AnnualReport2007 2008

Central Bank of Egypt
Annual Report
2007/2008
Board Members
Governor and Chairman of the Board

Dr. Farouk Abd El Baky El Okdah
Deputy Governor Deputy Governor

Mr. Tarek Fathy Kandil Mr. Hisham Ramez Abdel Hafez
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
Dr. Mahmoud Abd El-Fadeel Hussein Mr. Aladdin Saba

Mr. Tarek Hassan Aly Amer
Contents of the Annual Report
Preface A-G
Chapter 1 Central Bank of Egypt

1/1 Developments in the Financial Position of the CBE 1
1/2 Banknote Issue 3
1/3 Monetary Policy 4
1/4 Payment Systems and Information Technology (IT) 6
1/5 Domestic Liquidity and Counterpart Assets 9
1/6 Banking Supervision 13
1/7 Banking Sector Reform 14
1/8 Management of the Foreign Exchange Market and International
Reserves 20
1/9 Domestic and External Public Debt 23
1/10 Human Resources Development 34
Chapter 2 Banking Developments

2/1 Financial Position 39
2/2 Deposits 41
2/3 Lending Activity 42
2/4 Banks Cash Flows 44
2/5 Bank Performance Indicators 46
Chapter 3 Domestic Economic Developments

3/1 Economic Growth 51
3/2 Inflation 56
3/3 Consolidated Fiscal Operations of the General Government 60
3/4 Balance of Payments and External Trade 67
3/5 Stock Exchange 83
3/6 Insurance Sector 87
Annex
A- Statistical Section 89
A
Central Bank of Egypt Annual Report 2007/2008
Preface:
The global economic performance continued to slacken in FY 2007/2008,

despite certain signs of recovery in the US economy. World economy recorded a
growth rate of 2.6 percent, down from 3.4 percent in FY 2006/2007. This slowdown
was a result of the sluggish performance of Japan, the euro area, the UK, Canada and
a number of advanced and emerging economies. The weak growth at the global level
was largely attributed to the soaring commodity prices, especially of energy and food,
and their adverse impact on consumer demand and investment. Other factors at work
were the exacerbation of the subprime mortgage crisis and the resultant credit crisis,
together with the deterioration of the property market in most advanced economies.
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.
At the level of domestic economy, the strong performance was sustained in

FY 2007/2008 with a growth rate exceeding 7.0 percent. No doubt, this helped
elevate the living standards and face the challenges posed by the highly burgeoning
population and the surge in world commodity prices (food and oil). The economic
growth was underpinned by the increased investments in different sectors and the
significant contribution of the private sector to GDP (more than 60 percent). Growth
was energized also by a pickup in oil and non-oil exports, the fostered confidence in
the flexibility and efficiency of the Forex market, and the tax cuts on income and
corporate profits. In addition, the banking system was strengthened and reformed to
ensure its soundness and robustness, besides enhancing the competitiveness of its
units at home and abroad and enlarging their catalyst role in 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.
In pursuit of an adequate level of monetary stability, the CBE continued to

sterilize the structural excess of liquidity at the banking system, primarily relying on
the monetary instrument of deposit auctions. The monetary policy applied throughout
the reporting year helped hold back the growth of domestic liquidity (M2) to 15.7
percent, down from 18.3 percent a year earlier.
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.
In the context of restructuring and risk management of state-owned banks,

since early 2005, state-owned banks (SOBs) have been applying a comprehensive
restructuring plan according to a timeline of goals and actions. The plan was devised
by the Banking Reform Unit (BRU) at the CBE to reform the practices of all
departments and technological systems, and establish new departments. Moreover, a
finance agreement was signed with the European Commission to conduct diagnostic
reviews of, and develop, the current practices of three backbone departments at the
NBE and Banque Misr (Risk Management, IT and Human Resources), in line with
the best international practices. International consultants were chosen to conduct this
process (ABN AMRO for Banque Misr and ING Bearing for the NBE). The project is
currently under implementation and is to be completed by end-2008. Full audit
reviews have been conducted for the four state-owned banks (including the Bank of
Alexandria before sale) by international audit firms, in accordance with the
international accounting standards. In addition, qualified senior staff and cadres were
appointed in those banks.
D
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).
In the context of information technology (IT), a new electronic accounting

system was designed to organize book entry at the CBE. The different CBE
departments were relocated from the old building to the new one at Gomhoria Street.
In the meantime, the implementation of a backup site for all computer applications is
on track.
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.
The aggregate financial position of banks (excluding the CBE) scaled up by

LE 145.4 billion or 15.5 percent, amounting to LE 1083.3 billion at the end of June
2008. Deposits at banks rose by LE 97.2 billion or 15.0 percent in the reporting
period, standing at LE 747.2 billion or 69.0 percent of the aggregate financial
position of banks at the end of June 2008. The lending and discount rates also went
up by LE 47.7 billion or 13.5 percent, reaching LE 401.4 billion and representing
37.1 percent of banks aggregate financial position.
The Egyptian stock market witnessed increased activity in terms of the

number of dealers (Egyptians and foreigners), on the back of the solid pace of
Egyptian growth and the progress in the development of the stock market, in line with
international standards. Combined with this was the introduction of new financial
instruments to encourage more dealers. These factors were reflected on the
performance of CASE 30 which leaped to 9827.3 points at the end of June 2008,
against 7803.4 points at the end of June 2007, recording a rise of 25.9 percent. The
CMA index moved up by 21.8 percent, posting 3329.7 points at the end of June 2008,
F
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.
As regards the anti-money laundering efforts, the Money Laundering Com-

bating Unit at the CBE has been performing its role in investigating reports of
suspicious cases and taking the necessary action. Also, by virtue of Law No. 181 for
2008, amendments were made to the Anti-Money Laundering Law, promulgated by
Law No. 80 for 2002 and amended by Law No. 78 for 2003. Accordingly, the Money
Laundering Combating Unit at the CBE was permitted to receive reports of cases
suspected of involving terrorism financing; whether the source of the funds is of
legitimate or illicit origin, and obligating the financial institutions to report such
transactions. Additionally, the Prime Minister was authorized to determine the
obligations of other entities that are considered financial institutions. In the reporting
year, Egypt also participated in a number of conferences, fora and workshops in the
area of combating money laundering and the financing of terrorism, and some studies
were made in this respect.
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.
The CBE Governor

Dr. Farouk El Okdah
Chapter 1: Central Bank of Egypt
1/1- Developments in the Financial Position of the CBE

1/2- Banknote Issue
1/3- Monetary Policy
1/4- Payment Systems and Information Technology (IT)
1/5- Domestic Liquidity and Counterpart Assets
1/6- Banking Supervision
1/7- Banking Sector Reform
1/8- Management of the Foreign Exchange Market and
International Reserves
1/9- Domestic and External Public Debt
1/10- Human Resources Development
1
Chapter 1
1/1: Developments in the Financial Position of the CBE
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.
CBE: Assets Analysis

(LE mn)
End of June 2006 2007 2008
Total Assets 356330 447551 443367
Foreign Assets 129454 160176 181973
Domestic Assets 226876 287375 261394
Claims on the government, of which: 167685 170338 137743
-Government securities 164761 166724 123123
Claims on the NIB 10 10 10
Claims on banks in Egypt 16537 76230 96788
Other domestic assets 42644 40797 26853
Claims on the government decreased by LE 32.6 billion due to the amortization

of some government bonds with a value of LE 43.6 billion. Other domestic assets
also retreated by LE 13.9 billion as a result of settling part of the accounts
representing revaluation differences of the CBE assets and liabilities and exchange
rates (LE 15.7 billion worth). Such a retreat was offset by the rise in claims on banks
in Egypt by LE 20.6 billion (LE 19.4 billion of which represents the CBE foreign
currency deposits with banks).
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
Breakdown of Domestic Assets at end of June
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.
CBE: Liabilities Analysis

(LE mn)
End of June 2006 2007 2008
Total Liabilities 356330 447551 443367
Foreign Liabilities 69440 66168 5140
Domestic Liabilities 286890 381383 438227
Banknote issue 79017 93240 112430
Government claims 53079 52006 50495
NIB claims 496 544 2573
Banks claims 149088 229701 261725
Equities & net profits for the year 2423 2146 5120
Provisions 50 41 115
Other domestic liabilities 2737 3705 5769
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
Breakdown of Domestic Liabilities at end of June
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
1/2: Banknote Issue

