbulence in the
foreign-exchange market. The political risk rating informs the ratings for sovereign risk, currency risk and
banking sector risk.
Economic structure risk
This risk category is derived from a series of macroeconomic variables of a structural rather than a cyclical
nature. Consequently, the rating for economic structure risk will tend to be relatively stable, evolving in line
with structural changes in the economy. The economic structure risk rating informs the ratings for sovereign
risk, currency risk and banking sector risk.
Overall country risk
This risk rating is derived by taking a simple average of the scores for sovereign risk, currency risk and banking
sector risk.

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http://country.eiu.com/egypt

http://country.eiu.com/article.aspx?
articleid=1883829972&Country=Egypt&topic=Summary&subtopic=Fact+sheet

http://country.eiu.com/egypt

Egypt

Summary
Politics
Economy
Risk
Regulation
Business

Industry

In brief
Egypt's political transition culminated in the election of a parliament, which held its first session in January. The
new assembly is largely supportive of the policies introduced by the president, Abdel Fattah el-Sisi.
Nevertheless, the crackdown on the Muslim Brotherhood will also fuel Islamist militancy, illustrated in January
by an attack on tourists in Hurghada. We expect growth to average 4.6% in 2016-20 as political stability
improves and economic reform progresses.

http://country.eiu.com/article.aspx?
articleid=983830082&Country=Egypt&topic=Summary&subtopic=Basic+data
January 7th 2016
Basic data
Land area
997,739 sq km, of which only 5% is inhabited and cultivated territory
Population

92m (2012 census)

Main towns
Population (July 2007 official estimates)
Greater Cairo (capital; Cairo, Giza, Helwan, 6th of October & Kalyoubia governorates): 18,440,076
Alexandria: 4,123,869
Port Said: 570,603
Suez: 512,135
Climate
Hot and dry, with mild winter
Weather in Cairo (altitude 116 metres)
Hottest month, July, 21-36C (average daily minimum and maximum); coldest month, January, 8-18C; driest
months, July, August, 0 mm average rainfall; wettest month, December, 5 mm average rainfall
Language
Arabic
Measures
Metric system. Local measures are also used, especially for land area: feddan=0.42 ha or 1.04 acres; cereal
crops: ardeb=198 litres or 5.6 US bushels; 8 ardebs=1 dariba; cotton: Egyptian bale=720 lb (325.5 kg), qantar
(metric)=50 kg (replacing the traditional qantar equivalent to 44.93 kg)
Currency
Egyptian pound (E) = 100 piastres
Time
Two hours ahead of GMT
Public holidays
The dates of Islamic holidays are based on the lunar calendar and are therefore approximate: National Police
Day (January 25th); birthday of the Prophet Mohammed (December 12th 2016); Sinai Liberation Day (April
25th); Labour Day (May 1st); National Day (July 23rd); Eid al-Fitr (July 5th 2016); Armed Forces Day (October
6th); Eid al-AdhaFeast of the Sacrifice (September 11th 2016); Islamic New Year (October 2nd 2016)

http://country.eiu.com/article.aspx?
articleid=1013830085&Country=Egypt&topic=Summary&subtopic=Political+structure
January 7th 2016

Political structure
Official name
Arab Republic of Egypt
Legal system
Based on the new constitution approved in a referendum in January 2014
National legislature
Unicameral, following the passage of the amended constitution in January. Members of parliament serve a fiveyear term. There are 568 elected members in the new House of Representatives, and 28 members appointed by
the president to boost the numbers of underrepresented minorities such as women and Copts
National elections
Elections for the presidency took place in May 2014, and elections for the House of Representatives took place
over two rounds; the first took place during October 18th-19th and the second on November 22nd-23rd. The
next presidential election is scheduled in 2018
Head of state
President. Abdel Fattah el-Sisi was sworn in as president on June 8th
National government
Council of Ministers headed by the prime minister, Sherif Ismail, who was previously the petroleum minister,
and was appointed to the new role in September
Main political parties
Free Egyptians; Future of a Homeland; Wafd
Key ministers
Prime minister: Sherif Ismail
Agriculture: Essam Fayyed
Communication: Yassr el-Kady
Defence: Sedki Sobhi
Education: El-Hilali Sherbini
Electricity: Mohammed Shaker
Finance: Hany Kadry Dimian

