Professional Documents
Culture Documents
Annual Report
2007/2008
Board Members
Dr. Ahmed Saad Abdel Latif Mr. Momtaz El-Said Dr. Mohamed Fathy Sakr
Mr. Hassan Abdalla Mr. Abd El Salam El Anwar Mr. Mohamed Kamal El-Din Barakat
Dr. Ziyad Ahmed Bahaa El Din Mr. Hazem Zaki Hassan Mrs. Mona Zulficar
Preface A-G
Annex
A- Statistical Section 89
A
Preface:
A year has passed since the eruption of the subprime mortgage crisis, yet
efforts are still being exerted to alleviate its implications for the financial sector,
especially after spilling over into other economic sectors. As a response, the Federal
Reserve, in coordination with some central banks in major industrialized countries
injected liquidity several times into the financial sector and granted loans to the
hardest hit financial institutions, after interbank lending rates had risen, influenced by
banks reluctance to lend one another. Furthermore, discount and interest rates were
reduced several times in some countries, particularly the USA, to spur growth.
The investments executed in the reporting year totaled LE 199.5 billion, with a
pickup of 28.5 percent. The private sector was the main contributor, accounting for
86 percent of this increase, with a share of 4.9 percentage points of the overall growth
rate (7.2 percent). The betterment of the investment climate and its positive effect on
economic performance helped broaden the absorptive capacity of the labor market.
Thus, the number of employees rose by some 700 thousand workers, to reach 22.6
million in the reporting year, while unemployment receded from 8.9 percent to 8.4
percent.
B
The CBE continued to pursue its monetary policy objective of price stability
and, accordingly, it seeks to contain the inflationary pressures triggered by the world
price hikes, so as to help reinforce confidence in the Egyptian economy and maintain
reasonable levels of investment and economic growth. In the first half of the
reporting year, the Monetary Policy Committee (MPC) kept the overnight deposit and
lending rates unchanged at 8.75 percent and 10.75 percent, respectively, to cope with
global and domestic economic changes, especially the moderation of CPI inflation
during this period. However, close to the end of the first half of FY 2007/2008,
inflation gradually accelerated to some 19.7 percent and 20.2 percent in May and
June 2008, in order, reaching 21.5 percent in September. This uptrend was fed by the
surge in food prices as of November 2007, the regulated price adjustments of energy
and petroleum products, and the high economic growth rates. Concurrently,
expectations of higher inflation prompted the MPC to increase the policy rate more
than once in the period Feb. - June 2008. These increases totaled 1.75 percent,
bringing the deposit and lending rates up to 10.5 percent and 12.5 percent,
respectively, at the end of June 2008.
In its meeting dated 18/9/2008 (following the reporting year), the MPC continued
to raise the CBE key interest rates, bringing the overnight deposit and lending rates
up to 11.5 percent and 13.5 percent, respectively. Market interest rates were affected
by the successive increases in the CBE rates, as the weighted average of overnight
interbank interest rate approached the CBE overnight deposit rate. It was also obvious
during the year that the monetary transmission mechanism has shown more
improvement, thanks to the introduction of an operational framework known as the
corridor system as of 2005. Accordingly, the annual interest rate on six month
deposits rose from 7.0 percent at the end of June 2007 to 7.3 percent at the end of
June 2008, and on loans of one year and less from 11.1 percent to 11.6 percent.
The CBE continued its successful foreign exchange management that led to
increased confidence in market efficiency, higher degree of flexibility in the LE
exchange rate, and less price uncertainty. The weighted average exchange rate of the
US dollar in the interbank market reached LE 5.3331 on 30/6/2008 against LE 5.6968
on 28/6/2007, with a rise of 6.8 percent in the value of the LE in the reporting period.
It is noteworthy that the improvement in the local currency position came at a time of
global economic uncertainty primarily related to subprime mortgage crisis and its
complications. Furthermore, the volume of dealing in the US dollar interbank market
stepped up by 45.7 percent at the reporting period, to US$ 67.76 billion against US$
46.5 billion in the previous FY.
C
Net international reserves at the CBE augmented by US$ 6.0 billion or 21.1
percent in FY 2007/2008, posting US$ 34.6 billion, thus covering nearly 7.9 months
of merchandise imports at the end of June 2008. NIR has been on the rise in the
period of preparing the report, reaching US$ 35.0 billion at the end of October 2008.
With respect to the reserve management, the CBE has adopted an investment
policy centered on diversifying NIR composition to include other currencies
alongside the US dollar, on the basis of certain strategic factors such as the
component foreign currencies of Egypts external debt structure and the currencies of
Egypts main trade partners. This policy managed to preclude the possibility of
considerable losses that, otherwise, could have ensued from the depreciation of the
US dollar against other currencies. Also, the CBE distributed foreign exchange
reserves among many portfolios, with various goals and maturities that are
risks/return balanced, while investing the major part of NIR in debt instruments
guaranteed by foreign governments. In the meantime, the most advanced electronic
systems of reserve management have been put in place for this purpose.
Under the CBE plan for the banking sector reform, voluntary and
compulsory mergers took place among a number of banks, with the aim of creating
strong entities and augmenting their capital. Accordingly, the number of banks
operating in Egypt declined to 40 at end of June 2008 (against 54 in December 2004).
Under this plan, 80% of the stake of the Bank of Alexandria (BOA) was sold to
Italys Sanpaolo IMI for US$ 1.6 billion. This deal is considered a landmark in the
history of privatizations in emerging markets. Later on, at the end of May 2007, it
was announced that Banque Misr acquired 100 percent of the stakes of Banque du
Caire. Concerning the divestiture of state-owned banks, these banks have
proceeded with selling their stakes in joint venture banks according to the set plan.
One of the achievements made by the banking reform plan was addressing the
problem of non-performing loans (NPLs). In the period 1/1/2004 - 30/6/2008, the
NPL Management Unit at the CBE had monitored the workout units at banks, which
managed to settle 92 percent of irregular debts (excluding the debt of the public
business sector) and to recover 43 percent (36 percent in cash). The CBE - in
coordination with the National Bank of Egypt, Banque Misr, Banque du Caire, and
the Industrial Development Bank of Egypt - applied a program addressing minor
NPLs (up to LE 1 million each) in the manufacturing, trade and services sectors. This
program which started in mid March 2007, set a deadline up to the end of June 2007
to the NPL cases, resulting in the resolution of nearly 7600 NPLs or 63 percent of the
total cases addressed by the program. These involved 4300 cases against which legal
actions had been taken, 1200 facing court judgments, and 31 serving imprisonment
sentences.
Also, a final agreement was reached with the Ministry of Investment regarding
the irregular debt value of the public business sector enterprises (LE 26.0 billion) to 4
state-owned banks (including BOA before sale). Cash repayments of LE 6.9 billion
were made to the Bank of Alexandria in January 2006, and also LE 9.1 billion to the
other state-owned banks (the National Bank of Egypt, Banque Misr and Banque du
Caire) in December 2006. It was also agreed that the remaining debt to these banks
(LE 10 billion) would be repaid from the privatization proceeds prior to the end of
2008.
A program for the reform of the Bank Supervision Sector has been on track
to achieve the following: (I) improve the Egyptian banking sector; (II) benefit from
the best international practices and adopt the concept of risk-based supervision to
ensure the soundness and robustness of the banking system; (III) recruit highly
qualified and professional staff to the top banking management positions; (IV)
improve the efficiency of human resources and recruit the expertise required for the
application of the most advanced international regulatory standards; and (V) improve
the management information systems (MIS). To this end, a protocol was signed with
the European Central Bank (ECB) and four European central banks to introduce a
two-year technical assistance program; launched in December 2005 and finalized in
November 2007. Furthermore, preparations are currently underway to qualify the
CBE and banks for the application of Basel II Accords, in the context of applying the
international practices for risk-based supervision. To this end, a memorandum of
understanding was signed between the CBE and the ECB on another technical
assistance program with the Bank. The said program is expected to be initiated at the
beginning of 2009, with a time span of three years.
E
In order to upgrade the IT and payment systems, the most advanced systems in
this field were applied (inter alia the RTGS), to bolster the sectors effectiveness in
facilitating the exchange of assets, services and information among economic units,
with the aim of reducing credit and settlement risks. A leading international company
was selected to implement the RTGS system, according to the EU standards for
securities clearing and settlement systems. The operational testing of the system is to
be finished shortly, before starting the full operation in 2009. Moreover,
arrangements for the interface of the RTGS with the other systems - inside and
outside the CBE - were completed. Meanwhile, the government receipts system has
become operational; to effect settlement within two days at most. In addition, the
cheque settlement system, has also operated to enable same-day settlement of the
cheques drawn by government entities in favor of other government entities (on the
day of their receipt by the CBE).
With respect to the CBE balance sheet, the Banknote Issue Department
reported an increase in banknote issue by LE 19.2 billion or 20.6 percent in the year
under review, against LE 14.2 billion or 18.0 percent a year earlier, posting LE 112.4
billion at the end of June 2008. According to the CBE balance sheet, the Banking
Operations Dept. unfolded a total balance of LE 330.9 billion at the end of June 2008,
with a drop of LE 23.3 billion or 6.6 percent in the reporting year.
despite the downtrend in the stock market in May and June 2008. However, this trend
intensified in July and August 2008, compared with June, as CASE 30 registered
declines of 6.0 percent and 14.0 percent, respectively. This was a reflection of the
plunge in world capital markets associated with the subprime mortgage crisis and its
repercussions.
The new issues approved by the CMA in the primary market reached 3365, at a
total value of LE 99.6 billion, of which 2301 went to new incorporations at a value of
LE 19.3 billion. Issues for the capital increase of companies amounted to 1064 at a
value of LE 80.3 billion. Only two bonds were issued in the amount of LE 2.3 billion.
In the secondary market, the number of listed companies reached 377, and the
nominal value of their capitals rose by 14 percent in the reporting year, to reach LE
138 billion. The market capitalization of these companies edged up by LE 211.5
billion or 35.1 percent, to LE 813.3 billion, accounting for 90.7 percent of GDP in FY
2007/2008. Trading in securities was buoyant, as the value of traded papers rose by
LE 333.8 billion or 120.5 percent, posting LE 610.8 billion in the reporting year.
The fiscal policy implemented in the reporting year sought to ease the burdens
of high prices on the low income brackets. This was translated into a large increase in
subsidies in the year, particularly for petroleum products and supply commodities to
subdue the effect of world price hikes (food and oil) on local prices. In addition,
salaries were increased and periodical and social allowances were raised to constitute
30 percent of the basic salary. In the areas of health and education, appropriations
increased by 26.1 percent and 21.3 percent, respectively. Consequently, government
spending rose by 27.1 percent in the reporting year, while public revenues picked up
by 22.9 percent. As a result, the overall fiscal deficit widened to LE 61.1 billion in
FY 2007/2008, from LE 54.7 billion in the previous corresponding period.
Nonetheless, the ratio of the overall deficit to the GDP fell from 7.5 percent to 6.8
percent.
Domestic public debt rose by LE 28.9 billion to LE 666.1 billion at the end of
June 2008, constituting 74.3 percent of GDP. The government debt represented LE
478.7 billion, economic authorities debt LE 50.1 billion and the National Investment
Bank debt (net) LE 137.3 billion.
As for external transactions, the balance of payments ran a surplus of US$
5.4 billion or 3.3 percent of GDP, against US$ 5.3 billion or 4.1 percent, respectively.
The current account realized an overall surplus of some US$ 0.9 billion or 0.5
percent of GDP in FY 2007/2008, owing to the increase in the services surplus and
net unrequited transfers which offset the widening of the trade deficit. Capital and
financial transactions unfolded net inflows of US$ 7.1 billion (against US$ 0.9
billion), essentially as a result of higher FDI in Egypt, which registered a net inflow
of US$ 13.2 billion (against US$ 11.1 billion).
G
The external debt rolled up by US$ 4.0 billion at the end of June 2008,
compared with June 2007, as the outstanding balance (public and private)
denominated in US dollar, posted roughly US$ 33.9 billion. This was the outcome of
the rise in most borrowing currencies vis--vis the US dollar, bringing the external
debt balance to US$ 2.7 billion, on the one hand, and the realization of net
disbursements of US$ 1.3 billion of loans and facilities in FY 2007/2008, on the
other.
The external debt service decreased by US$ 75.1 million, to some US$ 2.9
billion in FY 2007/2008, due to the fall in principal repayments by US$ 0.2 billion to
US$ 2.1 billion, and the rise in interest payments by US$ 0.1 billion to US$ 0.8
billion. The lower debt service, along with the pickup in current receipts, resulted in
the improvement of the ratio of external debt service to current receipts in the BOP
current account to 4.3 percent from 5.9 percent in the previous corresponding period.
Finally, I would like to express my thanks and appreciation to all the CBE staff
for their sincere efforts that enabled the Bank to perform its role effectively and
efficiently. I also heartily wish that our efforts to materialize our dear countrys
aspirations for more progress and development will bear fruit.
Chapter 1
Central Bank of Egypt
The CBE agreed with the Ministry of Finance to use the rescheduling accounts
of external debt which have not yet fallen due under Paris Club agreement, to settle a
part of the government debt to the CBE. Accordingly, the CBE's aggregate financial
position (banknote issue and banking transactions) declined by LE 4.1 billion or 0.9
percent during FY 2007/2008, against a rise of LE 91.2 billion or 25.6 percent in the
preceding FY, to reach LE 443.4 billion at end of June 2008.