Banknote issue (including subsidiary coins) mounted by LE 19.2 billion or
20.5 percent during the reportingyear, against LE 14.2 billion and 18.0 percent in the
preceding FY, to reach LE 112.7 billion at end of June 2008. The rise in banknote
issue during the year was mainly attributed to the pickup in net foreign assets with the
CBE.
Banknote Issue*
(LE mn)
Balance of Change During FY
End of June Banknote Issue Value %
2004 59922 7490 14.3
2005 67753 7831 13.1
2006 79253 11500 17.0
2007 93499 14246 18.0
2008 112705 19206 20.5
* Including subsidiary coins issued by the Ministry of Finance
As for the components of the issue cover, the value of gold increased by LE 2.0
billion worth, to reach LE 8.7 billion, as a result of its revaluation on 30th June 2008.
Likewise, government bonds also increased by LE 17.2 billion, reaching LE 103.7
billion. Accordingly, the structure of the cover at end of June 2008 was as follows:
92.3 percent as government bonds and 7.7 percent as gold.
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.
Currency in Circulation outside the CBE*

(LE mn)
June 2007 June 2008 Change During FY
Relative Relative 2006/ 2007/
Denominations Value Value
Importance Importance 2007 2008
Total 92175 100.0 111412 100.0 17.3 20.9
Banknote in
Circulation 91916 99.7 111137 99.8 17.3 20.9
PT 25 142 0.2 145 0.1 5.2 2.1
PT 50 234 0.2 242 0.2 (2.1) 3.4
LE 1 550 0.6 591 0.5 1.9 7.5
LE 5 987 1.1 1105 1.0 (9.9) 12.0
LE 10 3323 3.6 2845 2.6 (21.2) (14.4)
LE 20 8553 9.3 7194 6.5 (6.3) (15.9)
LE 50 27967 30.3 25422 22.8 (0.8) (9.1)
LE 100 47136 51.1 54529 49.0 33.6 15.7
LE 200** 3024 3.3 19064 17.1 - 530.4
Subsidiary Coins 259 0.3 275 0.2 9.7 6.2
* Representing the difference between banknote issue and cash at the CBE.
**
The LE 200 note has been in circulation as of May 2007.
1/3: Monetary Policy
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.
According to this institutional framework and until fully meeting the

fundamental prerequisites of the inflation targeting framework, the CBE will meet its
inflation target by steering short-term interest rates, keeping in view the
developments in credit and money supply, as well as a host of other factors that may
influence the inflation rate. This will further enhance the predictability, transparency
and soundness of policy performance.
5
Monetary Policy Performance
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:
First: Interest Rates:
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
O/N Interbank rate and policy rates

12.50
12.00
11.50
11.00
10.50
%
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
The monetary policy transmission mechanisms improved as a result of adopting

a new framework for its implementation. The new framework relies on the use
of the corridor system (within which the ceiling is the overnight interest rate on
lending from the Bank and the floor is the overnight deposit interest rate at the
Bank). As such, the interest rates on clients' deposits and loans have become
more responsive to the changes in the CBEs overnight interest rates. The
annual interest rates on six-month deposits reached about 7.3 percent at end of
June 2008 (against 7.0 percent at end of June 2007). Interest rates on one-year-
or-less loans reached about 11.6 percent per annum at end of June 2008 (against
11.1 percent at end of June 2007).
Second: Open Market Operations
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.
1/4: Payment Systems and Information Technology (IT)
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
Hereunder are the main achievements made during FY 2007-2008:
- 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.
- Information Technology (IT)
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
1/4/1: SWIFT Local Services and Clearing Houses Activity
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).
SWIFT Local Service Activity in Local Currency
Number of Value of Change during the

During FY Messages Transfers FY
(Unit) (LE mn) Number Value
2004/2005 326341 1246023 67840 275406
2005/2006 404776 1658794 78435 412771
2006/2007 525236 2280198 120460 621404
2007/2008 700668 3092401 175432 812203
Moreover, transactions executed via SWIFT in foreign currencies mounted to

13.9 thousand, with a value of US$ 105.6 billion, against 12.1 thousand and US$ 79.0
billion in the previous FY.
SWIFT Local Service Activity in US Dollar
Number of Value of Change during the

During FY Messages Transfers Period
(Unit) (US$ mn) Number Value
2005/2006 11049 39773 445 27840
2006/2007 12070 78997 1021 39224
2007/2008 13925 105586 1855 26589
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
CBE Clearing Houses* Activity
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.
1/5: Domestic Liquidity and Counterpart Assets
Domestic liquidity (M2) went up by LE 104.0 billion or 15.7 percent during

FY 2007/2008, against LE 102.3 billion or 18.3 percent a year earlier, to reach LE
766.7 billion at end of June 2008 and represent 85.5 percent of GDP in FY
2007/2008. This was attributed to the increase in LE deposits with banks by LE 80.3
billion or 19.0 percent, foreign currency deposits by the equivalent of LE 5.9 billion
or 3.8 percent and money in circulation outside the banking system by LE 17.8
billion or 20.5 percent.
Analysis of M2 components shows that the first component [money supply

(M1)] scaled up during the reporting year by LE 39.3 billion or 29.9 percent against
LE 22.0 billion or 20.1 percent in the previous FY, to reach LE 170.6 billion or 22.2
percent of total domestic liquidity at the end of June 2008. This was attributed to an
increase in money in circulation outside the banking system by LE 17.8 billion or
20.5 percent (against LE 12.6 billion or 17.0 percent), to reach LE 104.7 billion at
end of June 2008. Another contributing factor was the rise in demand deposits in
local currency by some LE 21.5 billion or 48.4 percent (against LE 9.4 billion or 26.8
percent), to post LE 65.9 billion at end of June 2008. The bulk of the rise in these
deposits (63.4 percent) was contributed by the private business sector.
Growth Rate of Domestic Liquidity by Component
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
Likewise, quasi-money (the 2nd component of domestic liquidity) augmented

by LE 64.7 billion or 12.2 percent during the reporting year, against LE 80.3 billion
or 17.8 percent in the previous FY, to reach LE 596.1 billion or 77.8 percent of total
domestic liquidity at end of June 2008. The bulk of the increase in quasi-money
(about 85.5 percent) was in the private sectors (household and private business) LE
time and saving deposits. These deposits went up by LE 55.3 billion or 15.3 percent,
to reach LE 415.5 billion or 69.7 percent of total quasi-money at end of June 2008. In
the meantime, the foreign currency deposits of the sector rose by only LE 5.9 billion
worth or 3.8 percent during the reporting year (against LE 17.1 billion worth or 12.5
percent in the preceding FY), to reach the equivalent of LE 159.8 billion at end of
June 2008.
Domestic Liquidity Components

End of June 2008
Local Currency
Time & Saving
Deposits
56.9%
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.
As to the counterpart assets of domestic liquidity, net foreign assets contributed

the bulk (12.8 points) of its growth rate. Contribution of net domestic assets
(domestic credit and net balancing items) was confined to 2.9 points.
11
Contribution of Domestic Liquidity Counterpart Assets

to Its Growth Rate
(%)
June 2005 2006 2007 2008
Domestic Liquidity Growth Rate 13.6 13.5 18.3 15.7
Net Foreign Assets 8.2 10.6 15.2 12.8
Net Domestic Assets 5.4 2.8 3.1 2.9
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
Foreign Assets & Liabilities of the Banking System

at End of June
Foreign Assets
LE bn
Foreign Liabilities
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
Domestic Credit by Sector (End of June)

LE bn
700 Household Sector
Private Business Sector
600 Public Business Sector
Gov. Sector (Net)
500
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).
In addition, credit to the public business sector edged up by LE 2.5 billion or

10.0 percent, (compared with a decline of LE 8.4 billion or 25.7 percent). This lifted
its debt to banks up to LE 26.9 billion or 4.7 percent of the total at end of June 2008.
Net credit to the government (including public economic authorities), retreated

by LE 4.3 billion or 2.4 percent in the reporting year (against a drop of LE 5.8 billion
or 3.2 percent in the preceding FY). This brought the debt of this sector to about LE
174.0 billion or 30.5 percent of total domestic credit at end of June 2008. The
decrease was a result of the decline in banks holdings of government securities by LE
6.2 billion (due to the redemption of some government bonds in accordance with the
settlement agreement between the CBE and the government on rescheduled loans
within the framework of Paris Club). It was also an effect of the increase in
government deposits by LE 13.7 billion, and higher loans by LE 15.6 billion.
13
Relative Structure of Domestic Credit