Foreign affairs: Sameh Shoukry

Health: Ahmed Rady
Higher education: Ashraf el-Shihi
Housing: Mostafa Madbouli
Interior: Magdy Abdel-Ghafar
International co-operation: Sahar Nasr
Investment: Ashraf Salman
Irrigation & water resources: Hossam el-Din Moghazi
Justice: Ahmed el-Zend
Labour: Gamal Sorour
Local development: Ahmed Zaki Badr
Petroleum & mineral resources: Tareq el-Molla
Planning: Ashraf al-Araby
Social solidarity: Ghada Waly
Supply & internal trade: Khaled Hanafi
Technical education & teaching: El-Hilali Sherbini
Tourism: Hisham Zaazou
Trade & industry: Munir Fakhry Abdel-Nour
Transport: Saad el-Geyoushi
Central Bank governor
Tarek Amer
http://country.eiu.com/article.aspx?
articleid=1433517727&Country=Egypt&topic=Summary&subtopic=Political+forces+at+a+glance
September 18th 2015
Political forces at a glance
Present government: The transitional road map set out after the ousting of the Muslim Brotherhood's
Mohammed Morsi as president in July 2013 called for the drafting of a new constitution and the election of a
new head of state and a new parliament. A newly drafted constitution was passed in a public referendum in
January 2014, and the former defence minister, Abdel Fattah el-Sisi, was elected president of Egypt in May of

the same year. Upon his inauguration, Mr Sisi reinstated Ibrahim Mahlab as prime minister, who is expected to
remain in his post until a new parliament is elected by end-2015. The cabinet largely comprises technocrats,
most of whom have no affiliations to political parties.
The current government lacks Islamist representation, and most of the Muslim Brotherhood's leading figures are
either in jail or in self-imposed exile. Prior to his election, Mr Sisi vowed to end the role of the Muslim
Brotherhood in politics, and he has not wavered from his hardline stance since his inauguration. The army and
the broader security establishment have demonstrated, by deposing Mr Morsi and ruthlessly suppressing his
supporters, that they remain the dominant force in Egyptian political life, as they have been since the overthrow
of the monarchy in 1952.
Parliamentary forces: Egypt has been without a parliament since the dissolution of the Islamist-dominated
parliament by the Supreme Constitutional Court in 2012 on the grounds that the electoral law was biased against
individual candidates, and hence unconstitutional. With the passage of a new electoral law, parliamentary polls
will finally proceed before end-2015, although the legislation severely undermines the potential for a multiparty system as it allocates only one-fifth of parliamentary seats to party-based candidates. In any case, almost
all of Egypt's existing political parties are newly founded and all of them lack a popular base of support upon
which to fight an election. Prior to the Muslim Brotherhood's ousting in 2013, the group's Freedom and Justice
Party (FJP) was the most organised (and well-financed) political party, with grassroots support that enabled it to
secure over 40% of the seats in the previous parliament. However, the FJP has been banned and its assets
confiscated, and its ultra-conservative Islamist rival, Nour, has lost much of its popularity after the Islamists'
disappointing year in government and in parliament. The remaining other political forces are split between
nationalists who are broadly in favour of a degree of authoritarianism and a small rump of liberals who are
concerned at the erosion of political and human rights. Meanwhile, the large quota given to independent
candidates may provide an opportunity for the lower ranks of Hosni Mubarak's defunct National Democratic
Party (NDP) to run in large numbers in the coming polls.

http://country.eiu.com/article.aspx?articleid=1363517720&Country=Egypt&topic=Economy&subtopic=Longterm+outlook&subsubtopic=Summary
September 18th 2015

Summary
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There is significant potential for strong real GDP growth in the long term. Egypt is strategically located
between the Middle East and North Africa, and is geographically close to European markets as well. The
country is also home to a large and well-trained workforce, and its strong productivity growth underpins the
country's potential. However, success will also depend on a commitment to structural reform as well as on major
improvements to political stability and institutional effectiveness. We forecast that real GDP growth will average
3.5% a year in 2015-30 and 3.1% in 2015-50.