The said agreement affected the CBE domestic assets, as they went down by
LE 26.0 billion or 9.0 percent, to reach LE 261.4 billion or 59.0 percent of the CBE's
aggregate financial position at end of June 2008. On the other hand, the CBE foreign
assets stepped up by the equivalent of LE 21.8 billion or 13.6 percent, to reach LE
182.0 billion worth or 41.0 percent of the aggregate financial position at end of June
2008.
On the other hand, foreign assets increased during the reporting year due to the
continued inflows of foreign investments. The bulk of these assets was invested in
foreign bills and securities, reaching LE 149.6 billion worth or 82.2 percent of total
assets at end of June 2008.
2
14%
10%
Due o n
Go vernment
Due o n Lo cal
B anks
Other
Do mestic
A ssets
27% 59% 37%
53%
2007 2008
On the liabilities side, the decline was attributed mainly to a retreat in foreign
liabilities by LE 61.0 billion worth. This was ascribed to the fact that the rescheduling
accounts of external debt which have not yet fallen due under Paris Club agreement,
were used to settle a part of the government debt to the CBE as earlier mentioned. On
the other hand, domestic liabilities escalated by LE 56.8 billion or 14.9 percent, to
reach LE 438.2 billion or 98.8 percent of total financial position at end of June 2008.
The increase in domestic liabilities was a main result of the surge in banks'
claims by LE 32.0 billion or 13.9 percent (due to higher interest-bearing deposits of
local banks under the open market operations used by the Bank to manage liquidity).
Add to this the pickup in the balance of banknote issue by LE 19.2 billion or 20.6
percent; other domestic liabilities by LE 2.1 billion; and government and NIB claims
by only LE 0.5 billion.
3
1% 1%
1% 24% 26%
1% Banknote Issue
Government
Claims
Banks' Claims
60% 12%
60% 14% Equities and Net
Annual Profits
Other Domestic
2007 2008 Liabilities
The increase in banknote issue led to a rise of LE 19.2 billion or 20.9 percent
in the currency in circulation outside the CBE, to reach LE 111.4 billion at end of
June 2008. A breakdown of currency in circulation outside the CBE by denomination
showed a rise in the circulation of the LE 200 note (issued in May 2007) at the
expense of other denominations except for the pt 50 note which remained unchanged.
The circulation of the LE 200 note mounted to 17.1 percent at end of June 2008,
against 3.3 percent at end of June 2007. This was a result of the increase in the
issuance of LE 200 note -since its introduction - in line with the rising level of prices
and higher value of transactions.
4
Accordingly, the average value per note climbed to LE 30.3 at end of June
2008, against LE 25.6 at end of June 2007.
In virtue of the Law of the Central Bank, the Banking Sector and Money No.
88 for 2003, an institutional framework that enhances the effective and scientific
conduct of monetary policy was set and implemented in 2005. The Monetary Policy
Committee (MPC), affiliating to the CBE Board of Directors, was also established.
This Committee is responsible for setting, implementing and studying the targets of
monetary policy, as well as taking the decisions related to the key CBE interest rates
in light of relevant studies. Moreover, the Coordinating Council was established
under the chairmanship of the Prime Minister in 2005. The membership of this
Council includes the Ministers of Finance, Planning and Investment, the CBE
Governor and his two deputies, and 6 members who have international expertise in
economic, banking and financial affairs. The Coordinating Council determines the
monetary policy targets in a way that realizes price stability and banking system
soundness, within the context of the general economic policy of the State.
As the overriding objective of the monetary policy is price stability, the CBE
seeks to bring inflation to a low and stable level that helps build confidence and
sustain reasonable rates of investment and economic growth. The following is a
summary of the monetary policy performance in FY 2007/2008:
To cope with the global and domestic economic changes, especially the
moderation of CPI inflation, the Monetary Policy Committee - in its meetings during
the first half of the reporting year- decided to keep the CBE overnight deposit and
lending rates unchanged at 8.75 percent and 10.75 percent, in order.
However, at the end of the first half of FY 2007/2008, the CPI inflation rate
gradually increased to reach 19.7 percent and 20.2 percent in May and June 2008,
respectively. It further increased to post 23.6 percent in August of the same year. The
increase was an effect of the rise in international food prices (as of November 2007),
administered price adjustments of energy and oil products and a surge in economic
growth rates in various sectors (particularly in construction and manufacturing
sectors). This was accompanied by an increase in inflation expectations. Against this
background, the MPC made successive increases in its key interest rates during
February-June 2008, by a total of 1.75 percent. This brought the overnight deposit
and lending rates to 10.5 percent and 12.5 percent, respectively, at end of June 2008.
In the period following the reporting year, the MPC continued to raise the key policy
rates, bringing the overnight deposit and lending rates to 11.5 percent and 13.5
percent, respectively, in its last meeting on 18/9/2008.
The successive increases in key interest rates were reflected on the market
interest rates as follows:
Consistency was achieved between the overnight interbank interest rate (the
operational target of the monetary policy) and the MPCs decisions. Moreover,
the weighted average of the said rate moved close to the CBE overnight deposit
rate, under large excess of liquidity at the banking system during the year under
review (see the following chart).
6
10.00
9.50
9.00
8.50
8.00
7.50
8-Aug-06
29-Aug-06
21-Aug-07
6-Jun-06
27-Jun-06
18-Jul-06
19-Sep-06
13-Feb-07
19-Jun-07
10-Jul-07
31-Jul-07
11-Sep-07
5-Feb-08
26-Feb-08
10-Jun-08
21-Nov-06
12-Dec-06
2-Jan-07
23-Jan-07
6-Mar-07
27-Mar-07
17-Apr-07
8-May-07
29-May-07
13-Nov-07
4-Dec-07
25-Dec-07
15-Jan-08
18-Mar-08
8-Apr-08
29-Apr-08
20-May-08
10-Oct-06
31-Oct-06
2-Oct-07
23-Oct-07
Overnight Interbank Deposit facility rate Lending facility rate
To absorb the structural excess liquidity in the banking system, the CBE
continued to undertake operations to sterilize the excess liquidity. It used the auctions
for accepting bank deposits as a main instrument to contain the inflationary pressures
arising from monetary expansion.
The payment systems and IT sector plays an efficient role in facilitating the
transfer of assets, services and information among economic units. This minimizes
credit and settlement risks, enhances the reliability and speed of settling payments
and, in turn, makes a positive impact on economic performance and liquidity
management. Against this background, the top management of the CBE has paid
great attention to this sector as it sought to introduce the most advanced systems in
this area, the Real Time Gross Settlement (RTGS) system.
7
- Payment Systems
A leading international company was chosen to implement the RTGS
according to the European Commission regulations. The final arrangements
for testing RTGS system are currently being made with the participation of
all Egyptian banks and a group of foreign experts. The full operation of this
system is expected to be in 2009. Moreover, a contract was made with the
Society for Worldwide International Financial Telecommunications
(SWIFT) to adjust the applied SWIFT system to the RTGS requirements to
ensure effecting final real time settlement of the transactions received via
SWIFT.
A study was conducted on how to connect RTGS with banks' accounting
system at the Central Bank. Moreover, arrangements for the interconnection
of RTGS with other systems- inside and outside the CBE- were completed.
In collaboration with SWIFT, implementation of the first phase of the
project that aimed at ensuring absolute confidentiality in transferring the
messages of financial transactions and transfers (through the introduction of
new appliances and technology) was completed. Implementation of the
second phase of the project was also finished in April 2008.
The system of government receipts has become operational. The system
aims at shortening the duration of settling government receipts through
banks from three weeks to two working days at most.
The project regarding the automation of the works of the Cheque Settlement
Department was put into operation. The project aims at settling cheques
drawn from government units for the benefit of other government units on
the same day on which the CBE receives the cheques, or the next day at
most.
The core account system (CAS) was introduced to organize the accounting
entries at the Central Bank of Egypt and facilitate the management of
government units and banks accounts.
The PCs of the Bank in Alexandria and Port Said branches were updated.
Following up the stages of relocating the CBE's different departments from
old buildings to the new one in Al-Gomhoria Street.
A backup site is currently being designed for all CBE's electronic
applications.
Steps are being taken to raise the efficiency of the SWIFT link to meet the
RTGS requirements.
8
Data of local banking transfers under the Fin-Copy system, conducted via
SWIFT, showed an increase in the number and value of LE executed messages
during FY 2007/2008. As such, they amounted - in terms of number - to 700.7
thousand messages and in value terms to LE 3092.4 billion (against 525.2 thousand
and LE 2280.2 billion during the previous FY).
Concerning the Automated Clearing House activities, the number and value of
exchanged cheques increased during the reporting year. As such, they rose in number
to 11.7 million at a value of LE 483.1 billion, against 10.5 million at a value of LE
356.9 billion in the previous corresponding period. This led to a rise in the average
value per cheque to LE 41.2 thousand during the year (against LE 34.1 thousand
during the preceding FY).
9
Number of Value of
During FY Change
Cheques Cheques
(in thousand) (in million) Number Value
2004/2005 9321 262423 (2.8) 5.7
2005/2006 9508 288713 2.0 10.0
2006/2007 10481 356900 10.2 23.6
2007/2008 11725 483113 11.9 35.4
* As of 1/1/2006, the manual clearing houses in Alexandria and Port Said were cancelled, and all their activities were
transferred to Cairo Automated Clearing House.
22 Money Supply
20 Quasi-money
18
Domestic Liquidity
16
14
12
10
8
6
4
2
0
2004/2005 2005/2006 2006/2007 2007/2008
10
Foreign Currency
Demand Deposits
3.5%
Foreign Currency
Time & Saving
Deposits
Money Supply
Quasi-money 17.4%
22.2%
77.8%
This indicated the continued preference for the Egyptian pound as a saving
instrument, under the stability of the LE exchange rate vis--vis the US dollar,
supported by the confidence in the efficiency of the Forex market. Moreover, the
remarkable increase in local currency time and saving deposits of the private sector
was attributed to the higher LE interest rates especially in the second half of the
reporting year.
Net foreign assets with the banking system mounted by the equivalent of LE
85.1 billion or 38.9 percent during the reporting year, against a rise of LE 85.2 billion
worth or 63.9 percent during the previous FY, to reach the equivalent of LE 303.7
billion at end of June 2008. Most of the increase was attributed to the surge of LE
85.0 billion worth in net foreign assets with the CBE. This was an outcome of the
increase in its foreign assets by LE 21.9 billion worth and the retreat in its foreign
obligations by LE 63.1 billion worth. The decline was ascribed to settling a part of
the rescheduled debts under Paris Club agreement, between the CBE and the
government in accordance
400
300
200
100
0
2004 2005 2006 2007 2008
Domestic credit mounted by LE 39.6 billion or 7.5 percent during the reporting
year (against LE 21.8 billion or 4.3 percent in the preceding FY), posting LE 570.9
billion at end of June 2008.
12
400
300
200
100
0
2003 2004 2005 2006 2007 2008
Around 60 percent of the rise in domestic credit was attributed to the surge of
LE 23.1 billion or 8.6 percent in the credit extended to the private business sector.
This brought the debt of this sector up to LE 291.7 billion or 51.1 percent of total
domestic credit at the end of June 2008. The higher credit to the private business
sector comes in view of the increasing importance of its role in development, as its
share in total executed investments reached 67.2 percent during FY 2007/2008. A
breakdown of credit granted to the units of this sector indicated that trade received
45.3 percent of the rise in extended loans, manufacturing 34 percent, and services
29.6 percent. However, loans received by agriculture units decreased. Credit to the
household sector scaled up by LE 18.4 billion or 30.7 percent (against LE 6.8 billion
or 12.7 percent in the previous FY). The rise was attributed to the fact that some
banks increased their retail services, and consumer credit activity (particularly
personal and car loans).
13.7%
30.5%
51.1% 4.7%
banks has already been completed, along with other tasks regarding the limited
examination of another set of banks.
In addition, the CBE represented in the Bank Supervision Sector cooperates
with the investigation authorities in the relevant technical banking issues. The Bank
follows up the complaints and enquiries of banks and customers and responds to each
case as per the investigation results.
1/7: Banking Sector Reform
A banking reform unit -reporting to the Deputy Governor- was established at
the CBE to undertake the restructuring and reform of the banking sector. The aim is
to ensure the soundness of the banking sector units in a way that enables them to face
the global and domestic competition and expand their role in leading the economic
activity and spurring growth. The Unit introduced a four-pronged plan: (1)
privatization and consolidation of the banking sector; (2) financial and managerial
restructuring of state-owned banks; (3) addressing the problem of non-performing
loans of the banking sector; and (4) upgrading the CBE Supervision Sector. The plan
was approved by the President of the Republic in September 2004, and is currently
under implementation. Hereunder is a progress summary of this plan, covering the
period up to the end of FY 2007/2008 and afterwards till the time of printing this
Report.
A merger was made between Bank of Crdit Agricole Indosuez-Egypt and the
branch of Crdit Lyonnais Bank in Egypt, creating a new entity called the
"Calyon Bank-Egypt". The Egyptian American Bank was also merged into the
branches of American Express Bank in Egypt.
The Mohandes Bank was merged into the National Bank of Egypt on 5
October 2005.
The Bank of Commerce and Development "Al Tegareyoon" was merged into
the National Bank of Egypt on 29 Dec. 2005.
The CBE Board issued a decision on 20 June 2006, regarding the
establishment of the United Bank with a 99.9% CBE share of its issued and
paid-up capital. The Board issued a decision concerning the listing of the said
bank in the CBE banks' records on 25 June 2006. The Islamic International
Bank for Investment and Development, the Nile Bank and the United Bank of
Egypt were merged into the United Bank on 29 June 2006 and were de-listed
from the banks' records.