(End of June 2008)
13.7%
30.5%
51.1% 4.7%
Gov. Sector (Net) Public Business Sector

Private Business Sector Household Sector
Net balancing items had a contractional effect on domestic liquidity, as their

negative balance escalated by LE 20.7 billion (against a rise of LE 4.7 billion in the
preceding FY). The rise during the year was mainly ascribed to augmenting the
capital accounts by LE 21.0 billion (LE 3 billion of which was for increasing the
CBE capital). Add to this the retreat in unclassified assets and liabilities by LE 14.5
billion (partly due to the settlement made between the CBE and the government as
abovementioned). However, the retreat was offset by the rise in the balance of
interbank net debit and credit position by LE 14.8 billion.
1/6: Banking Supervision

The CBE continued its efforts to develop its supervisory role to be in line with
the international best practices in banking supervision. Accordingly, the On-Site
Supervision Department began to activate its risk-based supervisory examination to
include the examination techniques and automation, as well as the relevant reports.
Moreover, coordination between on-site and off-site supervision was strengthened to
ensure a regular monitoring of the banking system soundness.
Moreover, an examination agenda for 2008 was set to cover a number of banks
that hold about half of the assets of the banking system and ensure that the
examination of any bank be completed within no more than two years. The agenda
also allows for conducting special tasks in some banks during the year, whenever
deemed necessary. Under this new framework, the examination of a large number of
14
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.
1/7/1: Privatization and Consolidation Plan
A- Issue of Merger Regulations

The CBE Board of Directors issued the regulations for applying Article 79 of
Law No. 88 for the Year 2003 of the Central Bank, the Banking Sector and
Money, regarding dealing with banks that are exposed to problems affecting
their financial positions.
The CBE Board issued a decision for applying Article 41 of the said Law,
regarding the regulations and procedures of voluntary merger.
B- Merger and Acquisitions
Misr Exterior Bank was merged into Banque Misr on 16/9/2004.

The Arab African International Bank acquired 100% of the issued and paid-up
capital of Misr America International Bank. The merger took place at the end
of September 2005.
The Socit Arabe Internationale De Banque acquired 100% of the issued and
paid-up capital of Port-Said National Bank. The merger took place at the end
of January 2008.
15
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.
C- Privatization of the Bank of Alexandria (BoA)
The procedures of privatizing the BoA were initiated in September 2004 by

taking the following actions:
- A number of accounting firms (partners with international bureaus) and
international legal advisors were chosen to assess the financial, technical and
legal status of the Bank and prepare the financial statements of the Bank for
fiscal years 2003, 2004, 2005 and 2006, in accordance with international
accounting standards.
- 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.
- These institutions were invited to sign a confidentiality agreement, and be

committed accordingly not to disclose any information they acquire for the
purpose of studying the Banks acquisition.
- 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.
D- Divestiture of Public Stakes in Joint-Venture Banks

Under the plan of divesting the state-owned banks (SOBs) holdings in joint-
venture banks, the stakes of Banque du Caire Barclays were sold to the British
Barclays Bank and the NBEs stake in the NSGB was sold to the French Socit
Gnrale. Likewise, the stakes of Banque du Caire (BdC) and the Industrial
Development Bank in Misr America International Bank were sold to the Arab
African International Bank. The stake of Bank of Alexandria in the Egyptian
Commercial Bank was purchased by the Greek Piraeus Bank.
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.
1/7/2: Restructuring and Risk management of State-Owned Banks
Since the beginning of 2005, state-owned banks have been implementing a

time-lined restructuring plan.The plan was devised by the Banking Reform
Unit (BRU) at the CBE to develop all departments and technological systems,
besides establishing new departments. The BRU follows up the implement-
ation of the plan on a regular basis.
A finance agreement was forged with the European Commission to conduct

diagnostic reviews of, and develop, the current practices of three backbone
departments at the NBE and Banque Misr (Risk Management, IT and Human
Resources), in line with international best practices. In October 2005,
international consultants were chosen to conduct this process (ABN AMRO for
Banque Misr and ING Bearing for the NBE). The project is currently under
implementation, and is to be completed by end-2008.
Within the framework of the standards set by the Restructuring Unit in

agreement with the World Bank, the four state-owned banks have undergone
full audit reviews, in accordance with international accounting standards,
conducted by international audit firms, with a focus on asset quality, the
regulatory systems, and identification of the provisioning gap. The audit
reviews have been completed for fiscal years 2004, 2005 and 2006. The report
of 2007 is being prepared.
The state-owned banks have proceeded with the appointment of qualified

senior staff and cadres, and raised the necessary finance through the Banking
Reform Fund, mentioned in the Law of the Central Bank, the Banking Sector
and Money.
18
1/7/3: Non-Performing Loans (NPL) Unit at Banks
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.
Through a program initiated in mid-March, 2007, coordination was made

between the CBE, NBE, Banque Misr, Banque du Caire and the Industrial
Development Bank of Egypt. This program, dealing with small non-
performing debts (a maximum of LE 1 million each) in the manufacturing,
trade and services sectors, resulted in resolution of about 7600 NPL cases or 63
percent of the total cases listed under the program. The program set a deadline
for NPL resolution up to the end of June 2007. This gave real support to bona
fide cases of non-performing loans: 4300 or 57 percent of the total NPL cases
against whom legal actions had been taken, were resolved; 1200 of NPL
debtors against whom judgments were passed and 31 serving imprisonment
terms. This is bound to help raise the efficiency of these institutions and enable
them to resume their activities. Consequently, this will help reduce
unemployment, improve economic indicators and enhance small- and medium-
scale enterprises.
It was finally agreed with the Ministry of Investment on the value of

nonperforming debt of public enterprises to the four state-owned banks (LE 26
billion). In January 2006, an amount of LE 6.9 billion was repaid in cash to the
Bank of Alexandria, and thereafter, cash repayments of LE 9.1 billion were
made to the National Bank of Egypt, Banque Misr and Banque du Caire in
December 2006. In addition, it was agreed to repay the remaining debt (LE 10
billion) to the three state-owned banks from the privatization proceeds before
the end of 2008.
19
The Conciliation and Arbitration Administration at the CBE is in charge of

managing the conciliation and arbitration mechanism in accordance with the
prescribed rules and regulations. This mechanism aims at expediting final NPL
settlements between banks and NPL customers within a period not exceeding 4
months. The NPL Unit prepared a list of conciliators and arbitrators, including
an elite of lawmakers and bankers in this field, in addition to a list of audit
experts whose assistance may be sought. A number of meetings were held with
all banks to clarify their roles and responsibilities, as well as the details of the
above-said mechanism. This mechanism was announced to the market through
banks; and the cases applying for addressing their NPLs through this
mechanism are currently being worked out.
1/7/4: Bank Supervision Sector at the CBE
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:
- First phase: conducting diagnostic analysis of the current practices in the

field of banking supervision to assess how far they comply with
international standards; and accordingly an upgrading plan will be
designed, to raise the efficiency of the Sector in line with the
aforementioned goals. After the completion of this phase, the
recommendations were approved at end of March 2006.
20
- Second Phase: improving the supervisory techniques and organizing

comprehensive training courses to qualify the Supervision Sector staff for
applying the up-to-date techniques.
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.
1/8: Management of the Foreign Exchange Market and International Reserves

1/8/1:The Foreign Exchange and Dollar Interbank Market
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
Volume of Dealing and Weighted Average of US Dollar

Exchange Rate in the Interbank Market
US$ bn LE
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
Volume of dealing (end of Q) Exchange rate (end of Q)
Likewise, the volume of transactions in the interbank market picked up by 45.7

percent in the reporting year, to US$ 67.8 billion (the purchases and sales of the
private sector banks constituted 97.2 percent and 87.3 percent, respectively), against
US$ 46.5 billion during the preceding FY. Thus, the total volume of transactions
amounted to US$ 150.0 billion since the initiation of the interbank market up to the
end of June 2008.
Dealing of Public and Private Sector Banks in the Interbank

Market during 2007/ 2008
100%
Private Banks
80%
Public Banks
60%
87.3
97.2
40%
20%
12.7
0% 2.8
Purchases Sales
22
1/8/2: International Reserves
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.
Net International Reserves & Months of Merchandise Imports