http://country.eiu.com/article.aspx?
articleid=1133843297&Country=Egypt&topic=Risk&subtopic=Credit+risk&subsubtopic=Overview

December 16th 2015

Overview

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Sovereign risk
Political and security uncertainties, as well as the large public debt stock and a persistently high fiscal deficit,
will continue to impair Egypt's creditworthiness. Although Gulf Arab aid inflows will be forthcoming, they will
decline compared with 2013-14, forcing the government to become increasingly reliant on multilateral support
from the IMF and the World Bank.
Currency risk
In line with our forecast, the central bank is likely to effect steeper depreciation of the poundafter allowing the
currency to weaken significantly in January 2015 and less significantly in July and Octoberin order to
eliminate the black-market rate. Disbursements of multilateral support and rising inward invest-ment, including
from the Gulf, will help to moderate the pace of depreciation.
Banking sector risk
Banks' profits should be bolstered by the expected high returns on government debt instruments. Yet the high
level of government debt held by banks leaves the sector exposed to sovereign risk.

Political risk
Renewed security concerns and the weakening position of the president, Abdel Fattah el-Sisi, weigh on the
political risk rating. Nevertheless, Egypt's political transition is coming to an end, with the newly elected
parliament likely to hold its first session before the end of 2015. The greatest risk to long-term stability stems
from divisions between the current regime, the liberal opposition and the deposed Muslim Brotherhood.
Economic structure risk
The economy is diversified, but security concerns pose a great risk to earnings from tourism and hydrocarbons,
as well as to investor appetite. With the global economy growing only slowly, a recovery in Egyptian exports
will be slow and piecemeal.

http://country.eiu.com/article.aspx?
articleid=83731792&Country=Egypt&topic=Risk&subtopic=Credit+risk&subsubtopic=Sovereign+risk&oid=1
133843297&aid=1
November 25th 2015
Sovereign risk

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Current assessment

Downward revisions to the real GDP growth outlook underscore the two-point deterioration in the underlying
score for sovereign risk. Importantly, the score continues to be constrained by a wide budget deficit and a
relatively large public debt stock. The Ministry of Finance has not yet released a final fiscal outturn for fiscal
year 2014/15 (July-June), but the deficit is likely to have been about 11.5% of GDP, some 1.5 percentage points
above the government's target of 10%, despite the favourable impact of low oil prices on fuel subsidy
expenditure. As a result, the government will inevitably continue to rely on, and receive, Gulf Arab aid and
multilateral support as it works to reduce the large deficit. Egypt's public debt stands at about 90% of GDP,
although public foreign debt is estimated by The Economist Intelligence Unit at a relatively modest 15.5% of
GDP in 2015. According to the Central Bank of Egypt (CBE), external debt stood at US$48.1bn at endJune 2015, but we estimate that that figure will have risen to about US$49.2bn by end-2015, as the government
secures further support from the World Bank and regional development funds. Foreign reserves have generally
declined since Aprilwhen the Gulf Arab countries deposited US$6bn at the CBEto US$16.4bn at endOctober, as tourism and foreign direct investment growth failed to offset the persistent trade deficit.
Positive factors

The positive reception for a US$1.5bn dollar-denominated bond issue in June may encourage the
government to return to the market later in 2016-17, providing an additional source to finance the large budget
deficit.
Multilateral support from the World Bank, the IMF and regional development funds will be
forthcoming in 2016-17, and at rates that will almost certainly be lower than those offered by domestic banks.
Negative factors

The current low oil price climate will constrain the ability of Egypt's Gulf allies to support it through
aid inflows on a scale similar to that seen in 2013/14.
The US monetary policy tightening cycle, which is expected to begin in December 2015, may affect
demand for emerging market debt in 2016-17.
The weakening pound will increase the costs of foreign-currency-denominated debt repayments.