The Egyptian American Bank was merged into Calyon Bank to form Crdit
Agricole Egypt.
The Misr International Bank was fully acquired by National Socit Gnrale
Bank as of 30 November 2006.
At end of May 2007, it was announced that Banque Misr acquired 100 percent
of the shares of Banque de Caire.
The merger of the Egyptian Workers Bank into the Industrial Development
Bank was approved.
- Citigroup was chosen as a financial advisor for the selling process to evaluate the
Bank and prepare the marketing materials.
- The government announced on February 28, 2006 its intention to sell the BoA.
The Ministry of Investment was chosen as a coordinator of the selling process.
The privatization plan was set as follows: 75% - 80% of the Bank's total shares
are offered to an anchor investor, 5% to the Bank's staff and the remaining 15%
- 20% were to be offered in an initial public offering on CASE, following the
16
sale of the majority stake to the anchor investor. The sale of the Bank of
Alexandria was announced in local and international journals on March 30,
2006, to invite anchor investors to apply for purchasing the Bank. The
announcement included the conditions that should be met by the anchor
investor.
- The Ministry of Investment received thirteen initial bids from local, regional and
foreign financial institutions, expressing their interest in studying the acquisition
of the Bank. These bids met the aforementioned conditions.
- Eight of these institutions submitted initial technical and financial offers. Only six
institutions were granted approval for conducting due diligence reviews
(financial, technical and legal) of the Bank, in preparation for submitting their
final offers.
- It was announced on October 17, 2006 that Italys Sanpaolo IMI won the bid for
the majority stake of 80 percent of the BoA, following a public auction among
four final bidders of Arab and European financial institutions. Sanpaolo valued
the whole stakes of BoA at US$ 2.0 billion, offering about US$ 1.6 billion for
the deal (80 percent of the Bank's shares).
- On December 12, 2006, the stock ownership was transferred to Sanpaolo IMI on
the Stock Exchange.
The stake of the National Bank of Egypt (NBE) in Suez Canal Bank was sold to
the Arab International Bank. The stake of Banque Misr in MIBank was
purchased by the National Socit Gnrale Bank (NSGB), while the stake of
Banque Misr in Misr Romania Bank was sold to Bank of Lebanon and El
Mahgar (Blom).
17
The stake of the BoA in the Egyptian American Bank (EAB) was sold to Crdit
Agricole Group. The stake of the National Bank of Egypt (NBE) in the
Commercial International Bank (CIB) was purchased by the Ripplewood-led
consortium. Moreover, the shareholders of Delta Bank purchased the BoAs
stake in the Bank, while the stake of BdC in Cairo Far East Bank was sold to
Bank Audi.
The stakes of BdC and the NIB in Alexandria Commercial and Maritime Bank
(ACMB) were sold to the UAE-based Union National Bank (UNB).
The BoA and NBE holdings in the Egyptian Saudi Finance Bank were divested
and their stakes were sold in the Stock Exchange.
Pursuant to the CBE's decision No. 2119 dated 28 September 2004, an "NPL
Management Unit" was established at the CBE. Public and private sector banks
were instructed to establish similar independent workout units. The NPL
Management Unit at the CBE has taken the necessary procedures to ensure the
activation of these units at banks.
The NPL database was set up in the public and private sectors and has
already operated. The NPL Management Unit updates and analyzes the data on
a monthly basis.
The CBE assists, through its moral suasion, banks to conduct collective
settlements with multi-lender NPL critical cases.
The Unit monitored the workout units at banks, which have made settlements
of 92 percent irregular debts (excluding the non-performing debt of the public
enterprises sector), including recoveries of 43 percent (36 percent are cash
recoveries) from 1/1/2004 to 30/6/2008.
To improve the Egyptian banking sector, a program for upgrading the Bank
Supervision Sector has been set on track, to achieve the following goals:
- Raising the efficiency of the Bank Supervision Sector through applying the
international best practices and shifting to risk-based supervision, to
ensure the robustness and soundness of the banking sector.
- Recruitment of highly qualified and professional staff to the senior banking
management positions to take charge of, and reform, this key sector in the
state.
- Improving the efficiency of human resources, and recruiting the expertise
required for the application of the most advanced international supervisory
standards.
- Improving the management information systems (MIS) to ensure timely
access to accurate information.
Against this background, a protocol was signed with the European Central
Bank (ECB) and four central banks in Europe (Banque de France, Bank of
Greece, Banca dItalia and Deutsche Bundesbank) to introduce a two-year
technical assistance program, starting in December 2005. This program is
made up of the following two phases:
Particular attention was paid to the special training of the Bank Supervision
Sector Staff in order to develop their capacities and upgrade their skills in
various fields. To this end, training courses were organized by international
organizations, central and international banks, and educational missions were
sent abroad.
A set of new concepts were adopted in the area of bank analysis and bank
examination. In addition, a number of training courses were held with bank
analysts in the area of report writing with a focus on modifying and refining
reports.
The technical assistance program offered by the European central banks to the
Supervision Sector was completed as scheduled at the end of November 2007 .
The ultimate aim of the reform program is to ensure the soundness of the
banking sector and raise its efficiency by continuously benefiting from the best
international practices and applying the concept of risk-based supervision.
Within this context, preparations for the second phase of the reform program
are currently under way. The aim of this phase is to qualify the Central Bank
and banks of the Egyptian banking sector to apply Basel II requirements.
Accordingly, negotiations with representatives of the European Commission
and the European Central Bank were launched to discuss the need to introduce
and finance another technical assistance program with the participation of
some European central banks. This program is expected to be initiated at the
beginning of 2009, with a time span of three years.
The CBE went ahead with its successful management of the Forex market.
This proved effective in boosting confidence in the efficiency of the market, while
determining exchange rates with higher flexibility and dispelling dealers concerns
about exchange rate fluctuations.
The LE exchange rate improved vis--vis the US dollar by 6.8 percent during
the reporting year or 16.5 percent since the launch of the interbank mechanism on
23/12/2004. Thus, the weighted average of the US dollar interbank rate reached LE
5.3331 on 30/6/2008 against LE 5.6968 on 28/6/2007.
21
20.0 5.80
5.70
15.0 5.60
5.50
10.0
5.40
5.0 5.30
5.20
0.0 5.10
Q4_05/06 Q1_06/07 Q2_06/07 Q3_06/07 Q4_06/07 Q1_07/08 Q2_07/08 Q3_07/08 Q4_07/08
Private Banks
80%
Public Banks
60%
87.3
97.2
40%
20%
12.7
0% 2.8
Purchases Sales
22
Net international reserves (NIR) with the CBE continued to improve, rising by
US$ 6.0 billion or 21.1 percent during FY 2007/2008, to US$ 34.6 billion (covering
7.9 months of merchandise imports at the end of June 2008). NIR have been on the
rise during the period of preparing this report, amounting to US$ 35.0 billion at the
end of October 2008.
US$ bn
36 14.0
33
30 12.0
27 10.0
24
21 8.0
18
15 6.0
12
9 4.0
6 2.0
3
0 0.0
2003 2004 2005 2006 2007 2008
Government
Debt
478.7
Economic
Authorities Debt
50.1
NIB Debt
137.3
At the end of June 2008, the government's domestic debt totaled LE 478.7
billion or 53.4 percent of GDP, up by LE 0.5 billion or 0.1 percent during the
reporting year. The increase was an outcome of both the rise in the balances of bills
and bonds by LE 6.0 billion and the improvement in the net credit position of the
governments balances with the banking system by LE 3.3 billion (as deposits
mounted by LE 8.1 billion and loans by LE 4.8 billion). Another contributing factor
was the LE 2.2 billion decrease in the SIFs deposits with the Public Treasury.
24
The LE 6.0 billion rise in the balance of treasury bills and bonds was an
outcome of the following:
1) The LE 27.8 billion rise in the outstanding balance of treasury bills to LE 146.5
billion at the end of June 2008. This was a result of the increase in the issuance
of 182-day TBs by LE 5.5 billion and 364-day TBs by LE 24.5 billion.
However, there was a drop of LE 2.2 billion in the issuance of 91-day TBs. It is
noteworthy that the average interest rate on 91-day TBs increased by 42.7
percent during the period from the end of June 2007 to the end of June 2008.
The average interest rate reached 9.675 percent at the end of June 2008 and 6.781 percent at the
end of June 2007.
25
The redemption of four treasury bond issues (with a value of LE 4.7 billion)
on 20/8/2007, 10/3/2008, 29/6/2008 and 30/6/2008.
The decline of LE 0.7 billion worth in the value of treasury bonds issued to
cover the deficit of the foreign currency position at public sector
commercial banks due to revaluation differences.
Two Treasury bond issues (7- and 8-year bonds) on 27/5/2008 and
10/6/2008, at a value of LE 3.0 billion and LE 2.0 billion and an annual
interest rate of 10.65 percent and 10.95 percent, respectively. This is in
addition to the issuance of treasury bonds (six issues) during July/March
2007/2008 at a value of LE 15.5 billion
C) Issuing treasury bonds for the benefit of the Social Insurance Fund for Civil
Servants at a value of LE 1.1 billion on 30/6/2008.
700 75
600 65
500 55
400
45
300
35
200
25
100
0 15
-100 5
-200 -5
2003 2004 2005 2006 2007 2008
Bonds
Treasury Bills
Borrowing from NIB
Net Government Balances with the Banking System
Ratio of Government Debt / GDP
26
Dollar
development
bonds & others
Social insurance
5.3
funds
Post office 51.7
Saving account
49.3
Proceeds of
investment
cetificates &
accumulated
returns
86.2
27
The Bank used the bulk of its resources (around LE 137.3 billion or 71.3
percent of the total) in lending to holding companies and their affiliate units; equity
participations and also in concessional lending to different projects. In addition, LE
51.3 billion or 26.7 percent of total resources were used to finance the investments of
public economic authorities. The remainder of about LE 3.9 billion (2.0 percent of
the total) was deposited at the banking system.
Concessional Economic
lending & loans authorities
to holding 51.3
companies &
affiliate units
137.3
Deposits with
the banking
system
3.9
The outstanding external debt (public , private and all maturities) denominated
in US dollar increased by about US$ 4.0 billion, to US$ 33.9 billion as compared
with the end of June 2007. This was an outcome of two factors. First, there was a rise
in most currencies of borrowing against the US dollar, driving up the external debt by
some US$ 2.7 billion. Second, net disbursements of loans and facilities reached US$
1.3 billion, as an outcome of disbursements of some US$ 3.2 billion and principal
repayments of nearly US$ 1.9 billion
35 3.5
30 3
25 2.5
20 2
15 1.5
10 1
5 0.5
0 0
2001/2002 2002/2003 2003/2004 2004/2005 2005/2006 2006/2007 2007/2008
External debt service decreased by US$ 75.1 million, posting about US$ 2.9
billion during FY 2007/2008, compared with the preceding FY. This decline was
attributed to the retreat in principal repayments by US$ 176.7 million, to US$ 2.1
billion, and the rise of nearly US$ 101.6 million in interest payments, to about US$
0.8 billion.
1
1
1
1
2
2
2
2
2
2
2
2
2
3
3
3
3
3
3
3
3
3
20
20
20
20
20
External debt of the public sector amounted to some US$ 32.1 billion or 94.6
percent of total external debt at the end of June 2008. Meanwhile, the private sector
debt reached US$ 1.8 billion or 5.4 percent of total external debt at the end of June
2008.
Hereunder is a distribution of external debt by:
1- Maturity
2- Debtor
3- Main creditors
4- Main currencies
Private sector
Egyptian bonds (Non guaranteed)
and notes 0.1%
7.8% Short-term debts
International & 7.4%
regional
organizations
21.7%
Suppliers' &
buyers' credit Rescheduled
2.2% Other bilateral bilateral debts
debts 46.1%
14.7%
Debts due to international and regional organizations posted some US$ 7.4
billion or 21.7 percent of the total at the end of June 2008 (95.9 percent of which was
owed by the public sector). The balance of Egyptian bonds and notes (holdings of
non-residents) reached some US$ 2.7 billion or 7.8 percent of the total external debt
(including US$ 1.3 billion as guaranteed government securities, US$ 0.3 billion as
dollar denominated sovereign bonds and US$ 1.1 billion as LE bonds). The non-
guaranteed debts of the private sector reached US$ 18.2 million or 0.1 percent of the
total at the end of June 2008. The balance of short-term debt recorded US$ 2.5 billion
or 7.4 percent (59.7 percent was owed by the private sector).
30
A distribution of external debt by debtor at the end of June 2008 indicates that
the debt owed by the central government surged by US$ 2.1 billion to reach US$ 21.6
billion. Other sectors' debt increased by US$ 1.3 billion to US$ 9.4 billion and banks'
debt by US$ 0.6 billion to US$ 2.5 billion. However, the debt of the CBE declined by
US$ 25.7 million to US$ 0.3 billion.
1500 1283.6
1000
633.5
627.5 587.8
500 219.9 192.1
109.1 (25.7)
0
(165.6)
-500 (318.7) (348.6)
2005/2006 2006/2007 2007/2008
Central & Local Government Monetary Authority (CBE)
Banks Other Sectors
Nevertheless, these developments did not affect the structure of the external
debt by debtor. As such, the debt of the central government accounted for the bulk
(63.9 percent) of total external debt, followed by the other sectors 27.7 percent, banks
7.5 percent and the CBE 0.9 percent of the total external debt balance.
External debt by creditor indicates that 39.9 percent of the total debt was due to
EU countries [mainly France (14.6 percent) and Germany (12.7 percent)]. The USA
accounted for 11.4 percent and Japan for 10.5 percent, whereas the Arab countries
combined accounted for 4.2 percent. The debt due to international and regional
organizations represented 21.7 percent of the total, of which 6.0 percent was due to
the European Investment Bank.