End of June
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
NIR NIR/Months of Merchandise Imports
The CBEs investment policy aimed at distributing international reserves on

other currencies alongside the US dollar, on the basis of a number of determinants;
mainly the structure of Egypts external debt and the currencies of its main trade
partners. Such a policy managed to evade possible losses that could have been
triggered by the depreciation of the US dollar vis--vis other currencies. According
to this policy, NIR investments were distributed on diversified portfolios with
maturities and goals that are risk/return balanced. Additionally, for reserves to be
managed on a real time basis, the latest international electronic systems have been
used.
23
1/9: Domestic and External Public Debt

1/9/1: Domestic Public Debt
During FY 2007/2008, domestic public debt scaled up by about LE 28.9 billion

or 4.5 percent, to reach LE 666.1 billion or 74.3 percent of the GDP at market and
current prices during the year. The government's domestic debt represented 71.9
percent of the total, public economic authorities 7.5 percent and net debt of NIB 20.6
percent.
Domestic Debt at End of June 2008

(LE bn)
Government
Debt
478.7
Economic
Authorities Debt
50.1
NIB Debt
137.3
1/9/1/1: Domestic Debt of the Government
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
Government's Domestic Debt

(LE bn)
2007 2008 Change
Balances at End of June
Value % Value % + (-)
Net Government Debt 478.2 100.0 478.7 100.0 0.5
-Balances of Bonds & Bills 562.9 117.7 568.9 118.4 6.0
Notes and bonds* 444.2 92.9 422.4 87.8 (21.8)
Of which, tradable on exchanges 61.0 12.8 82.4 14.5 21.4
Treasury bills 118.7 24.8 146.5 30.6 27.8
- Deposits of the SIFs at the Treasury 4.5 1.0 2.3 0.5 (2.2)
-Net Balances at the Banking System -89.2 -18.7 -92.5 -19.3 (3.3)
Facilities 23.6 4.9 28.4 5.9 4.8
Deposits -112.8 -23.6 -120.9 -25.2 (8.1)
Net government debt/GDP (%) 64.2 53.4
Source: Ministry of Finance, CBE and NIB
Ratios are calculated in terms of LE million.
* Including Treasury bonds; housing bonds; bonds denominated in foreign currencies with public
commercial banks; the 5 percent ratio retained from profits of corporations subject to Law No. 97
of 1983 for the purchase of government bonds; and the holdings of resident financial institutions
(banking system and insurance sector) of dollar-denominated sovereign bonds tradable on world
exchanges.
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.
2) The LE 21.8 billion decline in the balance of treasury bonds to LE 422.4

billion at the end of the reporting year. This was an outcome of the following:
A) A decrease of LE 44.4 billion in the balance of treasury bonds as a result of
the following:
The early full redemption of 10 treasury bond issues, with a value of LE
30.7 billion to cover the cash and fiscal deficits and revaluation differences
of both loan repayment to abroad and foreign currency balances.
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 early partial redemption of 10-year treasury bonds, issued on

30/6/2002, at a value of LE 8.3 billion and an interest rate of 9 percent,
bringing their balance to LE 10.5 billion.
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.
B) An increase of LE 21.5 billion in the value of treasury bonds due to the

following:
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
The increase, on 4/3/2008, of LE 3.0 billion in the value of the treasury

bonds issued on 13/11/2007, to LE 5.0 billion on the same conditions.
The redemption of treasury bonds at a value of LE 2.0 billion on 14/2/2008,

bringing their balance to LE 78.5 billion at the end of June 2008.
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.
LE bn Government's Domestic Debt (End of June)

%
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
1/9/1/2: Debt of Public Economic Authorities

The debt of public economic authorities stepped up by LE 5.6 billion during
the reporting year, to reach LE 50.1 billion at the end of June 2008. The increase was
mainly attributed to the following developments: 1- the decline in the net credit
position of these authorities with the banking system by LE 6.0 billion due to their
higher loans by LE 10.7 billion; and larger deposits by LE 4.7 billion; and 2- the fall
in borrowing of these authorities from the NIB by LE 0.4 billion.
Debt of Public Economic Authorities

(LE bn)
2007 2008 Change
Balances at End of June
Value % Value % + (-)
Total Debt 44.5 100.0 50.1 100.0 5.6
- Net Credit Position at the Banking System -7.2 -16.1 -1.2 -2.3 6.0
Credit Facilities 28.8 64.7 39.5 78.9 10.7
Deposits -36.0 -80.9 -40.7 -81.2 -4.7
-Borrowings from NIB 51.7 116.1 51.3 102.3 -0.4
Total Debt/GDP (%) 6.0 5.6
Source: Ibid
1/9/1/3: National Investment Bank (NIB)

NIB's resources augmented by LE 23.3 billion, during the reporting year, to
reach some LE 192.5 billion at the end of June 2008. The rise was a result of the
following increases: LE 10.2 billion in the proceeds of investment certificates, LE 5.7
billion in post office savings, LE 4.1 billion in resources transferred from substitute
insurance funds, saving certificates & deposits of various authorities and LE 3.7
billion in the surpluses transferred by the two Social Insurance Funds for Civil
Servants and for Business Sectors Employees (public and private). It was also an
outcome of the decline in the accumulated interest on investment certificates (group
A) by LE 0.1 billion and the US dollar development bonds by LE 0.3 billion.
Resources of the NIB at End of June 2008
( LE bn )
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.
Uses of the NIB at End of June 2008

( LE bn )
Concessional Economic
lending & loans authorities
to holding 51.3
companies &
affiliate units
137.3
Deposits with
the banking
system
3.9
Domestic public debt service slightly declined by LE 17 million to LE 47.6

billion during FY 2007/2008, compared with the previous FY. The decline was an
outcome of the retreat in principal repayments by LE 2.0 billion to LE 0.9 billion and
the rise of nearly LE 2.0 billion in interest payments to LE 46.7 billion. The ratio of
domestic public debt service /GDP and revenues declined to 5.3 percent and 21.8
percent, respectively, during the reporting year against 6.4 percent and 26.4 percent a
year earlier. This was a main result of the increase in GDP and revenues during the
year under review.
% The Budget Domestic Debt Service/GDP

10
9 8.6
8
7 7.1
6.4
6
5 5.3
4
3
2
1
0
2004/2005 2005/2006 2006/2007 2007/2008
28
1/9/2: External Debt
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
US$ bn External Debt & Debt Service US$ bn
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 Debt Service ( right axis)
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.
Total Medium &Long-Term Public & Publicly Guaranteed

US$ mn
External Debt Service
( Fiscal Year )
4000
3500
3000
2500
2000
1500
1000
500
0
20 8
20 9
20 0
20 1
20 2
20 3
14
20 5
20 6
17
20 8
20 9
20 0
20 1
20 2
20 3
20 4
20 5
26
20 7
20 8
20 9
20 0
20 1
20 2
20 3
20 4
20 5
36
20 7
20 8
20 9
40
0
0
1
1
1
1
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
Principal Interest Total

29
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
1- External Debt by Maturity
A breakdown of external debt by maturity indicates that medium- and long-

term external debt reached about US$ 31.4 billion or 92.6 percent of total debt at the
end of June 2008. Of this amount, US$ 20.5 billion (60.5 percent of the total) were
owed to Paris Club member countries in the form of bilateral loans (rescheduled and
non-rescheduled) and suppliers' and buyers' credit. Debt due to countries other than
Paris Club members amounted to US$ 0.8 billion or 2.5 percent.
External Debt Structure
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
2- External Debt by Debtor
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.
External Debt by Debtor

(US$ mn)
Share in Total Increase/Decrease
2500
2149.2
2000
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 Debtor

End of June
(US$ bn)
40
35
30
25
20
15
10
5
0
2006 2007 2008
Other Sectors Banks

Monetary Authority (CBE) Central & Local Government
31
3- External Debt by Creditor
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.
External Debt by Creditor

Egyptian
bonds and USA
notes 11.4%
7.8%
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
External Debt by Creditor