Rating outlook
The rating, which is still in the higher end of the CCC band, will be weighed down by the weak public finances
and security threats from terrorist groups. Conversely, if the growth outlook for the economy, and especially the
tourism sector, improves, an upgrade is possible.

http://country.eiu.com/article.aspx?
articleid=303652414&Country=Egypt&topic=Regulation&subtopic=Regulatory%2fmarket+assessment
November 3rd 2015
Regulatory/market assessment
The Egyptian army has completed the Suez Canal Axis, a 72km waterway integrated into the existing
canal. Opened in August 2015, the site aims to ease congestion, reduce waiting periods and increase canal
revenues.
In March 2015 the government organised a three-day meeting of international business and political
leaders in Sharm el-Sheikh. The purpose of the Egypt Economic Development Conference was to showcase the
governments local development agenda while highlighting investment opportunities in the country. Results
from the event included the signing of several investment deals with international energy companies, a 272m
assistance package from the EU, and a US$12.5bn aid and investment agreement with Arab Gulf countries.
The government has continued its effort to return to coal power generation as a solution for satisfying
the countrys unmet energy needs. In May 2015 the Cabinet of Ministers adopted executive regulations for the
transport, storage and combustion of coal. The state-owned Egyptian Electricity Holding Company also signed
an agreement with a group of international investors to build a 2,460 MW coal-fired power plant in the Suez
area. The government expects coal to make up 25-30% of the countrys energy mix by 2030.
The government of President Abdel Fattah el-Sisi has maintained the flat 25% corporate tax issued by
the Morsi administration in 2013. The previous scheme had taxed corporate profits above E10m at 25% and
everything below at 20%.
New natural gas findings in 2015 have offered Egypt the prospect of greater energy self-sufficiency. In
August that year, Italian energy giant Eni announced the discovery of the largest known gas field in the
Mediterranean. The Zohr field could hold 30trn cu ft of gas within a 100 sq km area.

http://country.eiu.com/article.aspx?
articleid=1273517711&Country=Egypt&topic=Business&subtopic=Business+environment&subsubtopic=Ranki
ngs+overview
September 18th 2015
Rankings overview

Download the numbers in Excel

Egypt's global and regional positions in The Economist Intelligence Unit's business environment
rankings remain roughly unchanged for the forecast period (2015-19) compared with the historical period
(2010-14), as the impact of some business-friendly reforms is offset by higher taxation. Investment-related
reforms implemented by the current regime will continue under future administrations, although improving the
government's overstaffed and sluggish state bureaucracy will remain a long-term objective rather than a shortterm one. Donor funding will lead to improved financing opportunities, especially for infrastructure
development, although the reluctance of local banks to lend to the private sector will pose challenges to
businesses.

http://globaledge.msu.edu/countries/egypt/risk
Egypt: Risk Assessment
Due to the current political unrest in Egypt, the information on these pages may not
reflect current conditions in the country.

Country Rating1
Rating: C
Business Climate Rating1
Rating: B
Risk Assessment2
Tumultuous political transition
The extensive powers which president Morsi elected in June 2012 and coming from the conservative Islamic
Muslim Brotherhood movement arrogated to himself, the controversial approval of a constitution drawn up by
an Islamist-dominated assembly and the regimes inability to improve the daily lives of Egyptians led to huge
protests, triggering the removal of the president by the army in July 2013.
In mid-January 2014, the adoption of a new constitution by referendum marked the first step of the "democratic
transition" pledged by the armed forces chief Abdel al Sisi. Under that transition plan, it was followed by a
presidential election held in May 2014, in which the former Field Marshal and defence minister al Sisi who
has emerged as the strong man of the country achieved a landslide victory, although the turnout was low. After
that, parliamentary elections are normally scheduled to take place in October 2014.
While a majority of Egyptians are favouring stability, the coming period will look very delicate, as the
authorities have failed to forge a consensual transition: the country remains indeed deeply divided between nonIslamists and Islamists, and the Muslim Brotherhood is still powerful despite a ban and a crackdown on it
having been declared a terrorist organisation by the authorities while demonstrations, strikes, violence and
terrorist attacks could continue. As a matter of fact, the introduction of a regime similar to that of former
President Mubarak is likely.
Weak rebound in economic growth expected in 2014
GDP growth is expected to rebound weakly in 2014, with the positive impact of the two stimulus packages
funded by grants from some Gulf countries and the election of A. al Sisi as president, provided the political,
social and security situation really improves.
As the economy remains affected by a relatively weak consumer and business confidence, GDP growth will
continue to be supported by high public spending levels and their impact on consumption and investment, with a
revival of infrastructure projects. Improved security could lead to a rebound in tourism, a key sector for the
country (16% of GDP in the broadest terms), although reaching the pre-2011 level of tourists will prove
challenging. Moreover, the Suez Canal should benefit from a slight recovery in international trade.
Meanwhile, price tensions will remain high, exacerbated by distortions and the weakness of the Egyptian pound.
Continued slippage in public finances
The deficit is forecast to widen in fiscal year 2013-2014 and to narrow slightly in 2014-2015. Revenues are
expected to grow slightly thanks to financial aid from Gulf countries and new taxes on businesses, but spending
will continue to rise due to the implementation of the two stimulus packages. On top of this is the huge burden
of subsidies representing about a quarter of total spending and 10% of GDP, even if energy subsidies are due
to be cut and the high cost of servicing the debt. Traditionally the fiscal deficit has been mostly funded by the