International &
Regional France
Organizations End of 14.6%
21.7%
June 2008
Other Japan
Countries 10.5%
12.4%
Arab
United Germany
Countries 12.7%
Kingdom
4.2%
4.7%
32
During the FY ending June 2008 for the third year in row- the main indicators
of external debt improved, as reflected by the drop in the external debt/GDP ratio
from 22.8 percent to 20.1 percent. Likewise, the growth of 33.1 percent during FY
2007/2008 in the export proceeds of goods and services resulted in the improvement
of the ratios of debt service to current receipts (including transfers) to 4.3 percent
(against 5.9 percent) and to export proceeds of goods and services to 5.1 percent
(against 6.9 percent).
34
The external debt per capita rose from US$ 398.5 at the end of June 2007, to
US$ 450.0 at the end of June 2008, due to an increase in the balance of external debt
relative to the population.
It is observed that the ratio of debt service in Egypt is lower than the ratio of
developing countries combined, as illustrated in the following table.
The number of participants in the banking staff programs provided by the CBE
reached about 5479. The Banking Institute provided the bulk of these programs to
3602 trainees (specialized, administrative, English language and computer programs,
as well as some preparatory training courses for promotion purposes). Programs also
included some courses organized by non-CBE parties (attended by 948 trainees), in
addition to others provided by the CBE Computer Laboratory (803 trainees).
2006/2007 2007/2008
First: CBE Employees, through:
- Banking Institute Programs 4928 3602
- External Entities 1099 948
- Computer Laboratory 869 803
- External Missions 87 98
Second: Training in the CBE Departments (Foreigners) 99 28
Total 7082 5479
6000
5000
4000
3000
2000
1000
0
Banking Institute External Entities Computer Laboratory External Missions
Programs
2006/2007 2007/2008
36
In its pursuit of upgrading the skills of the banking staff, the Banking Institute
set, during FY 2007/2008, a training agenda composed of 8 main sets of programs.
The programs covered banking, financial, economic, marketing, legal and
administrative topics, in addition to other complementary programs including
computer and the English language. The agenda also covered specialized and
contract-based programs that are provided upon the request of banks, in cooperation
with the Luxembourg Financial Technology Transfer Agency (ATTF); in addition to
a program for journalists. Moreover, the Institute -in collaboration with the Industrial
Modernization Center (IMC)- organized a course on developing the culture of dealing
with banks.
Out of its keenness to develop the skills of the banking sector calibers, the EBI
has established the Assessment Services Center, with the aim of identifying the
employees potentials to reach an optimal level of employment. In addition, the EBI
has founded the Evaluation Unit to assess the Institute's programs via established
scientific methods.
The number of training programs conducted by the Institute during the year
under review reached 1357, attended by 25764 trainees, taking up 30676 training
hours. The programs were held at the Institutes headquarters in Nasr City and its
branches in Mohandeseen, Alexandria and Port Said in addition to some governorates
(such as Assiut and Tanta). Short-term training programs, accounting for the largest
share of the Institute's agenda, registered 24779 trainees or 96.2 percent of the total
number of participants in the Institute.
37
2006/2007 2007/2008
Short-Term Training Programs* 22065 24779
Specialized Certificates 733 566
Senior Management Programs 22 27
Seminars & Conferences 198 392
Total 23018 25764
* Includes training programs and special and contractual programs.
Specialized Programs
2006/2007 2007/2008
Chapter 2: Banking Developments
2/1- Financial Position
2/2- Deposits
2/3- Lending Activity
2/4- Banks' Cash Flows
2/5- Bank Performance Indicators
39
Chapter 2
Banking Developments
Change in Liabilities
(LE mn)
Change during FY
2006/2007 2007/2008
Value % Value %
Capital 5925 21.9 4258 12.9
Reserves (866) (6.5) 3589 28.6
Provisions (1481) (2.7) 8845 16.5
Bonds and long-term loans 8825 50.4 (4066) (15.4)
Obligations to the CBE 56106 540.6 17680 26.5
Obligations to local banks 5025 45.2 (1600) (9.9)
Obligations to banks abroad 1236 14.1 3321 33.2
Deposits 81112 14.3 97246 15.0
Other liabilities 20479 41.4 16115 23.0
Total Liabilities 176361 23.2 145388 15.5
40
Change in Assets
(LE mn)
Change during FY
2006/2007 2007/2008
Value % Value %
Cash 892 13.1 2556 33.2
Securities and investments (17867) (9.2) 25760 14.6
Balances with the CBE 89944 82.1 62745 31.4
Balances with local banks 5724 47.3 (1923) (10.8)
Balances with banks abroad 51812 71.4 (1574) (1.3)
Lending and discount balances 29705 9.2 47679 13.5
Other assets 16151 38.0 10145 17.3
Total Assets 176361 23.2 145388 15.5
Banks' investments in
securities and treasury bills rose by Relative Structure of Banks' Portfolio
LE 25.8 billion. This was an outcome Investm ent
of the following developments. On the %
one hand, investments in TBs 45 42.0
30 June 2008
participations in corporate equities by 25
LE 3.5 billion; non-government bonds 20 16.6 16.2
2.0 2.6
banks' investments in CBE notes 5 0.0
0
retreated by LE 17.6 billion, following Treasury Gov. Bonds Non-gov. Corp. CBE Notes Foreign
2/2: Deposits
Contributing around 47.6 percent of the rise in total LE deposits, the private
business sector's local currency deposits scaled up by LE 42.2 billion or 54.5 percent
to LE 119.7 billion, representing 21.7 percent of total deposits in local currency at the
end of June 2008. Likewise, the household sector's deposits in local currency stepped
up by LE 32.3 billion or 10.0 percent. On the other hand, the private business sector
accounted for 95.5 percent of the growth in foreign currency deposits, as its deposits
rose by LE 8.1 billion worth, totaling LE 57.2 billion worth or 29.3 percent of the
total foreign currency deposits at the end of June 2008. Meanwhile, the household
sectors deposits retreated by an equivalent of LE 4.7 billion for the first time since
FY 2004/2005.
42
100
Local Currency Foreign Currencies
80
60
40
20
0
(20)
2006/2007 2007/2008 2006/20007 2007/2008
(40)
Gov ernment Sector Public Business Sector Priv ate Business Sector
Household Sector Foreign Sector
Banks expanded their lending during the reporting year, as lending and
discount balances grew by LE 47.7 billion or 13.5 percent, recording the highest
growth rate since the beginning of 2001. These balances totaled LE 401.4 billion,
representing 37.1 percent of total assets and 53.7 percent of total deposits at the end
of June 2008. Credit facilities to small-scale enterprises reached some LE 29.6 billion
or 7.4 percent of total credit at the end of June 2008, with a rise of LE 4.7 billion
above the level of the preceding FY.
(LE mn)
Local Currency Foreign Currencies
End of June
Change % Change %
Total 18622 100 29057 100
Government sector (1090) (5.8) 5564 19.1
Public business sector 1378 7.4 1086 3.7
Private business sector 3966 21.3 14809 51.0
Household sector 14385 77.2 4009 13.8
External sector (17) (0.1) 3589 12.4
43
160
140
120
100
80
60
40
20
0
Agriculture Manufacturing Trade Services Unclassified
Local Currency Foreign Currencies
At the end of June 2008, loans and advances (excluding discounts) offered by
banks registered LE 399.5 billion, with an increase of LE 47.1 billion or 13.4 percent
during the reporting year. Around 71.1 percent of this increase was evidenced in
short-term loans (one-year-or-less), which rose by LE 33.5 billion or 17.0 percent.
The increase was a result of the growth in foreign and local currency loans by LE
25.8 billion worth and LE 7.7 billion, in order. On the other hand, the increase in
long-term loans (more than one year) reached only LE 13.6 billion or 8.7 percent, as
an outcome of the increase in loans in local currency by LE 10.9 billion and foreign
currencies by LE 2.7 billion worth.
44
Bank uses of LE 153.7 billion were mostly balances held with the CBE (LE
65.3 billion) to meet the reserve requirement ratio (14 percent). Moreover, the Central
Bank accepted deposits from banks under the open market operations to manage
banks' liquidity. In addition, market lending and discount operations amounted to LE
47.7 billion. The private sector (the private business and household sectors) was the
major recipient, with a share of 78 percent of this amount, owing to the increased
borrowing operations by this sector. An amount of LE 24.9 billion was invested in
securities and LE 10.1 billion in other assets. Repayment and amortization of part of
the loans and bonds owed by banks amounted to LE 4.1 billion, while their
obligations to local banks decreased by LE 1.6 billion.
45
The CBE ensures the soundness of banks' financial positions and evaluates
their performance from the perspective of risk-based supervision. In addition, it
checks that banks comply with the CBE regulatory standards, including the minimum
reserve and liquidity ratios, the maximum limits for a banks exposure to a single
customer and his connected parties and to abroad, and asset-liability matching in
terms of maturity and currency.
The initial stage of the off-site supervision automation program was completed,
with the aim of producing a number of annual/provisional tables to attain some
financial and regulatory indicators. In turn, these indicators should serve as a main
tool that helps bank supervisors to thoroughly analyze the conditions of the relevant
banks. In this regard, a set of internationally recognized indicators are used to
evaluate banks' financial soundness, including capital adequacy (according to Basel I
Accords), asset quality, bank profitability and liquidity.
The following are the results realized by banks in each area, as shown by their
financial position at end of June 2008:
Banks registered at the CBE (33 banks excluding foreign banks branches) are
obliged to maintain a specific ratio (a minimum of 10%) of the capital (core and
supplementary) to risk-weighted assets and contingent liabilities. The core capital
(tier I) consists of the paid-up capital, reserves and the retained earnings.
Supplementary capital (tier II) is composed of the general risk provision; the
supplementary loans of more than five-year maturity; 45% of the increase in the fair
value over the book value of the financial investments that are available for sale, held
until maturity and used in subsidiary and common-interest companies. The
supplementary capital should not exceed 100 percent of the core capital.
47
Assets and contingent liabilities are calculated on risk weights ranging between
0 percent and 100 percent, according to a weighting system set by the CBE according
to the degree of risk. Meeting that standard reflects a banks ability to face any
potential risks.
- For banks combined, the ratio reached 14.6 percent against the minimum
established ratio (10.0 percent). Core capital represents the major part, as it
accounts for 11.1 percent, while supplementary capital accounts for 3.5
percent.
- The number of banks whose capital adequacy ratio ranges between 10 percent
and 15 percent reached 13; 19 banks registered over 15 percent, and a single
bank posted less than 10 percent.
On May 24th 2005, the CBE issued the regulations on the customer credit
rating and provisioning. These regulations covered lending to institutional customers,
taking into account the obligor risk rate, the consumer-purpose, real estate and
personal housing loans, and small loans for business purposes. On October 2nd, 2007,
the CBE issued rules and regulations of banking finance for real estate development
companies specialized in the construction of housing units for sale. These rules apply
to bank credit for real estate finance and refinance companies, in conformity with the
rules and regulations issued earlier regarding real estate finance, credit grant and the
rules established by the credit policy of each bank in this respect. Subsequently, on
November 14, 2007, the CBE issued some regulations governing credit to holding
companies.
As part of its supervisory role, the CBE monitors all market practices.
Recently, the CBE has noticed that some companies or groups have made mergers,
formed holding companies and / or revaluated the assets of merged companies, in
such a way exerting an inflationary effect on the value of their assets which is
reflected, in turn, on the evaluation of their balance sheets for lending purposes. The
CBE instructed banks to comply with a number of regulations in case of revaluation
for lending purposes and calculation of the leverage ratio. These regulations mainly
required banks:
1. to refrain from taking into account the equity changes resulting from
revaluation of customers' financial positions; or the intangible assets
(goodwill) resulting from the revaluation.
2. to determine the creditworthiness irrespective of the revaluation results.
3. to be particularly cautious when lending to holding companies.
4. to determine the degree of risks (credit scores) for the subsidiaries of the
holding company, and accordingly, to determine the aggregated credit
score for the whole company. This should represent the basis for the
decisions of granting / increasing credit.
In accordance with Article (84) of the Law of the Central Bank, the Banking
Sector and Money, No. 88 for 2003, the Governor of the Central Bank may issue a
decision disapproving the distribution of profits to the shareholders and to those
entitled to a share in the profits, within fifteen days from the date of receiving the
[auditors] report ... This decision is issued if it is found that there is a decrease in the
provisions. In this context, the auditors' reports on some banks for FY 2007
revealed a shortage in their provisions, whereupon some of the relevant banks
strengthened their provisions using the surplus shown in their income statements,
with the result that these provisions denoted a balance. Other banks augmented their
reserve balances and distributed part of these balances on their staff and members of
board of directors and retained the remainder for the next FY. In accordance with the
Egyptian Accounting Standard (EAS) No. (5), some banks posted the shortfall in
their provisions that had occurred in the preceding years, by debiting their income
statements.
Third: Profitability
The level of profits realized by a bank reflects its ability to strengthen its
capital (equities) and to distribute dividends among its shareholders. A follow-up of
the levels of banks' profits reveals the following:
Including the Export Development Bank of Egypt, and excluding the Bank of Alexandria which
was privatized and classified under banks whose fiscal year ends December 31.
+ Revised figures for comparability purposes.
49
- The ratio of the net profits of commercial banks and the Export Development
Bank of Egypt to average equities was 4.2 percent for the FY ending June 30,
2007, against 2.8+ percent for the preceding FY. The ratio of net returns on
average assets was 0.2 percent against 0.1+ percent in the previous FY.