(US$ mn)
June 2007 June 2008
At the End of Relative Relative
Value Value
Importance Importance
Total External Debt 29898.0 100.0 33892.8 100.0
USA 4065.1 13.6 3859.4 11.4
Japan 3207.0 10.7 3578.2 10.5
Total EU Countries 12008.9 40.2 13518.1 39.9
France 4574.4 15.3 4955.1 14.6
Germany 3599.3 12.1 4290.3 12.7
Spain 829.7 2.8 817.5 2.4
Italy 697.7 2.3 666.6 2.0
UK 1162.6 3.9 1590.9 4.7
Austria 544.7 1.8 588.6 1.8
Others 600.5 2.0 609.1 1.7
Total Arab Countries 988.3 3.2 1422.6 4.2
Kuwait 542.2 1.8 692.5 2.0
Saudi Arabia 116.8 0.4 253.2 0.8
UAE 91.2 0.3 107.1 0.3
Bahrain 15.6 0.1 52.4 0.2
Others 222.5 0.6 317.4 0.9
Total International and
Regional Organizations 6815.2 22.8 7361.5 21.7
IDA 1484.4 5.0 1519.5 4.5
Arab Fund for Economic and
Social Development 1094.3 3.7 1179.3 3.5
European Investment Bank 1733.7 5.8 2028.8 6.0
World Bank 1007.4 3.4 1073.4 3.1
AMF 315.7 1.1 250.0 0.7
African Development Fund and
Bank 963.8 3.2 1059.6 3.1
Islamic Development Bank
(Jeddah) 70.4 0.2 54.3 0.2
Other Institutions 145.5 0.5 196.6 0.6
Egyptian Bonds and Notes 1570.3 5.3 2651.8 7.8
Other Countries 1243.2 4.2 1501.2 4.5
33
4- External Debt by Main Currencies
A breakdown of external debt by main component currencies (US dollar,

Japanese yen and euro) indicated that the US dollar is the main borrowing currency,
with a relative importance of 38.7 percent of the total, because the outstanding
obligations in US dollar are also owed to creditors other than the USA. The euro
comes next constituting 33.6 percent, then the Japanese yen 10.6 percent and the
Kuwaiti dinar 5.3 percent.
External Debt by Major Currencies

End of June 2008
Kuwaiti Dinar EURO

5.3% 33.6%
SDR
4.3%
Japanese Yen
10.6% Egyptian
Pound
Pound Sterling 3.3%
0.7%
USD Other
Swiss Franc 38.7% Currencies
1.8% 1.7%
- New Commitments on Loans and Facilities
During FY 2007/2008, the new commitments on loans and facilities reached

US$ 1.8 billion. The bulk of these commitments was in loans and facilities provided
by the international and regional organizations (US$ 1.3 billion or 70.7 percent)
particularly the International Bank for Reconstruction and Development (IBRD), the
African Development Bank and the European Investment Bank (EIB). Moreover,
bilateral loans accounted for US$ 0.5 billion or 28.2 percent of total commitments,
followed by suppliers' and buyers' medium- and long-term credit with US$ 0.02
billion or 1.1 percent of the total.
- Main Indicators of External Debt
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.
Main Indicators of External Debt

(%)
FY
2005/06 2006/07 2007/08
Debt balance/GDP 27.6 22.8 20.1
Debt balance/exports of goods and services 82.4 70.4 59.9
Debt service/exports of goods and services 8.5 6.9 5.1
Debt service/current receipts (including transfers) 7.3 5.9 4.3
Interest payments/exports of goods and services 1.6 1.5 1.3
Interest payments/current receipts (including transfers) 1.4 1.3 1.1
Short-term debt/total external debt 5.5 4.8 7.4
Short-term debt/net international reserves 7.1 5.1 7.3
External debt per capita (US$) 401.7 398.5 450
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.
Debt Service/Exports of Goods and Services in Egypt

Versus the Group of Developing Countries
(%)
2006 2007
Calendar Years Principal Principal
Interest Repayments Total Interest Repayments Total
Developing
countries 4.4 9.4 13.8 4.2 6.6 10.8
Africa 3.0 9.5 12.5 2.6 4.9 7.5
Asia (developing
countries) 2.2 4.4 6.6 2.1 3.8 5.9
Middle East 1.9 4.4 6.3 2.2 2.9 5.1
Egypt* 1.6 5.9 7.5 1.4 3.6 5.1
Source: IMF's World Economic Outlook April 2007 (statistical appendix)
*
According to BOP data during the two calendar years 2006 and 2007.
1/10: Human Resources Development
During FY 2007/2008, the CBE continued to prepare and qualify a new

generation of young banking leaders capable of keeping up with the international
banking developments. To this end, the CBE introduced a number of qualifying and
training programs delivered by local and foreign parties.
35
1/10/1: CBE Programs
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).
Participants in the CBE Training Programs
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
Furthermore, the CBE dispatched 98 trainees to participate in training courses,

organized by international and regional institutions, to catch up with the latest
developments. The Central Bank also admitted 28 trainees from abroad to be trained
in its various departments.
Participants in Training and Qualifying Programs
6000
5000
4000
3000
2000
1000
0
Banking Institute External Entities Computer Laboratory External Missions
Programs
2006/2007 2007/2008
36
1/10/2: Activity of the Egyptian Banking Institute (EBI)
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.
Emphasizing its role in satisfying the different training requirements -in

accordance with the government's plan for developing the role of SMEs in the
development plan- the Institute, in cooperation with BDSSP/CIDA, has established
the Small, Medium and Micro Enterprises Unit. The main target of this unit is to
narrow the gap between small enterprises and financing entities. This is realized by
setting up a training program for banks and enterprises to provide a staff specialized
in SMEs. In addition, the Institute hosts conferences and seminars with banks' staff,
to better understand the nature of loans required for such projects and provides the
necessary assistance to banks to establish SME units according to international
standards.
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
Participants in the Banking Institute Programs
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.
The EBI provided a comprehensive set of specialized programs and certificates

(local and international) during the reporting year to upskill the bank staff. The local
certificates are the Banking Lawyer Certificate, the Professional Certificate in Human
Resource Management and the Customer Service Certificate. On the other hand, the
international certificates include: the Banking Operations Certificate, Banking Credit
and Risks Certificate, ACI Dealing Certificate, Certificate of Banking Auditor
(CBA), the Association of Chartered Certified Accountants (ACCA) and the
International Computer Driving License (ICDL) certificates. The specialized
programs were attended by 566 trainees, through 64 programs spanning over 3574
training hours.
In the field of senior management programs, the Institute organized 35

programs covering 572 training hours and attended by 27 participants.
Participants in Training Programs of the Banking Institute
22065 24779 Short- term Programs
Specialized Programs
Seminars & Conferences

198 392
733 566
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
2/1: Financial Position
The aggregate financial position of banks operating in Egypt (40 banks)

reached LE 1.1 trillion at the end of June 2008. This denoted a rise of LE 145.4
billion or 15.5 percent during FY 2007/2008, against LE 176.4 billion or 23.2 percent
during the previous FY.
A breakdown of the financial Banking Liabilities & Relative Importance of their

position indicates that around 78 Components
at End of June
percent of the total increase in LE bn
liabilities was concentrated in deposits 100% 1500
and obligations to local banks. As such, 80% 1200
deposits grew by LE 97.2 billion and 60% 900
obligations by LE 16.1 billion (mainly 40% 600

because of the increase in the CBEs
20% 300
foreign currency deposits at banks). In
addition, banks increased their 0%
2004 2005 2006 2007 2008
0
provisions by LE 8.8 billion and Equities Prov isions

Bonds & Long-term Loans Obligations to Local Banks
equities by LE 7.8 billion. Obligations to Banks Abroad Total Deposits
Other Liabilities Total Liabilities (Right Scale)
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
Banking Assets & Relative Importance of their

On the asset side, the increase Components
at End of June
mainly stemmed from a rise in the LE bn
balances with local banks by LE 60.8 100% 1500
billion (because of higher balances at the 80% 1200

60% 900
CBE, particularly the deposits accepted
40% 600
under open market operations, being a 20% 300
monetary policy instrument) and also in 0% 0
lending and discount balances by LE 47.7 2004 2005 2006 2007 2008
billion. Cash Securities & Inv estments

Balances with Local Banks Balances with Banks Abroad
Loan & Discount Balances Other Assets
Total Assets (Right Scale)
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
augmented by LE 24.3 billion; 40

34.4
June 2007
government bonds by LE 13.1 billions; 35
28.8
31.6
30 June 2008
participations in corporate equities by 25
LE 3.5 billion; non-government bonds 20 16.6 16.2
by LE 1.6 billion and foreign securities 15 10.0

by LE 0.9 billion. On the other hand, 10
8.2 7.6
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
the CBE's replacement of these notes Bills Bonds Equities Securities
with the deposit auctions.