local market and particularly the banking sector, although the already very high public debt (mainly domestic) is
set to rise and to reach almost 100% of GDP.
With the recent political changes, the generous financial aid from the Arab world has increased: since July 2013
a US$14 billion package has been granted by Saudi Arabia, the UAE and Kuwait, and a further US$ 20 billion
aid package is likely to be added by Gulf countries following al Sisi's election as president. These grants and
loans may, however, provide only temporary respite.
Furthermore, Egypt has been in discussions with the IMF since early 2012. However, an agreement with the
Fund for a $4.8 billion loan conditioned, in particular, by the cutting of subsidies has been repeatedly
postponed. Relations with the IMF have recently improved, with the authorities expressing interest in seeking
IMF technical assistance in enacting economic reforms, including the introduction of value-added tax. It seems,
nevertheless, that the new government is not interested in reopening negotiations on a stand-by credit, as long as
it continues to receive a substantial and advantageous financial aid from Gulf countries.
The external accounts and the Egyptian pound still under pressure
Hydrocarbon sales abroad are expected to benefit from continuing firm prices, but the sluggish economic
recovery in the EU (representing about 30% of exports and 60% of tourists) together with the problematical
political situation will keep a downward pressure on exports and tourism income. In parallel, Egypt remains the
worlds leading importer of cereals. Income from the Suez Canal is expected, however, to be resilient and
remittances should benefit from economic momentum in the Gulf States, which are employing many Egyptians.
Overall, the pressure on the external accounts will remain strong.
The external deficit will be only partly covered by foreign direct investment flows, with the main part being
funded by the financial aid from Arab countries. External debt will therefore remain manageable (about 20% of
GDP).
In this context, maintaining the pounds informal peg to the dollar remains a challenge, although the currency is
expected to be less fragile in 2014-2015, with a slight renewal in investors confidence following al Sisis
election in May 2014. Nevertheless, the recovery of foreign exchange reserves is due to Arab countries aid and
not to an improved balance of payments. Furthermore, reserves are still at low levels around 3 months of
imports for a country which covers most of its substantial food needs through purchases abroad.
Vulnerable banking sector
Dominated by inefficient state-owned banks, the banking sector is actually not sufficiently capitalised, although
it is relatively profitable and the high proportion of non-performing loans is declining. However, the banks,
constrained to help financing the fiscal deficit, are overexposed to Egyptian sovereign risk.
Strengths

Diversified foreign currency resources (Suez Canal, gas, tourism, transfers)

Manageable external debt
Political and financial support from the Gulf monarchies and western countries

Weaknesses

Sharp political and social tensions, unstable geo-political environment

High levels of poverty (40% of the population) and unemployment
Deteriorated public finances

Very low level of foreign exchange reserves

Weak banking system

Country and Business Climate Ratings courtesy of Coface (10/2014)

Risk Assessment and methodology courtesy of Coface (10/2014).