- Banks' net profits amounted to LE 7140 million for the year ending December
31, 2007, against LE 5912 million for the previous FY.
- The ratio of banks net returns on average equities was 26.2 percent for the FY
ending December 31, 2007, compared with 20.3 percent for the previous FY.
Banks net return on average assets reached 1.6 percent, against 1.8 percent.
The main financial indicators of banks' financial positions at the end of June
2008 are shown in the following table:
(%)
June June
2007 2008
Liquidity requirement ratio (Minimum):
Domestic 20% 27.9 29.6
Foreign 25% 55.0 50.1
Liquid assets/customers' deposits 69.6 72.5
Assets in foreign currencies/liabilities and equities in
foreign currencies 101.1 100.8
Loans to customers/customers' deposits 54.5 53.7
Claims on banks in Egypt/due to banks in Egypt 110.5 109.4
Claims on banks abroad/due to banks abroad 1242.9 921.4
Claims on banks abroad/due to banks abroad (&) deposits in
foreign currencies 63.2 58.9
Contingent liabilities/total assets 15.5 17.8
For banks combined, the reserve ratio scored 14.0 percent against the minimum
established ratio (14.0 percent) during the period ending June 30, 2008.
+
Revised figures for comparability purposes.
Excluding the United Bank because its financial statements for the period July 1, 2006 up till December 31, 2007 (the
first financial period for the Bank) have not been approved.
Chapter 3: Domestic Economic Developments
3/1- Economic Growth
3/2- Inflation
3/3- Consolidated Fiscal Operations of the General Government
3/4- Balance of Payments and External Trade
3/5- Stock Exchange
3/6- Insurance Sector
51
Chapter 3
Domestic Economic Developments
8
6
4
2
0
-2
-4
2004/2005 2005/2006 2006/2007 2007/2008
The private sectors real GDP growth rate remained on the rise, posting 7.9
percent during FY 2007/2008, against 7.6 percent during the previous FY. Of the
GDP growth rate (7.2 percent), the private sector contributed some 4.9 percentage
points and the public sector 2.3 percentage points during the reporting year. The rise
in the private sector's contribution to the GDP growth was due to the higher GDP of
its fast-growth sectors (such as manufacturing; restaurants & hotels; wholesale and
retail trade and construction & building).
53
Others
0.8
Suez Canal
0.6 Others M anufacturing
1.0 Industries
1.2
The increase in both domestic and external demand played a key role in
improving the economic performance during FY 2007/2008. Total investments grew
by 28.5 percent to reach LE 199.5 billion, or 22.3 percent of GDP during the
reporting year. The sectors of manufacturing, natural gas and communications
accounted for the bulk of the total increase in investments. The increase in
investments was mainly ascribed to the 37.8 percent rise in the private sectors share
in total investments to post LE 134.1 billion or 67.2 percent of the total. It is
noteworthy that a pickup of 12.6 percent in the credit granted to the private sector
was evidenced during the year.
Electricity &
Reclamation
Others
Manufacturing
Communications
&Oil products
Retail Trade
Wholesale &
Restaurants &
Agriculture,
Irrigation &
Natural Gas,
Transportation
Sevices
and Storage
water
Hotels
Oi l
Private Public
54
GDP by Expenditure
(Current prices)
Value in LE Billion Growth Rate (%)
2006/07 2007/08 2006/07 2007/08
1- GDP at Market Prices (2+5-6) 744.8 896.5 14.7 20.4
2- Gross Domestic Expenditure (3+4) 778.9 950.5 14.0 22.0
3- Final Consumption 623.6 751.0 12.8 20.4
- Private 539.2 653.5 13.2 21.2
- Public 84.4 97.5 10.6 15.5
4- Gross Capital Formation 155.3 199.5 19.5 28.5
- Implemented investments 155.3 199.5 19.5 28.5
- Inventory change 0.0 0.0 0.0 0.0
5- Exports of Goods and Services 225.3 293.9 13.2 30.4
6- Imports of Goods and Services 259.4 347.9 11.0 34.1
7- Gross Domestic Saving (1-3) 121.2 145.5 24.9 20.0
8- Domestic Resource Gap (5-6) = (7-4) -34.1 -54.0 - -
Source: Ministry of Economic Development
Resources Gap
LE bn
375
350
325
300
275
250
225
200
175
150
125
100
75
50
25
0
-25
-50
-75
2004/2005 2005/2006 2006/2007 2007/2008
Inflation kept its upward trend during FY 2007/2008, recording its highest
level since early nineties. According to the CPI (urban) published by the CAPMAS,
inflation mounted to 20.2 percent, compared with 8.6 and 7.2 percent during FY
2006/2007 and 2005/2006, respectively.
CPI and Price Index of Food, Electricity & Gas and Fuel, and Transportation
(Urban)
135.0
130.0
125.0
120.0
115.0
110.0
105.0
100.0
95.0
r
r
er
ri l
ly
ry
ay
07
st
08
08
be
be
be
c
Ju
gu
Ap
ua
ob
M
ar
20
20
20
em
em
em
M
Au
ct
br
ne
ne
n.
pt
ov
ec
O
Fe
Ja
Ju
Ju
Se
The noticeable rise in inflation was mainly owed to the successive increases in
food prices on the back of the continuous surge in international prices and the
propagation of the effects of higher food prices to other commodities. Moreover, the
decline in food self- sufficiency and the consequent rise in imports thereof added
more upward pressure on food prices.
International Prices of Basic Com m odities
(%)
(Change Rate)
180.0
150.0
120.0
90.0
60.0
30.0
0.0
Wheat Palm Oil Maize Rice Iron
The prices of food & non-alcoholic beverages soared by 27.1 percent during
the reporting year (against 10.1 percent during the year of comparison) as a main
result of the rise in food prices by 27.7 percent. The bulk of the increase was in the
following groups: bread and cereals (36.4 percent against 10.0 percent), oils and fats
(60.0 percent against 2.4 percent), meat (20.3 percent against 8.9 percent), milk,
cheese & eggs (32.9 percent against a decline of 2.0 percent), sugar and
confectionaries (20.8 percent against 2.4 percent) and fish & seafood (18.1 percent
against 10.6 percent). The surge in food prices was also reflected in the prices of
restaurants & hotels that went up by 46.1 percent against 8.5 percent owing to the
price hike of catering services.
Relative Weight of Food ( 42.6% )
Fruit Meat
3.1 12.9
The rise in inflation during the year was also ascribed to raising the prices of
some oil products (including benzene 92 and 90) by virtue of May 2008 decrees. This
was associated with a pickup in the prices of electricity, gas and fuel by 11.5 percent,
and transportation by 20.1 percent.
The higher inflation was also attributed to the increase in the prices of
education services by 37.7 percent (against 11.1 percent) owing to the abolishment of
tax exemptions granted for educational entities. Another contributing factor was the
12.1 percent rise in the prices of health services (against 2.9 percent) as a result of the
increase in the prices of hospital services by 21.2 percent and the fees of out-patient
services by 25.2 percent. Add to this the inflationary pressures associated with higher
economic growth.
180.0
170.0
160.0
150.0
140.0
130.0
120.0
ay
ry
ly
ch
il
er
st
7
8
r
r
be
be
be
Ju
00
00
Ap
00
ua
gu
M
ob
ar
em
em
em
2
2
y2
br
Au
M
ct
ne
ne
Fe
O
ar
pt
ov
ec
Ju
Ju
Se
nu
N
Ja
59
Others
14.3
Agriculture, Forestry
and Fishing
25.1
Most of the PPI increase was in the prices of cereals and legumes; rice; oils &
fats; crude oil; stone, sand & clay; iron & steel; cement manufacturing; wood &
products; cement and other main commodities. (see the following table)
On the other hand, data of the period following the reporting year (during the
preparation of the Report) showed that because of the current global financial crisis
and its repercussions, the global prices of some of the primary commodities (such as
oil, wheat, maize, rice and palm oil) showed a decline. This is expected to exert
downward pressure on local prices.
24.0
22.0 21.3
20.0 20.1
18.0 18.1
18.4 18.1
16.0 16.6
14.0
12.0
10.0
8.0
6.0 5.8
4.0 4.5 4.2
2.0
0.0
2005/2006 2006/2007 2007/2008
35
30
25
20
15
10
0
2003/2004 2004/2005 2005/2006 2006/2007 2007/2008
Total collected revenues reached LE 221.4 billion, up by 22.9 percent over the
previous FY and 18.3 percent above budgeted revenues for the whole year,
representing 24.7 percent of GDP.
Tax revenues contributed 55.5 percent of the total rise in public revenues,
reaching LE 137.2 billion, up by 20.0 percent as compared with the preceding FY.
45.1 percent of the increase came from the sales tax revenues which rose by LE 10.3
billion or 26.2 percent over the preceding year, to LE 49.7 billion or 36.3 percent of
total tax revenues. The pickup in these revenues was largely ascribed to the growing
sales taxable base, and the imposition of more stringent penalties on tax evasion.
Taxes on Income
Taxes on Goods & 30.3%
Services 22.5%
Revenues from taxes on income and business profits went up by LE 8.5 billion
or 14.6 percent over the previous FY (compared with LE 10.3 billion or 21.3
percent), posting LE 67.1 billion during FY 2007/2008, and recording 48.9 percent of
total tax revenues. Taxes collected from the EGPC reached LE 29.3 billion,
accounting for 45.6 percent of the increase in taxes on income and business profits.
Revenues collected from the Suez Canal Authority also rose by LE 1.1 billion or 12.3
percent, from taxes on individual income by LE 1.8 billion or 18.3 percent, and from
taxes on companies by LE 1.7 billion or 12.2 percent.
2007/2008
2006/2007
2005/2006
2004/2005
2003/2004
Likewise, property income revenues from the EGPC, SCA, CBE and some
other economic authorities surged by LE 7.3 billion or 16.3 percent, to LE 52.5
billion or 23.7 percent of total collected revenues.
Compensations
Investments 34.2 of Employees 62.8
Other Expenditures
23.9
Purchases of Goods
Subsidies, Grants & & Services
Social Benefits 18.5
92.4
Interests
50.5
Interest payments on public debt (external and domestic) rose by LE 2.8 billion
or 5.9 percent, to LE 50.5 billion or 17.9 percent of total expenditures. This was due
to the increase of LE 2.1 billion or 4.8 percent in domestic interest payments to NIB,
and SIFs and in other public debt service expenditures, on the one hand, and the rise
of LE 0.7 billion in external interest payments, on the other.
The overall budget deficit (LE 61.1 billion) and various domestic repayments
of LE 14.9 billion were chiefly financed by the blocked account at the CBE, which
was used to amortize the CBEs government bonds (LE 39.0 billion), after making
settlements with the Ministry of Finance. In addition, miscellaneous non-banking
sources were used, comprising the budget units (LE 14.8 billion); subscriptions of
individuals for TBs and government bonds (LE 7.5 billion); NIB and SIFs (LE 2.4
billion); and net privatization proceeds (LE 0.7 billion). The remaining finance was
covered by some miscellaneous non-banking local sources (LE 0.2 billion) and
external borrowing (LE 11.4 billion worth).
Foreign Borrowing
11.4 Non-Banking
Financing through
Budget Entities
14.8
Blocked Account
Used in Amortizing
Government Bonds
39.0
Adding the fiscal operations of the NIB and SIFs to those of the budget sector
during FY 2007/2008, collected revenues would surge by LE 27.4 billion to LE 248.8
billion, constituting 27.8 percent of GDP. Likewise, expenditures would rise by LE
23.5 billion, to LE 305.8 billion or 34.1 percent of GDP.
66
10
9.2
8.2 8.4
8
7.7
7.0 7.7 7.5
6.1 6.4
6
5.2
4
0
2003/2004 2004/2005 2005/2006 2006/2007 2007/2008
The governments blocked account at the CBE, which was used to amortize the
CBE's government bonds after making settlements with the Ministry of Finance, was
primarily drawn upon to cover this deficit and to make some domestic repayments.
Other sources of finance included miscellaneous local sources and external
borrowing.
The surplus on the current account was an outcome of the rise in the services
surplus and net unrequited transfers, which offset the impact of the widened trade
deficit.
Overall Balance
US$ bn
6.0
5.3 5.4
5.0 4.5
4.0
3.3
3.0
2.0
1.0
0.0
2004/2005 2005/2006 2006/2007 2007/2008
____________________________
*
Compiled in accordance with the Fifth Edition of the IMFs Balance of Payments Manual,
September 1993.
**
Net errors and omissions amounted to a negative US$ 2.6 billion during FY 2007/2008.
68
The services balance recorded a surplus of US$ 15.0 billion due to the
following factors:
- The 33.0 percent rise in invisible receipts, to US$ 27.2 billion as a result of
the pickup in most items, particularly travel receipts (tourism revenues) by
32.3 percent; transportation by 18.7 percent due to a rise in the Suez Canal
receipts by 23.6 percent; and investment income receipts by 8.0 percent.
- The 36.7 percent increase in invisible payments, to US$ 12.2 billion, due to
the pickup in all their items: travel payments (by 51.0 percent), transportation
payments (by 27.3 percent), and other payments (by 66.0 percent).
Net unrequited transfers rose by 32.2 percent, owing to the increase in private
transfers by 33.8 percent to US$ 8.4 billion and official transfers by 20.0 percent to
US$ 1.0 billion.