41
Banks' net transactions with their correspondents abroad during FY

2007/2008 showed a decline in banks' net credit balances by the equivalent of LE 4.9
billion or 4.3 percent to LE 109.5 billion worth at the end of June 2008 (against LE
114.4 billion worth at the end of June 2007). The decline in banks' credit position was
due to a decrease in their balances with banks abroad by the equivalent of LE 1.6
billion, and the increase in their obligations to these banks by LE 3.3 billion worth.
2/2: Deposits
At the end of June 2008, banks deposits including government deposits

reached LE 747.2 billion or 69.0 percent of banks' aggregate financial position, rising
by LE 97.2 billion or 15.0 percent during FY 2007/2008, against LE 81.1 billion or
14.3 percent a year earlier. Given the preference to save in Egyptian pound, prompted
by its higher interest (vs. foreign currencies) and stability, the increase in deposits
during the reporting year was concentrated in local currency (around 91.3 percent of
the total). Deposits in local currency rose by LE 88.8 billion or 19.2 percent to LE
552.1 billion, representing 73.9 percent of total deposits with banks at the end of June
2008. On the other hand, deposits in foreign currencies modestly edged up by LE 8.5
billion worth.
Deposits with Banks by Sector

(LE bn)
End of June Local Currency Foreign Currencies
2006 2007 2008 2006 2007 2008
Total 401.1 463.3 552.1 167.7 186.6 195.1
Government sector 49.4 37.2 44.8 29.3 30.3 33.2
Public business sector 20.4 23.5 29.5 5.6 6.7 9.1
Private business sector 41.4 77.5 119.7 39.3 49.1 57.2
Household sector 288.0 321.8 354.1 92.2 98.3 93.7
External sector 1.9 3.3 4.0 1.3 2.2 1.9
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
% Rate of Change in Deposits by Sector
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
2/3: Lending Activity
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.
Around 61 percent of the increase in lending and discount balances was

concentrated in loans in foreign currencies, which significantly rose by LE 29.1
billion worth or 27.6 percent to LE 134.3 billion worth at the end of June 2008. This
notable increase in foreign currency loans was attributed to the decline in interest on
US dollar, the abatement of concerns about exchange rate fluctuations, and the
continued stability in the foreign exchange market. Accordingly, loans / deposits in
foreign currencies rose to 68.8 percent at the end of June 2008, against 56.4 percent
at the end of June 2007. Around 51 percent of this increase was in the private
business sectors loans which grew by LE 14.8 billion worth or 19.5 percent.
Business Sectors Share in Total Loans, FY 2007/2008
(LE mn)
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
Loan and discount balances in local currency modestly went up by LE 18.6

billion or 7.5 percent, posting LE 267.2 billion at the end of June 2008. In the light of
banks expansion in retail business and the concurrent decline in real interest rates,
the household sector obtained about 77.0 percent of the total increase in LE loans. As
such, loans in local currency to this sector increased by LE 14.4 billion or 26.0
percent, against LE 5.3 billion or 10.6 percent during the year of comparison. On the
other hand, loans to the private business sector recorded a tiny increase of LE 4.0
billion or 2.4 percent. Loans in local currency/total LE deposits retreated to 48.4
percent at the end of June 2008, against 53.6 percent at the end of June 2007, because
deposits grew faster than loans.
A relative breakdown of loans (local and foreign currencies) by economic

activity shows that the manufacturing sector was the major recipient, with a relative
share of 36.0 percent of the total at the end of June 2008. The services sector
followed with 26.6 percent, then trade (14.4 percent) and finally agriculture (1.6
percent).
Credit Facilities by Econom ic Activity

LE bn at End of June 2008
160
140
120
100
80
60
40
20
0
Agriculture Manufacturing Trade Services Unclassified
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
2/4: Banks' Cash Flows
Banks' cash flows statement showed a surplus of LE 4.1 billion worth on

external transactions during the reporting year. Banks' resources reached LE 4.9
billion worth and their uses LE 0.8 billion worth. In contrast, banks' local transactions
brought about a deficit equivalent to the aforementioned surplus.
As for banks' external transactions, their resources emanated from the

increase in banks external obligations by the equivalent of LE 3.3 billion and the
decrease in their external balances by LE 1.6 billion worth. As for external uses,
banks portfolio investment modestly rose by the equivalent of LE 0.8 billion.
Resources from local transactions registered LE 149.6 billion during the

reporting year, against LE 196.9 billion during the previous FY. These resources
stemmed from the increase of LE 97.3 billion in deposits, (LE 88.8 billion in local
currency deposits and LE 8.5 billion worth in foreign currency deposits, against LE
62.2 billion and LE 18.9 billion worth, respectively). This signified the higher
confidence in the Egyptian pound, fostered by the stability of, and the higher interest
on, the local currency, relative to foreign currencies. In addition, resources realized
from banks' augmentation of their provisions reached LE 8.8 billion and from their
obligations to the CBE LE 17.7 billion because of the increase in the CBEs foreign
currency deposits with banks. On the other hand, resources achieved from capital
accounts (equities) reached LE 7.8 billion as a result of the increase in banks' capital;
from other obligations LE 16.1 billion; and from the decline in balances at local
banks LE 1.9 billion.
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
Banks' Cash Flows Statement*

(LE mn)
During 2006/2007 2007/2008
First: Local Transactions
1. Total Resources: 196912 149657
A. From the Increase in Obligations (Liabilities) 176606 147733
Deposits 81112 97246
Obligations to the CBE 56106 17681
Capital accounts (equities) 5058 7846
Loans and bonds 8825 -
Obligations to local banks 5025 -
Provisions - 8845
Other obligations 20479 16115
B. From the Decrease in Assets 20306 1924
Balances with local banks - 1924
Portfolio investments 20306 -
2. Total Uses: 143896 153716
A. In Reducing Obligations 1481 5667
Loans and bonds 4066
Obligations to local banks - 1601
Provisions 1481 -
B. In Increasing Assets 142415 148049
Cash and balances with the CBE 90837 65300
Portfolio investments - 24924
Lending and discount 29705 47679
Balances with local banks 5723 -
Other assets 16150 10146
Sources/Uses Surplus (+) or Deficit (-) 53016 -4059
Second: External Transactions
1. Total Resources: 1236 4895
A. From the Increase in Obligations 1236 3321
Obligations to banks abroad 1236 3321
B. From the Decrease in Assets 0 1574
Balances with banks abroad 0 1574
2. Total Uses: 54252 836
A. In Reducing Obligations 0 0
Obligations to banks abroad - 0
B. In Increasing Assets 54252 836
Portfolio investments 2440 836
Balances with banks abroad 51812
Sources/Uses Surplus (+) or Deficit (-) 53016 4059
*
Figures in this statement represent only the difference between balances at the end of both the
reporting year and the preceding year.
46
2/5: Bank Performance Indicators
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.
In response to the implications of the sub-prime mortgage crisis that have

rocked the US and European markets, the CBE required banks to review the limits of
their exposure to each country according to the scale of its economy and its sovereign
credit rating. Furthermore, banks are to study and determine maximum limits for their
customers of foreign financial institutions, given that these limits are to be
periodically reviewed. Banks should also reconsider investments with these
institutions in the light of their sub-prime related losses. On June 3, 2008, the CBE
Board of Directors issued a decision specifying the regulations that banks should
comply with, when practicing the activity of money market funds, in order to ensure
disciplined oversight by banks over their money market funds.
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:
First: Capital Adequacy Ratio
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.
The follow-up of banks' compliance showed the following results:
- 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.
Second: Asset Quality
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:
The bank resumed compliance with the ratio as of July 2008.