http://www.coface.com/Economic-Studies-and-Country-Risks/Egypt

RISK ASSESSMENT

Economic recovery in 2015

After several years of stagnation, the Egyptian economy seems to have resumed growth. The national growth
rate increased during the second half of 2014 driven by the manufacturing sector and a recovery in the tourist
industry. The energy mining industry will remain depressed due to the fall in oil & gas prices and should record
a negative growth rate. This will be largely offset however by strong performances in the construction sector and
higher revenues from the Suez Canal. Investments increased, compared to 2013/2014, due to a recovery in
private investment. Consumer spending should continue to support economic activity particularly given the high
level of public expenditure and increased household consumption. This improvement has been confirmed by a
stronger consumer confidence index. The PMI index which gauges corporate confidence also reflects an
improvement in the economic climate.

No sign of improvement in the public finances

Despite signs of an economic recovery, Egyptian public finances should remain strongly in deficit in 2015. In
spite of increased revenues stemming from financial aid provided by the Gulf States and new corporate taxes,
the budget deficit should remain above 10 % on the year. Spending will continue to increase under planned
stimulus policies. This increase should be offset by a reduction in energy subsidies which began in July 2014.
Despite these measures, spending on subsidies will continue to weigh on the budget as it represents almost 5.1%
of GDP. The significant deficits recorded 2011 have resulted in a substantial increase in public debt. Mainly
domestic, it is held by the banks. The reforms aimed at cutting subsidies and attracting joint funding for future
major investment projects will help gradually bring down the debt.

External accounts and Egyptian pound still under pressure

The 2011 Egyptian crisis had major repercussions on the external balance sheet. Since 2013, Egypt has been a
net importer of oil & gas and remains highly dependent on grain and energy imports. The trade balance deficit is
likely to exceed 9 % of GDP in 2015, although it will be offset by a slight trade surplus in services thanks to a
stabilisation of transfers from expatriates and an increase in the number of tourists. The current account
excluding grants should also remain negative and worsen in 2015. The deficit will be only partially covered by
direct foreign investments and financial aid from the GCC. External debt should remain at a manageable level
(around 20% of GDP).
In this context, it will be difficult to keep the Egyptian pound informally pegged to the dollar. The devaluation
of the pound in January 2015 from 7.14 to 7.53 per dollar and restrictions introduced aiming to combat a
shadow forex market should limit downside pressure.
Following fresh aid from the Gulf States, Egyptian reserves should reach 20 billion dollars in 2015, which is the
highest level in four years.

Completion of political transition

Egypt has regained a degree of political stability following the election of President Abdel Fatah El Sissi in June
2014. The Egyptian president presents himself as the country's new strong man. His policies are based on two
areas: reviving the Egyptian economy and an unrelenting war on terrorism. Despite a generally calmer
atmosphere, the near future is likely to be difficult for the country. The Egyptian authorities have not succeeded
in bringing about a consensual transition and Egyptian society remains deeply divided between the different
revolutionary movements (Islamists and left-wing secular parties). Moreover, the regime's repression of the
Muslim Brotherhood, an organization declared a terrorist group by the government, increases the risk of a
violent response by its members. These tensions have been exacerbated since the former president Mohamed
Morsi was condemned to death in April 2015.
With regard to the economy, the international marketing campaign led by the President since his election (visit
to the countries of the Gulf Cooperation Council, presence at Davos) seems to be bearing fruit. The International
Egypt Economic Development Conference held on 13 March 2015 in Sharma El Sheik resulted in the signing of
$36 billion in contracts, which could, in future, help revive the Egyptian economy.

Vulnerable banking sector

Egypt's banking system remains inefficient and highly exposed to sovereign risk. Holding almost 95% of the
public debt, it hardly involves the private sector, which suffers from a crowding out effect. Moreover; the bank
account penetration rate (10 %) is very low compared to other MENA countries. However, though weakly
capitalised, Egypt's banks are still fairly profitable and the ratio of non-performing loans is declining.
A new reform has been introduced to facilitate and therefore encourage investment in Egypt. This reform has
reduced a number of constraints including the abolition of manager criminal liability and decreased customs
levies on capital goods.