The net inflow realized by the capital and financial account was due to the fact
that foreign direct investment (FDI) in Egypt achieved a net inflow of US$ 13.2
billion (against US$ 11.1 billion a year earlier). Of this amount, net green-field
investments or capital raises accounted for US$ 6.4 billion; net investments in the
petroleum sector US$ 4.1 billion; and privatization proceeds US$ 2.3 billion (against
US$ 5.2 billion, US$ 3.0 billion, and US$ 2.8 billion, respectively).
69
FY (%)
2006/2007 2007/2008*
Trade Balance:
- Merchandise exports / GDP 16.9 18.1
Oil exports / Total exports 45.9 49.3
Crude oil exports / Oil exports 30.9 33.9
- Merchandise imports / GDP 29.4 32.5
Non-oil imports / Total imports 89.2 81.9
Oil products imports / Oil imports 62.2 46.8
- Volume of foreign trade / GDP 46.3 50.5
- Coverage ratio of merchandise exports / Merchandise imports 57.5 55.6
- Trade Balance / GDP (12.5) (14.4)
Services Balance:
- Services balance / GDP 8.8 9.2
Total service receipts / GDP, of which: 15.7 6.7
Suez Canal tolls / GDP 3.2 3.2
Tourism / GDP 6.3 6.7
Service receipts / Service payments 228.4 222.2
Transfers:
- Transfers / GDP 5.4 5.7
- Current receipts / GDP 38.0 40.5
- Current payments / GDP 36.3 40.0
- Current receipts / Current payments 104.8 101.4
- Current Account / GDP 1.7 0.5
Capital and Financial Account:
- FDI in Egypt / GDP 8.5 8.1
Overall Balance / GDP 4.1 3.3
- Months of merchandise and service imports covered by NIRs
(End of June) 7.3 6.4
* Provisional.
70
Non-oil merchandise exports accounted for the bulk of the increase in export
proceeds, especially finished goods and raw materials which made up together 41.0
percent of total export proceeds. Likewise, oil exports rose to US$ 14.5 billion,
constituting 49.3 percent of total exports.
Against this background, the trade deficit enlarged by 43.7 percent to US$ 23.4
billion. Moreover, the coverage ratio of merchandise export proceeds / merchandise
import payments fell from 57.5 percent to 55.6 percent
(US$
29.4
30.0) 22.0
18.4
20.0
10.0
0.0
-10.0
(12.0)
-20.0 (16.3)
(23.4)
-30.0 (30.4)
(38.3)
-40.0
(52.8)
-50.0
-60.0
2005/2006 2006/2007 2007/2008
16.0
12.0
8.0
4.0
0.0
Fuels , Mineral Oils & Raw Materials Semi-f inished Goods Finished Goods
Products
The marked pickup in exports was supported by oil exports. As such, export
proceeds of fuel, mineral oils and products rose by 43.7 percent, recording the bulk of
the increase in total merchandise exports. Likewise, non-oil exports scaled up due to
the increase in exports of raw materials by 50.2 percent to US$ 1.1 billion, namely
vegetables, plants, roots and tubers, cotton, fruits and edible nuts.
30.0
25.0
20.0
15.0
10.0
5.0
0.0
2005/2006 2006/2007 2007/2008
Exports of finished goods came next with an increase of 45.4 percent, reaching
US$ 10.9 billion. The increase was mostly in the exports of electric machines and
appliances, cement, iron and steel products, and pharmaceuticals.
On the other hand, exports of semi-finished goods fell by 7.5 percent, to US$
1.8 billion. The decline was particularly pronounced in the exports of unalloyed
aluminium, cast iron and cotton yarn.
Commodity Exports
US$ 29.4bn
Oil 49.3%
Non-oil 50.7%
US$14.5 bn
US$14.9 bn
Main
commodities: Main
Edible commodities:
Natural gas Liquified gas
vegetables, Cast iron. 7.8% 92.2%
roots & tubers. Organic &
Cotton. inorganic
Edible fruits & chemicals.
nuts. Plastic & articles Main commodities:
Iron ore thereof. Electric machines &
Animal & appliances.
vegetable fats, Cement.
greases & oils & Articles of iron and
products steel.
Pharmaceuticals.
Articles of base
metals.
73
The increase in non-oil imports (81.9 percent of total import payments) was
ascribed to the tangible pickup in the imports of consumer and intermediate goods.
Foodstuffs in all merchandise groups tangibly rose as a result of the successive
increases in world prices during the reporting year.
Import Payments
(US$ bn) during Fiscal Year
18.0
16.0
14.0
12.0
10.0
8.0
6.0
4.0
2.0
0.0
2005/2006 2006/2007 2007/2008
Moreover, imports of investment goods rose by US$ 2.0 billion or 20.6 percent
during the reporting year, to US$ 11.9 billion. This reflected mainly the rise in the
imports of cranes and bulldozers and parts thereof, and parts and accessories of cars.
Import payments of raw materials highly increased by 71.5 percent to US$ 9.7
billion, representing 18.3 percent of total imports. This was essentially the result of
the world price hikes of crude oil in the reporting year.
The group of fuel and mineral oil and products rose to US$ 4.9 billion in FY
2007/2008, constituting 9.3 percent of total imports. Oil products represented the
major part of this group with a share of 91.4 percent of the total.
The following graph shows the structure of merchandise imports in FY
2007/2008, distributed by relative importance.
Commodity
Imports
US$ 52.8 bn
The volume of Egypts foreign trade picked up by 36.1 percent to US$ 82.1
billion, following the reduction in import restrictions since the advent of the current
century, on the one hand, and the upsurge in exports and trade with Europe, Africa
and a large number of major world markets, on the other.
The EU continued to be the major trade partner with Egypt, accounting for
US$ 27.8 billion or 33.9 percent of the total volume of trade, up by US$ 7.4 billion or
36.0 percent. The key exports to the EU were crude oil and products, cast iron, cotton
textiles, cement, iron and steel products, pharmaceuticals, and aluminum products.
The main imports from the EU were crude oil and products, iron and steel products,
organic and inorganic chemicals, pharmaceuticals, and electric appliances for
telephones and telegraphs.
The USA came second with a share of US$ 19.1 billion, up by US$ 4.0 billion
or 26.5 percent, chiefly importing from Egypt crude oil and products, cement,
miscellaneous edible preparations, fertilizers, glass and articles, and iron and steel
products. Imports from the USA were mainly crude oil and products, iron and steel
products, wheat, and maize.
The volume of trade with the Asian countries (non-Arab) rose by 58.2 percent
to US$ 14.2 billion. The key exports to these countries were oil and products, cotton,
ready-made clothes, fertilizers, glass and articles, cotton textiles, and cars, tractors
and bicycles. The main imports from these countries were parts and accessories of
cars, animal and vegetable fats, greases and oils and products, cars, ready-made
clothes, plastic and articles thereof, organic and inorganic chemicals, and iron and
steel products.
The volume of trade with the Arab countries also rose by 44.5 percent to US$
8.6 billion. Crude oil and products, miscellaneous edible preparations, iron and steel
products, cast iron, cement, and rice were the main Egyptian exports. Imports from
these countries were chiefly crude oil and products, iron and steel products, plastic
and articles thereof, organic and inorganic chemicals, and cars.
The volume of trade with the other European countries scaled up by 28.5
percent to US$ 5.5 billion. Exports to these countries were concentrated in articles of
base metals, cast iron, and iron and steel products. Egyptian imports were mainly iron
and steel products, crude oil and products, wheat, pharmaceuticals, and organic and
inorganic chemicals.
76
The volume of trade with the Russian Federation and the CIS doubled to US$
1.9 billion. The majority of their imports from Egypt were crude oil, and vegetables
and plants. Exports to Egypt were mainly iron and steel products, wheat, and iron ore.
On the other hand, the volume of trade with Australia and other countries and
regions declined by 7.8 percent to US$ 3.8 billion. Exports were concentrated in
crude oil and products, while imports were primarily crude oil and products, iron and
steel products, meat and edible offals, and maize.
The share of the African countries (non-Arab) doubled to US$ 1.2 billion.
Exports to this group were crude oil and products, pharmaceuticals, and
miscellaneous edible preparations. On the other hand, tea, copper and articles thereof,
and iron and steel products were the key Egyptian imports.
The following graph shows the volume of external trade between Egypt and its
main trade partners:
25000
Other Countries
45.2%
20000
15000
Germany 16.9%
Other Countries
51.1%
10000
Italy 18% Other Countries
Korea 12.9% 48.7%
5000
Japan 14.9%
100% UAE 27.5%
UK 19.9%
India 21.1% Saudi Arabia 23.8%
0
EU USA Asian Countries Arab Countries
77
(US$ mn)
Export Proceeds Import Payments Trade Balance
FY 2006/07 2007/08 2006/07 2007/08 2006/07 2007/08
Grand Total 22017.5 29355.8 38308.1 52771.2 (16290.6) (23415.4)
EU 7440.6 9808.2 13005.5 18007.4 (5564.9) (8199.2)
Other European
Countries 1048.6 1343.3 3205.6 4121.8 (2157.0) (2778.5)
Russian Federation
& CIS 151.9 158.5 685.2 1723.4 (533.3) (1564.9)
USA 6849.8 9279.2 8262.3 9829.9 (1412.5) (550.7)
Arab Countries 2729.6 3155.9 3244.4 5473.9 (514.8) (2318.0)
Asian Countries
(non- Arab) 2969.0 4364.3 6027.6 9870.2 (3058.6) (5505.9)
African Countries
(non- Arab) 328.1 786.2 269.2 417.5 58.9 368.7
Australia 64.0 21.2 107.8 183.2 (43.8) (162.0)
Other Countries &
Regions 435.9 439.0 3500.5 3143.9 (3064.6) (2704.9)
The rise in services receipts was due to the pickup in most items, particularly
travel (tourism revenues), which rose by 32.3 percent to US$ 10.8 billion. This was
an outcome of the rise in the number of tourist nights to 127.4 million during the
reporting year, against 96.3 million during the year of comparison, with the average
tourist spending per night remaining unchanged at US$ 85.
Developm ent of Main Item s of Services Receipts
US $ bn
12.0
10.0 10.8
8.0
8.2
6.0 7.2
4.0 5.2
4.2
3.6
2.0
0.0
2005/2006 2006/2007 2007/2008
Calculated on the basis of the number of tourist nights multiplied by average tourist spending per
night.
78
Other Receipts
19.6%
Investment
Inco me
12.1%
Travel
39.8%
Transportation receipts also rose by 18.7 percent to US$ 7.6 billion, because of
the 23.6 percent rise in the Suez Canal receipts (due to the increase in the number of
transiting ships and their net tonnage, and the continuing operations of developing the
navigation course of the Canal). Likewise, investment income went up by 8.0 percent
to US$ 3.3 billion, as a result of the rise in the receipts of investment (portfolio)
income.
Moreover, other receipts rose by US$ 2.7 billion, as a result of the higher
services receipts of communications, construction and contracting, legal and
consultation fees, insurance, and computer services and subscriptions in magazines
and journals.
Services payments increased by 36.7 percent, due to the rise in all items,
particularly:
- Travel by 51.0 percent due to higher expenses of tourism and medical treatment
abroad, and the increase in payments abroad by tourism companies and hotels, and
in pilgrimage and "Omra" fees.
Other Payments
Transportation
36.7%
13.2%
Government
Payments
10.7% Travel
23.6%
Investment Income
15.8%
Net unrequited transfers rose by US$ 2.3 billion or 32.2 percent, representing
14.2 percent of current receipts during FY 2007/2008, as an outcome of the following
factors:
Kuwait 21.0%
USA
UAE
32.3%
16.3%
Unrequited Transfers
(US$ mn)
FY Change
2006/07 2007/08 Value %
Net Current Transfers 7061.3 9337.6 2276.3 32.2
1- Official Transfers (Net) 800.3 960.5 160.2 20.0
- Inward cash grants 375.0 643.1 268.1 71.5
- Other inward grants 461.1 395.2 -65.9 -14.3
- Outward grants -35.8 -77.8 -42.0 117.3
2- Private Transfers (Net) 6261.0 8377.1 2116.1 33.8
- Workers' remittances 6321.0 8559.2 2238.2 35.4
- Other transfers 92.4 49.9 -42.5 -46.0
- Foreigners' transfers abroad -152.4 -232.0 -79.6 52.2
The following graph shows current receipts and payments in the reporting year
and the year of comparison.
Current Receipts & Paym ents
US$ bn
40.0
30.0
29.4 27.2 2006/2007
22.0 20.5 2007/2008
20.0
6.3 8.4
10.0 1.0
0.8
0.0
-10.0
-9.0
-20.0 -12.2
-30.0
-40.0
-38.3
-50.0
-52.8
-60.0
Merchandise Exports Services Receipts Net Private Transfers Net Official Transfers Merchandise Imports Services Payments
81
The capital and financial account revealed a net inflow of US$ 7.1 billion
during FY 2007/2008, compared with US$ 0.9 billion, due to the interaction of the
following factors:
1. Foreign investment in Egypt (direct and portfolio) realized a total inflow of US$
42.1 billion, and a total outflow of US$ 30.2 billion. This brought about a net
inflow of US$ 11.8 billion, as an outcome of net FDI inflow of US$ 13.2 billion
and net portfolio investment outflow of US$ 1.4 billion.
A- Net FDI in Egypt included the following:
U S$ b n
16 .0
14 .0 13.2
12 .0 11.1
10 .0
8 .0 6.1
6 .0
4 .0 2.8
2 .0
0 .0 -0.9 -1.4
- 2 .0
- 4 .0
FDI represents foreign investors who own 10 percent or more of the capital of any resident
economic entity or have an effective voice in its management. In Egypt, a foreign investor's
equity participation shall be at least 10 percent of the capital of any enterprise.