48
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:
A. Banks Whose FY Ends June 30 (Mostly Public Sector Banks)

- The net profits of commercial banks and the Export Development Bank of
Egypt amounted to LE 589 million for the FY ending June 30, 2007, compared
with LE 382+ million in the previous FY. Meanwhile, specialized public sector
banks did not achieve any profits in the preceding FY ending June 30, 2007,
because they increased their provisions.
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.
B. Banks Whose FY Ends 31 December
- 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
Fourth: Reserve Requirement Ratio
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
3/1: Economic Growth

During FY 2007/2008, the Egyptian economy remained on the rise. Real GDP
grew at factor cost according to the Ministry of Economic Development from 7.1
percent during the previous fiscal year to 7.2 percent during the reporting year, to
reach some LE 761.4 billion.
Shares of Consumption,Investment and Net Exports in Real GDP Growth Rate
(percentage point)
8
6
4
2
0
-2
-4
2004/2005 2005/2006 2006/2007 2007/2008
Consumption Investment Net Exports
The continued improvement was driven by strong domestic demand (consumer

and investment) and the notable rise in oil and non-oil exports, especially of finished
goods and raw materials. The improvement was also attributed to the favorable
impact of continued banking reform, and the tax and customs reforms. This is in
addition to the confidence in the efficiency of the foreign exchange market and the
efforts made to strengthen the infrastructure. Actually, all these actions largely
contributed to encouraging local investment and attracting further FDI flows (to reach
a net inflow of US$13.2 billion during the reporting year against US$11.1 billion a
year earlier).
(%) Egypt Real GDP vs Emerging Economies
10.0 7.7 7.5 7.3 7.5 7.2

8.0
6.0 6.9 7.1 6.5
4.0
4.2 4.6
2.0
0.0
2003/2004 2004/2005 2005/2006 2006/2007 2007/2008
Egypt Emerging Economies
Source: Ministry of Economic Development Social and Economic Development Plan JP

Morgan, World Financial Markets.
52
3/1/1: GDP by Sector
A follow-up of the implementation of the Development Plan for FY 2007/2008

reveals that the commodity, productive and social services sectors contributed some
3.1, 3.6 and 0.5 percentage points, in order, of real GDP growth rate (7.2 percent).
The main contributors to the GDP growth were manufacturing (1.3 percentage
points); wholesale & retail trade and restaurants & hotels (0.8 percentage point each);
construction & building, extractions and Suez Canal (0.6 point each); and finally
agriculture and communications (0.5 percentage point each).
Shares of Productive and Services Sectors in GDP Real Growth Rate

(at Factor Cost)
(percentage point)
2006/2007 2007/2008
Total GDP 7.1 7.2
Productive Sectors, of which: 3.1 3.1
Agriculture, irrigation & fishing 0.6 0.5
Extractions (oil, natural gas and others) 0.3 0.6
Manufacturing (oil refining and others) 1.3 1.3
Construction & building 0.8 0.6
Services Sectors, of which: 4.0 4.1
Wholesale & retail trade 1.0 0.8
Financial intermediaries & supporting services 0.4 0.3
Transportation & storage 0.4 0.4
Suez Canal 0.5 0.6
Restaurants & hotels 0.4 0.8
Communications 0.3 0.5
Source: Ministry of Economic Development
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
Growth Rate of Public Sector Output, by

Sector (percentage point) Growth Rate of Private Sector
2007/2008 Output, by Sector (percentage point)
2007/2008
Others
0.8
Suez Canal
0.6 Others M anufacturing
1.0 Industries
1.2
Financial Extractio ns A griculture Who lesale

Intermediar- 0.5 0.5 & Retail Trade
ies General 0.8
0.2 Go vernment Co nstruc-
0.2 Restaurants & tio n & B uilding
Ho tels 0.6
0.8
3/1/2: GDP by Expenditure
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.
Sectoral Breakdown of the Business Sector's Investments

LE million (Public and Private)
2007/2008
50000.0
45000.0
40000.0
35000.0
30000.0
25000.0
20000.0
15000.0
10000.0
5000.0
0.0
Educational
Real Estate
Electricity &
Reclamation
Others
Manufacturing
Communications
&Oil products
Mining & Crude
Retail Trade
Wholesale &
Restaurants &
Agriculture,
Irrigation &
Natural Gas,
Transportation
Sevices
and Storage
water
Hotels
Oi l
Private Public
54
Private consumption continued to grow at a high rate (21.2 percent), reaching

LE 653.5 billion or 72.9 percent of GDP. The tangible cuts in income taxes and
customs duties contributed to this growth.
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
Moreover, exports of services and goods helped push up the economic

performance during the year, recording a growth rate of 30.4 percent (against 13.2
percent during the year of comparison) to reach LE 293.9 billion. Nonetheless,
exports' pace of growth was still lagging behind that of imports that registered 34.1
percent (against 11.0 percent in the preceding year) to post LE 347.9 billion.
Accordingly, domestic resource gap widened further. However, this was mitigated by
the 20.0 percent rise in gross domestic saving to post LE 145.5 billion during the
reporting year.
55
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
Domestic Resources Gap Exports Imports
3/1/3: Labour Force and Unemployment
The sustainable improvement in economic performance during FY 2007/2008

helped expand the absorptive capacity of the labour market. As such, some 900
thousand new job opportunities were created, thereby increasing employment to 22.6
million persons during the reporting year. Because the rise in employment exceeded
the total increase in the labour force that recorded 700 thousand persons during the
year, unemployment fell from 8.9 percent to 8.4 percent.
Sectoral Distribution of Employees

(FY 2007/2008)
Services sector
33%
Commodity
sectors
50%
Productive
services sectors
17%
56
According to the CAPMAS estimates, the sectoral distribution of employment

during FY 2007/2008 showed that the commodity sectors accounted for almost half
of the total. Services sectors accounted for 33 percent and the productive services for
17 percent.
3/2: Inflation
A- Consumer Price Index (CPI)
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
All Items Food and non-alcoholic Beverages

Electricity & Gas and Other Fuels Transportation
Source: CAPMAS
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
2006/2007 14.3 93.8 50.2 6.8 9.5

2007/2008 56.3 46.5 74.5 155.7 66.0
Source: International Financial Statistics, IMF, various issues
57
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% )
Sugar and Other food products

confectionery 0.7
2.0 Bread and cereals
Vegetables
5.4
6.5
Fruit Meat
3.1 12.9
Oils and fats

Fish and seafood 3.1
2.8
Milk, cheese and eggs

6.1
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.
A breakdown of main components of CPI (urban) inflation rate (20.2 percent

per annum) showed that food & beverages accounted for 12.1 percentage points, oil
products (1 percentage point), transportation (1 percentage point), education services
(1.6 percentage point) and health care (0.4 point)
58
Overall Inflation by CPI Groups (Urban)
Main CPI Groups CPI at the CPI at the Annual Share in

End of End of Inflation Overall
June 2007 June 2008 Rate Inflation
2007/2008 2007/2008
(%)
General Index 101.0 121.5 20.2 20.2
Food & non-alcoholic beverages 102.5 130.3 27.1 12.1
Alcoholic Beverages, tobacco and narcotics 100.0 112.1 12.1 0.3
Clothing and footwear 100.2 104.3 4.1 0.3
Housing, water, electricity, gas and other
fuel 100.0 107.6 7.6 1.0
Furnishings, household equipment and
routine maintenance of the house 100.4 110.7 10.3 0.4
Health 100.0 112.1 12.1 0.4
Transportation 100.0 120.1 20.1 1.0
Communications 100.0 104.0 4.0 0.2
Recreation and culture 100.0 121.7 21.7 0.7
Education 100.0 137.7 37.7 1.6
Restaurants, cafes and hotels 100.0 146.1 46.1 1.7
Miscellaneous goods and services 100.2 111.5 11.3 0.5
B- Producer Price Index (PPI)
Similarly, the PPI-based inflation rate released by the CAPMAS jumped to

33.7 percent during the reporting year, against 6.9 percent during the year of
comparison.
Producer Price Index (2004/2005 = 100)
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
The Relative Weights of Main PPI Groups (%)
Others
14.3
Agriculture, Forestry
and Fishing
25.1
Manufacturing 38.9 Mining and Quarrying

21.7
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)
Overall Inflation by PPI Groups
Main PPI Groups PPI at the PPI at the Annual Share in