82
Other 4.1%
Construction 2.4%
Services 5.2%
Petroleum 45.5%
Manufacturing 8.6%
Finance 12.3%
Undistributed 21.9%
- Net foreigners sales of US$ 2.2 billion on the Egyptian Stock Exchange
(outflows), and their sales of Egyptian CDs for US$ 0.7 billion (outflows).
- Net foreigners subscriptions of US$ 1.1 billion for LE bonds abroad (inflows),
and their net transactions on Egyptian treasury bills in the amount of US$ 0.7
billion (inflows).
2. The decline in net outflows of other assets and liabilities to US$ 3.4 billion
(representing the change in both banks foreign assets and liabilities and the
CBEs non-reserve foreign assets, and the counterpart of some items included in
the current account), against US$ 10.2 billion.
3. Medium- and long-term loans and facilities resulted in a net repayment of US$ 1.6
billion during the reporting year, against US$ 0.4 billion a year earlier, as an
outcome of the following:
The decrease in total repayments to US$ 2.1 billion against US$ 2.3 billion,
due to the 24.5 percent decline in the repayments of international
organizations loans, and a drop of 18.7 percent in bilateral loans.
The decline in total disbursements to US$ 0.4 billion against US$ 1.9 billion,
due to the fall in the disbursements of international organizations loans by
85.0 percent and bilateral loans by 6.0 percent.
*
Representing foreigners' net portfolio (according to the CMA statement), and their dealings in
Egyptian bonds and notes.
83
With regard to the efforts made to regulate the market, CMA issued a decision
amending the rules of listing and delisting of securities, at official and non-official
schedules on the Stock Exchange. In this respect, the issued capital of a company
should be paid in full. Amendments also extended to the rules determining the value
of corporate capital and the profits generated from companies activities according to
the type of schedule on which they are listed. Also amended were the rules of
84
purchasing treasury shares (local shares and GDRs). Accordingly, the period for
which a company is allowed to keep shares should not be less than three months and
not more than one calendar year. CMA also introduced some amendments to the
capital adequacy requirements of brokerage firms. The amendments aimed at
identifying the ability of securities companies to fulfill their current obligations and
to face all types of risks arising from practising their activities. In addition, CMA
issued a decision to improve the scope of disclosure for transactions made by the
members of a company's board, and the related parties of listed companies, with the
aim of providing more protection for investors and enhancing transparency.
To foster cooperation with regional and global capital markets, CASE signed a
Memorandum of Understanding with Cyprus Exchange to enhance mutual
cooperation between the two Exchanges on capital markets' development issues. The
key areas of cooperation included information exchange, as well as setting an
organized framework for exchanging expertise to make the staff of the two
Exchanges conversant with the main mechanisms of improving capital market
performance. Add to this, the activation of various studies and researches conducted
jointly by the two Exchanges with the aim of deriving the utmost benefit for both
parties.
14000 CASE 30
12000 Capital Market Authority
10000
8000
6000
4000
2000
As for the primary market, the number of new issues approved by CMA
during the year reached 3365, with a total value of LE 99.6 billion, against 2852
issues with a value of LE 97.7 billion a year earlier. Issues for new incorporations
accounted for 2301 (with a value of LE 19.3 billion) or 68.4 percent of the total
number. Issues for the capital increase of existing companies reached 1064, with a
value of LE 80.3 billion or 80.6 percent of the total. Concurrently, only two new
issues were offered on the bonds market at a value of LE 2.3 billion.
As for listing on the Sock Exchange, the number of listed companies declined
from 544 at end of June 2007 to 377 at end of June 2008 (due to delisting the
companies that did not comply with the listing conditions and standards). By contrast,
the nominal capital value of these companies rose to LE 138.0 billion at end of June
2008 against LE 121.1 billion at end of June 2007. Likewise, the market value of
their shares mounted to LE 813.3 billion (against LE 601.8 billion) or 90.7 percent of
GDP during FY 2007/2008.
CMA approved the inception of one mutual fund during the reporting year,
thus bringing the number of funds up to 38 (35 open-end and 3 close-end funds).
As to the secondary market, market trading showed, during the year, a pickup
in the three indicators of overall trading. The number of transactions rose by 68.3
percent to 13 million. Likewise, the number of dealt-in securities stepped up by 109.7
percent to some 23.6 billion and the value of traded securities by 120.4 percent to LE
610.6 billion.
Share transactions accounted for the bulk of trading on the Exchange (96.1
percent of the total against 94.4 percent a year earlier). On the other hand, trading in
bonds constituted 3.9 percent of the total, against 5.6 percent.
Trading in Securities
During the reporting year, the Egyptian Exchange continued to attract foreign
investors. Foreigners' transactions totaled LE 327.8 billion during the year, against
LE 135.7 billion a year earlier. However, these transactions resulted in net sales of
LE 2.4 billion (against net purchases of some LE 14.0 billion).
87
At end of June 2007, the National Authority for Social Insurance accounted for
86.4 percent of total investments of the insurance sector, with a value of LE 252.3
billion. Investments of insurance companies and funds contributed 13.6 percent with
a value of LE 39.6 billion.
*
Including the National Authority for Social Insurance, insurance companies and private insurance
funds.
88
Statistical Section
89
Statistical Section
(5) Banks
(5/1) Banks: Aggregate Financial Position
(5/2) Banks: Deposits by Maturity
(5/3) Banks: Deposits by Sector
(5/4) Banks: Lending and Discount Balances by Sector
90
Balances with correspondents abroad 43529 64299 65266 85788 72763 43425 20876
Gold and other foreign balances 4053 5489 5937 6328 8622 9389 11520
Claims on government, of which: 113231 131689 175579 218450 167685 170338 137743
Other domestic assets 22389 53360 59380 52724 42644 40797 26853
Claims to National Investment Bank 150 5478 487 819 496 544 2573
Claims to Banks in Egypt 56685 84915 107572 144411 149088 229701 261725
Equities & net profits of the year 5500 1790 2325 2513 2423 2146 5120
Other domestic liabilities 6372 7721 7151 5575 2737 3705 5769
91
* The decline was ascribed to the settlement of rescheduled debts -under Paris Club agreement- between the CBE and the government.
Central Bank of Egypt - Annual Report 2007/2008
92
(1/2) CBE: Banknote Issued By Denomination
( LE mn )
During FY ending June 2002 2003 2004 2005 2006 2007 2008
First : Cairo Branch
Number of cheques (thousands) 7918 10025 9591 9321 9508 10481 11724
Value of cheques (LE mn) 270543 244581 248224 262423 288715 356900 483113
93
were transferred to Cairo Automated Clearing House.
Central Bank of Egypt - Annual Report 2007/2008
94
(2/1) Banking Survey : Domestic Liquidity and Counterpart Assets
( LE mn )
First : Domestic Liquidity 328728 384262 434911 493884 560356 662688 766664
Currency in circulation outside the banking system 42299 48258 55933 63029 74239 86860 104656
Demand deposits in local currency 17506 18954 21673 26656 35035 44430 65923
Time & saving deposits in local currency 192718 212010 233610 283020 314188 377424 436268
Demand and time & saving deposits in foreign currencies 76205 105040 123695 121179 136894 153974 159817
Net foreign assets 17285 25429 45241 80913 133385 218629 303680 *
Other items (net) -48647 -28613 -32370 -53800 -82561 -87255 -107969
* Rescheduled debts -under Paris Club agreement- were settled between the CBE and the government.
(2/2) Banking Survey : Deposits in Local Currency
( LE mn )
Total Deposits in Local Currency 210224 230964 255283 309676 349223 421854 502191
First : Demand Deposits 17506 18954 21673 26656 35035 44430 65923
Private business sector 7385 7989 9235 12228 15863 20681 34301
Minus: Purchased cheques & drafts 947 646 725 584 593 907 1079
Second : Time and Saving Deposits 192718 212010 233610 283020 314188 377424 436268
Public business sector * 11116 10990 12557 13700 15465 17186 20736
Private business sector 24209 22099 25984 27439 25580 56823 85415
95
* Including all public sector companies subject or not to Law No. 203 for 1991.
Central Bank of Egypt - Annual Report 2007/2008
96
(2/3) Banking Survey : Deposits in Foreign Currencies
( LE mn )
Total Deposits in Foreign Currencies 76205 105040 123695 121179 136894 153974 159817
First : Demand Deposits 8267 12159 16280 18140 18533 26917 26581
Public business sector * 311 475 878 1249 935 947 943
Private business sector 4155 6123 8891 10234 10417 18453 17417
Minus: Purchased cheques & drafts 191 128 186 166 211 172 183
Second : Time and Saving Deposits 67938 92881 107415 103039 118361 127057 133236
Public business sector * 1883 2403 2554 2946 4734 5774 8202
Private business sector 15272 19056 20659 21103 28845 30641 39785
* Including all public sector companies subject or not to Law No. 203 for 1991.
(2/4) Banking Survey : Foreign Assets and Liabilities
( LE mn )
Net Foreign Assets 17285 25429 45241 80913 133385 218629 303680
First : Foreign Assets 90125 126068 145297 174328 218982 304968 330770
Second : Foreign Liabilities 72840 100639 100056 93415 85597 86339 27090
Central Bank of Egypt 52078 73944 78455 71443 68176 64825 1688 *
* Rescheduled debts -under Paris Club agreement- were settled between the CBE and the government.
97
Central Bank of Egypt - Annual Report 2007/2008
98
(2/5) Banking Survey : Domestic Credit / Other Items (Net)
( LE mn )
First : Domestic Credit 360090 387446 422040 466771 509532 531314 570953
Net claims on the government (A+B-C) 95423 103518 126343 159889 184131 178323 174005
Claims on public business sector * 31143 34986 35588 37420 32888 24446 26897
Claims on private business sector 200230 214308 223096 228195 239338 268607 291719
Claims on household sector 33294 34634 37013 41267 53175 59938 78332
Second : Other Items (Net) -48647 -28613 -32370 -53800 -82561 -87255 -107969
Net unclassified assets and liabilities 19932 48292 51451 40379 19578 27279 27432**
* Including all public sector companies subject or not to Law No. 203 for 1991.
** Rescheduled debts -under Paris Club agreement- were settled between the CBE and the government.
(2/6) Total Saving Vessels
( LE mn )
Savings with the Banking System 268923 317050 357305 404199 451082 531398 596085
Time & saving deposits in local currency 192718 212010 233610 283020 314188 377424 436268
Demand and time & saving deposits in foreign currencies 76205 105040 123695 121179 136894 153974 159817
Net Sales of Investment Certificates 49008 55218 60178 58485 63697 68311 79354
Post Office Saving Deposits 17720 22800 28404 35506 45450 55667 66738
99
Source : Central Bank of Egypt
100
Central Bank of Egypt - Annual Report 2007/2008
(3/1) Government Domestic Debt & Economic Authorities Debt
(LE mn)
- Amounts paid against Insurance Funds' deposits with the Treasury 0 0 0 0 4517 2343
(LE mn)
. Social Insurance Fund for Pub. & Priv. Business Sector Employees 78947 87166 96093 105703 20574 22632
. Proceeds from Investment Certificates 55218 60178 58485 64038 68485 78714
. Proceeds from US dollar development bonds 1736 1738 1418 824 483 152
. NIB balances with the banking system 9082 4393 4917 3757 2951 3891
Source: The Ministry of Finance, Central Bank of Egypt & National Investment Bank.
* Including deposits of the private insurance funds, saving certificates, and loans & deposits of various entities.
101
Central Bank of Egypt - Annual Report 2007/2008
102
(3/3) External Debt
(US$ mn)
Total External Debt* 28661 29396 29872 28949 29593 29898 33893
Rescheduled bilateral debt ** 15337 16192 16385 15734 15229 14847 15606
Other bilateral debt 4057 4350 4433 4291 4295 4346 4972
Paris Club countries 3405 3320 3264 3530 3590 3630 4130
International & regional institutions 4698 4904 5081 5058 5205 6815 7362
Suppliers' & buyers' credit 924 1133 1333 782 980 792 764
Egyptian bonds & notes 953 735 588 614 1862 1570 2652
+ Provisional
** According to the agreement signed with Paris Club countries on May 25, 1991.
*** As of December 2004, the deposit of the Arab International Bank was transferred from short-term debt to long-term deposits.
(3/4) Distribution of External Debt by Main Currencies
(US$ mn)
June 2007 June 2008 * Change
End of
Value % Value % (-)
Total 29898.0 100.0 33892.8 100.0 3994.8
US dollar ** 12453.0 41.6 13100.8 38.7 647.8
* Provisional.
103
** Including other liabilities due in US dollar.
Central Bank of Egypt - Annual Report 2007/2008
104
(4/1) Participants in the CBE Training Programs
2006/2007 2007/2008
Qualifying Programs (Specialized & Managerial, Computer & English) 2005 885
2006/2007 2007/2008
During FY Number Number
Programs Participants Programs Participants
First: Short-Term Training Programs, through: 1066 22065 1239 24779
1- Training Programs
- Banking and Managerial Programs 399 8257 417 7895
.Finance & Credit 85 1691 109 1836
.Banking Operations 136 2772 142 2792
105
Total 1232 23018 1357 25764
Source: Egyptian Banking Institute (EBI)
106
Central Bank of Egypt - Annual Report 2007/2008
Branches 837
Branches 1145
Off-Shore Banks 7
Branches 63
Specialized Banks
Industrial Development Bank of
Industrial 1
Egypt
Branches 14
Branches 28
Branches 1210
Of which Agricultural Banks in:
Governorates 2
Village Banks 1037
Total 40 3297
* Excluding branches of Egyptian banks abroad, and two banks which were established under private
laws and not registered with the CBE: the Arab International Bank, and Nasser Social Bank.
107
Central Bank of Egypt - Annual Report 2007/2008
Registration
Name Address
Date
Al-Raghi Banking & Investment Corp. 20/10/1993 19 Adly St.,2nd Floor , Apart. 59, Cairo
Bank of New York 27/10/1993 9 Abd El- Moneim Riad St., Dokki, Giza
Commerz Bank AG 31/05/1994 153 Mohamed Farid St.,(Banque Misr Tower) , 22nd Floor, Cairo
Monte dei Paschi di Siena S.P.A 05/07/1994 10 Sarai EL- Gezeera st.,2nd Floor,Room .5,Zamalek11211,Cairo.
Union De Banques Arabes et Francaises (UBAF) 15/08/1994 4 Behlar Passage, Kasr El-Nil St., Cairo
Dresdner Bank AG 23/08/1994 21& 23 Giza St., El-Nil Tower, Floor No.12, Giza
State Bank of India 03/10/1994 15 Kamel El-Shinnawy St., Garden City, Cairo
Credit Agricole Indosuez 17/07/1995 42 Al Batal Ahmed Abdel Aziz St., Mohandeseen
Arab Islamic Bank 11/12/1995 21& 23 Giza St., Nile Tower, Giza
Bank of Tokyo Mitsubishi UFJ Ltd 04/03/1997 Nile Hilton, Commercial Center ( No.247), Cairo
Union Bank of Switzerland (UBS AG) 22/10/1997 1191 Corniche El-Nil St., World Trade Center, 13th Floor, Cairo
Wachovia Bank National Association 06/05/1998 9 El-Gomhoria El-Motahida Square, Dokki, Giza
Royal Bank Of Scotland (RBS) 17/11/1999 31 Gezirat El-Arab St., Mohandeseen, Giza
Sumitomo Mitsui Banking Corporation 19/01/2004 3 Ibn Kassir Corniche El-Nil St., 14 th Floor, Flat 6, Giza
Clariden Leu Ltd. 22/04/2004 4A Hassan Sabri St.,Floor No.12, Room No.82, Zamalek,11211,Cairo.
American Express Bank Ltd. 12/09/2005 Star Capital 2, Sheikha Fatma St., Office no. 21-22, Heliopolis, Cairo
Egyptian-Sudanese Bank 28/05/2008 4 Ahmed Basha st.,Floor No.15, Garden City, Cairo.
108
(5/1) Banks : Aggregate Financial Position
( LE mn )
Assets
Securities & investments in TBs, of which: 87726 111337 137431 170659 193965 176098 201858
Balances with banks in Egypt 83244 110874 116290 124986 121695 217363 278185
Balances with banks abroad 20002 29798 43290 51204 72554 124366 122792
Loans and discount balances 266100 284722 296199 308195 324041 353746 401425
Liabilities
Long- term loans & bonds 14057 14866 15012 14254 17526 26351 22285
Obligations to banks in Egypt 35094 35579 29933 22671 21488 82619 98699
Obligations to banks abroad 11830 16247 10332 12262 8770 10006 13327
( LE mn )
Time & saving deposits 286953 342535 389483 445132 479805 542982 612737
Blocked or retained deposits 23002 23376 25472 22960 26605 28212 33893
First : In Local Currency 250106 278179 310870 369067 401143 463320 552079
Time & saving deposits 213385 242058 269505 324664 345953 396351 460285
Blocked or retained deposits 15658 13192 14197 12797 13397 16603 19823
Second : In Foreign Currencies 90762 124965 150827 150582 167698 186633 195120
Time & saving deposits 73568 100477 119977 120468 133852 146631 152452
Blocked or retained deposits 7344 10184 11276 10163 13208 11609 14070
109
Source : Central Bank of Egypt
Central Bank of Egypt - Annual Report 2007/2008
110
(5/3) Banks : Deposits By Sector
( LE mn )
End of June 2002 2003 2004 2005 2006 2007 2008
Total Deposits 340868 403144 461697 519649 568841 649953 747199
Public business sector * 13930 13928 15414 16727 20399 23464 29434
Private business sector 31594 30088 35219 39668 41444 77504 119716
Public business sector * 2194 2878 3432 4195 5668 6721 9146
Private business sector 19426 25179 29550 31337 39263 49093 57202
* Including all public sector companies subject or not to Law No. 203 for 1991.
( LE mn )
Public business sector * 25831 26835 27690 30164 26269 18097 19474
Public business sector * 5060 8051 7740 7078 6373 6091 7177
Private business sector 40670 50827 51668 53502 64184 76020 90829
111
* Including all public sector companies subject or not to Law No. 203 for 1991.
Central Bank of Egypt - Annual Report 2007/2008
112
(6/1) GDP at Factor Cost by Economic Sector
At 2006/2007 prices
(LE mn)
Growth Rate (%)
Extractions 86191.0 17465.4 103656.4 89530.6 18301.6 107832.2 3.9 4.8 4.0
Oil 37871.0 6188.0 44059.0 38950.0 6555.0 45505.0 2.8 5.9 3.3
Natural gas 47975.0 8615.0 56590.0 50213.0 8973.0 59186.0 4.7 4.2 4.6
Others 345.0 2662.4 3007.4 367.6 2773.6 3141.2 6.6 4.2 4.4
Manufacturing Industries 14955.7 99519.5 114475.2 15976.6 107672.3 123648.9 6.8 8.2 8.0
Oil refining 3503.0 2552.0 6055.0 3665.0 2898.0 6563.0 4.6 13.6 8.4
Others 11452.7 96967.5 108420.2 12311.6 104774.3 117085.9 7.5 8.1 8.0
Electricity 8337.6 1542.5 9880.1 9107.5 1539.0 10646.5 9.2 -0.2 7.8
Water 2390.0 0.0 2390.0 2561.0 0.0 2561.0 7.2 - 7.2
Construction & Building 3500.6 26674.7 30175.3 3854.4 30788.9 34643.3 10.1 15.4 14.8
Transportation & Storage 6479.8 23069.2 29549.0 6989.4 24958.7 31948.1 7.9 8.2 8.1
Communications 7476.9 15585.5 23062.4 8427.7 17909.4 26337.1 12.7 14.9 14.2
Suez Canal 24123.8 0.0 24123.8 28454.5 0.0 28454.5 18.0 - 18.0
Wholesale & Retail Trade 2792.4 75055.4 77847.8 2985.5 80363.4 83348.9 6.9 7.1 7.1
Financial Intermediation
17970.5 9560.4 27530.9 19319.5 10312.7 29632.2 7.5 7.9 7.6
& Supporting Services
Insurance 1619.0 475.0 2094.0 1732.0 509.4 2241.4 7.0 7.2 7.0
Social Solidarity 24278.4 0.0 24278.4 25905.5 0.0 25905.5 6.7 0.0 6.7
Restaurants & Hotels 264.3 24301.1 24565.4 303.6 30232.4 30536.0 14.9 24.4 24.3
Real Estate 878.6 20064.2 20942.8 911.2 20805.6 21716.8 3.7 3.7 3.7
Real Estate Ownership 356.5 10479.9 10836.4 370.0 10862.1 11232.1 3.8 3.6 3.7
Business Services 522.1 9584.3 10106.4 541.2 9943.5 10484.7 3.7 3.7 3.7
General Government 64219.8 0.0 64219.8 65484.8 0.0 65484.8 2.0 - 2.0
Education, Health & Personal Services 1019.2 30624.1 31643.3 1063.4 32073.7 33137.1 4.3 4.7 4.7
Education 0.0 8376.0 8376.0 0.0 8746.5 8746.5 0.0 4.4 4.4
Health 1019.2 8982.1 10001.3 1063.4 9377.0 10440.4 4.3 4.4 4.4
Others 0.0 13266.0 13266.0 0.0 13950.2 13950.2 0.0 5.2 5.2
Source : Ministry of Economic Development.
(6/2) GDP by Expenditure
At 2006/2007 prices
1- GDP at Market Prices (2+5-6) 744.8 798.1 100.0 100.0 7.1 7.2
5- Exports of Goods and Services 225.3 290.1 30.2 36.3 23.3 28.8
6- Imports of Goods and Services 259.4 327.6 34.8 41.0 28.5 26.3
7- Gross Domestic Saving (1-3) 121.2 141.8 16.3 17.8 22.3 17.0
113
Source : Ministry of Economic Development.
Central Bank of Egypt - Annual Report 2007/2008
114
(6/3) Consumer Price Index (Urban Population) (January 2007=100)*
Food & non-alcoholic beverages 43.9 93.1 102.5 130.3 10.1 27.1
Tobacco 2.5 100.0 100.0 112.1 0.0 12.1
Clothing & footwear
7.9 95.6 100.2 104.3 4.8 4.1
Housing, water, electricity, gas & other fuel
13.5 94.6 100.0 107.6 5.7 7.6
Furnishings, household equipment & routine maintenance of the house 4.2 95.4 100.4 110.7 5.2 10.3
* A new series of CPI was introduced in September 2007. The weights involved in the formation of the Index were taken from the results of the 2004/2005
survey of income, expenditure and consumption. The series was updated on the basis of the weights of January 2007.
(6/4) Producer Price Index (PPI) (2004/2005 = 100)
Electricity, Gas, Steam and Air Conditioning Supply 2.3 100.0 100.0 114.0 0.0 14.0
Water Supply, Sewerage, Waste Management and Remediation Activities 2.1 111.7 128.0 138.7 14.6 8.4
Accommodation and Food Service Activities 5.0 105.2 105.2 117.5 0.0 11.7
Source: Central Agency for Public Mobilization and Statistics (CAPMAS), PPI Bulletin issued as of Sept. 2007 to replace the WPI Bulletin,
115
as the publication of the latter was stopped as of January 2008.
116
Central Bank of Egypt - Annual Report 2007/2008
( LE mn )
Actual
During FY 2004/2005 2005/2006
The Budget
The Budget The Budget The Budget
Sector, NIB &
Sector Sector Sector, NIB & SIFs
SIFs
Difference between Treasury Bills Face Value & Present Value -1168 -1168 -1149 -1149
FY
* Preliminary figures.
FY
2006/2007 2007/2008*
Value Value
Capital & Financial Account 853.0 7136.7
Capital Account -39.0 2.3
Financial Account 892.0 7134.4
Direct investment abroad -535.6 -1112.7
Direct investment in Egypt (net) 11053.2 13236.5
Portfolio investment abroad -557.5 -959.5
Portfolio investment in Egypt (net), of which: -936.7 -1373.6 **
Bonds -550.7 775.0
Other Investments (Net) -8131.4 -2656.3
Net Borrowing 2039.1 757.2
Medium- and Long-Term Loans -234.3 -1158.5
Drawings 1780.4 436.9
Repayments -2014.7 -1595.4
Medium-Term Suppliers' Credit -191.5 -463.4
Drawings 89.0 8.9
Repayments -280.5 -472.3
Short-Term Suppliers' Credit (net) 2464.9 2379.1
Other Assets -10941.6 -4402.5
CBE -215.3 -48.1
Banks -9900.5 -2486.1
Others -825.8 -1868.3
Other Liabilities 771.1 989.0
CBE 16.0 0.2
Banks 755.1 988.8
Net Errors & Omissions 2160.3 -2604.6
Overall Balance 5282.3 5420.4
Change in CBE Reserve Assets, Increase (-) -5282.3 -5420.4
Source: CBE
* Preliminary figures.
** Including foreigners' transactions on Egyptian TBs and CDs
122
Central Bank of Egypt - Annual Report 2007/2008
Number of Number of
Amount M.Value Amount M.Value
Transactions Transactions
(Thousands) (mn) (Thousands) (mn)
in unit in unit
Over the Counter Trading 216519 1638090 14627 592182 3569165 54347
Over the Counter Trading 8957 166927 549 7956 604454 2109
Floor Transactions 0 0 0 0 0 0
123
Source : Capital Market Authority (CMA).
Central Bank of Egypt - Annual Report 2007/2008
124
(9/2) Trading in Bonds on the Stock Exchange
Number of Number of
Amount M.Value Amount M.Value
Transactions Transactions
125
Source : Monthly Report- Capital Market Authority (CMA).
Central Bank of Egypt - Annual Report 2007/2008
126
(9/4) Investments of the Insurance Sector
( LE mn )
2006 2007
End of June Local Insurance National Private Local Insurance National Private
& Reinsurance Authority for Insurance Total & Reinsurance Authority for Insurance Total
Companies Social Insurance Funds* Companies Social Insurance Funds*
Grand Total 18710 243438 16629 278777 21258 252318 18305 291881
Second : Securities 11100 2000 11698 24798 12345 204316 13125 229786
Government bonds,notes&bills 5774 2000 11228 19002 6278 204316 12659 223253
Securities available for sale 1975 0 454 2429 3179 0 450 3629
To the government 0 0 0 0 0 0 0 0
Fifth : Fixed Deposits with Banks 6880 0 4363 11243 8044 0 4492 12536
Source: Yearbook of the Egyptian Authority for Insurance Control, National Investment Bank (NIB), and the Ministry of Finance.
* Including the Government Insurance Fund for Insurance on Cashiers.
Periodical Publications of the Central Bank of Egypt
Notes:
- All publications of the Central Bank of Egypt are available on the CBE's
website : www.cbe.org.eg
- To obtain a hard copy of any publication by mail, please write to the following
address: Research, Development and Publishing Sector, the Central Bank of
Egypt, 31 Kasr El Nil Street, Cairo, Egypt.