End of End of Inflation Overall
June 2007 June Rate Inflation
2008 2007/2008 2007/2008
(%)
General Index 126.0 168.5 33.7 33.7
Agriculture, forestry and fishing, of
which: 143.0 179.5 25.5 7.3
Cereals and Legumes 111.9 182.2 62.8 2.4
Rice 100.3 146.7 46.3 0.7
Raising of poultry and egg production 126.5 160.4 26.8 0.8
Mining and quarrying, of which 136.8 232.3 69.8 16.4
Crude oil 157.6 306.7 94.6 25.6
Quarrying of stone, sand and clay 103.6 161.1 55.5 0.0
Manufacturing, of which: 115.7 144.4 24.8 8.9
Processed food products, of which 114.9 127.7 11.1 0.9
-Oils and fats 100.0 169.1 69.1 0.6
-Dairy Products 109.4 125.5 14.7 0.1
Manufacture of Fertilizers 107.4 175.4 63.3 0.3
Wood & Products 104.1 142.8 37.2 0.0
Cement Industry 122.7 148.6 21.1 0.2
Iron and Steel Industry 129.6 241.0 86.0 3.6
Electricity, Gas, Steam and Air
Conditioning Supply, of which: 100.0 114.0 14.0 0.2
Electric Power Generation, Transmission
and Distribution 100.0 119.7 19.7 0.3
Water Supply and Sewerage Activities 128.0 138.7 8.4 0.2
Transportation and Storage, of which 101.7 110.9 9.0 0.2
Land Transport 112.0 130.3 16.3 0.1
Accommodation and Food Service
Activities , of which 105.2 117.5 11.7 0.5
Meal serving services in limited-service
facilities 121.8 218.2 79.1 0.4
Information and Communications 107.8 107.8 0.0 0.0
60
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.
3/3: Consolidated Fiscal Operations of the General Government
In FY 2007/2008, the fiscal policy aimed at mitigating the impact of price

hikes on low-income brackets as subsidies remarkably increased by LE 30.2 billion
compared with the previous FY, to LE 84.2 billion, almost one third of total
government expenditures. The increase was mainly in petroleum products and ration
commodities, to offset the effects of high global prices on local prices. In this sense,
partially-subsidized ration cards have been shifted to fully-subsidized, and the
number of beneficiaries was increased by 15 million persons. Moreover, subsidies to
the EGPC and GASC were raised, with the aim of building up a commodity stock to
face the prospects of further world price hikes.
During the reporting year, wages and compensations of employees scaled up

by LE 10.7 billion compared with the preceding FY, reaching LE 62.8 billion or 22.3
percent of total government expenditures. This included the periodical and social
allowances that represent 30 percent of the basic salary. Likewise, expenditures on
education rose by 21.3 percent to LE 33.7 billion, or 11.9 percent of total government
expenditures. Expenditures on health increased by 26.1 percent to LE 13.1 billion, or
4.6 percent of total government expenditures. Despite the tangible increase in
expenditures on education and health, their ratios to GDP were confined to 3.8
percent and 1.5 percent, respectively, during the reporting year.
Subsidies to EGPC, GASC, Education & Health as a Percentage of Total Government

% Expenditure
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
Education & Health GASC Subsidies EGPC Subsidies

61
Government expenditures and public revenues increased by 27.1 percent and

22.9 percent, respectively, in the reporting year. Consequently, the overall budget
deficit widened to LE 61.1 billion during FY 2007/2008, against LE 54.7 billion a
year earlier. The budget deficit/GDP ratio declined to 6.8 percent in FY 2007/2008,
from 7.5 percent in FY 2006/2007, mainly because of the higher GDP.
Ratios of Expenditures, Revenues & Overall Deficit / GDP

%
40
35
30
25
20
15
10
0
2003/2004 2004/2005 2005/2006 2006/2007 2007/2008
Revenues Expenditures Overall Deficit
Purporting to reduce the budget deficit, the government issued a number of

regulations and laws to boost state revenues and rationalize subsidies. In this context,
a law amending the Financial Resources Development Law was issued, to include
increasing vehicle licensing fees and the sales tax on cigarettes and certain oil
products. Amendments also covered abolishment of the tax exemptions on treasury
bills . Moreover, the new Real Estate Tax Law was enacted in the reporting year.
Certain provisions of the Executive Regulations of the Income Tax Law, the Law on
Regulation of Customs Exemptions, and the Sales Tax Law were amended . Customs
tariffs were cut on capital goods to redress customs distortions in some local
industries. In addition, natural gas and electricity prices were raised for companies in
energy-intensive industries, given that developments in energy prices are to be
closely monitored to ensure efficient and effective pricing. With respect to the
rationalization of subsidies, a number of foodstuffs were exempted from customs
duties in order to reduce their prices in the local market.
Hereunder is a follow-up of the executed consolidated fiscal operations of the

general government in FY 2007/2008, according to the preliminary actual data of the
Ministry of Finance:
62
3/3/1: Budget Sector

(Administrative System - Local Administration - Service Authorities)
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.
Tax Revenues / Total Budget Revenues

FY 2007/2008
Other Taxes
2.9%
Taxes on
International Trade
6.3%
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.
Moreover, receipts from customs duties scaled up by LE 3.7 billion or 35.2

percent as compared with the previous FY, owing to the escalation in merchandise
imports by 37.8 percent, to US$ 52.8 billion during the reporting year.
63
Total Revenues,Tax Revenues & Property Income

(LE bn)
2007/2008
2006/2007
2005/2006
2004/2005
2003/2004
0 50 100 150 200 250
Total Revenues Tax Revenues Property Income
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.
Grants obtained during FY 2007/2008 reached LE 1.5 billion, down by 62.4

percent below the level of the previous FY. The decline in current and capital grants
was largely attributed to the drop in grants from the USA.
Expenditures, according to the actual data, totaled LE 282.3 billion or 31.5

percent of GDP during FY 2007/2008, with a rise of LE 60.3 billion or 27.1 percent
over the pervious FY. Almost half the rise in expenditures (50.2 percent) was directed
to supply commodities and petroleum subsidies and others. This rise came as a
government policy response to the upward trend in world prices. As such, subsidies
absorbed LE 84.2 billion of expenditures, up by 56.1 percent over the preceding FY,
and 51.2 percent over estimates. Moreover, wages and compensations of employees
rose by LE 10.7 billion or 20.5 percent, to LE 62.8 billion or 22.3 percent of total
expenditures. The marked rise in this item was guided by a government policy aiming
to improve the conditions of civil servants (the item in question includes cash and in-
kind benefits, all the raises, periodical allowances and incentives set at the beginning
of the FY, and the costs of adding the special allowance of FY 2002/2003).
64
Total Expenditures of the Budget Sector

2007/2008
( LE bn )
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.
Purchases of non-financial assets (investments) amounted to LE 34.2 billion or

12.1 percent of total expenditures, up by LE 8.7 billion or 34.1 percent over the total
executed investments in the previous FY. This amount included LE 6.0 billion,
representing additional investments for potable water and sanitary sewage projects,
financed from the proceeds of selling land plots in FY 2007/2008.
Summary of the Fiscal Operations

of the Budget Sector
(LE mn)
2006/07 2007/08 2006/07 2007/08
Revenues Actual Preliminary Expenditures Actual Preliminary
Actual Actual
Total Revenues 180215 221404 Total Expenditures 222029 282290
Tax revenues 114326 137319 Compensations of employees 52153 62839
Taxes on income &
profits 58535 67059 Purchases of goods & services 17028 18470
Taxes on property 1788 2052 Interests 47700 50528
Taxes on goods & Subsidies, grants & social
services 39436 49747 benefits 58442 92371
Customs 10369 14020 Subsidies 53959 84205
Other taxes 4198 4317 Grants 2599 3890
Grants 3886 1463 Social benefits 1612 4050
Other revenues 62003 82746 Others 272 226
Property income 45111 52455 Other expenditures 21208 23891
Proceeds of selling
goods & services 9776 12038 Defense 17718 19849
Financial investments 4376 5765 Other 3490 4042
Others 2740 12488 Purchases of non-financial assets
(investments) 25498 34191
65
As a result of the above-mentioned developments on the revenues and

expenditures sides during FY 2007/2008, the budget showed a cash deficit of LE 60.9
billion or 6.8 percent of GDP, against 5.7 percent during the previous FY. By adding
the net acquisition of financial assets (LE 236 million), the overall budget deficit
would post LE 61.1 billion in FY 2007/2008.
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).
Budget Deficit Financing Sources & Repayments

(LE bn)
Subscriptions of
Net Privatization Individuals for
Proceeds & Others Treasury Bills &
0.9 Bonds
7.5
Foreign Borrowing
11.4 Non-Banking
Financing through
Budget Entities
14.8
Blocked Account
Used in Amortizing
Government Bonds
39.0
NIB & SIFs

2.4
3/3/2: Budget Sector, NIB and SIFs
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
Cash Deficit & Overall Deficit / GDP

%
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
Cash Deficit Overall Deficit
Accordingly, the above-mentioned fiscal operations gave rise to a cash deficit

of LE 57.0 billion in the consolidated fiscal operations of the general government
during FY 2007/2008. By adding the net acquisition of financial assets (LE 10.6
billion), the overall deficit reaches LE 67.6 billion.
Summary of Consolidated Fiscal Operations

of the General Government
(LE mn)
(Actual)
2006/2007 2007/2008
Total Revenues 205654 248835
Total Expenditures 244018 305795
Cash Deficit 38364 56960
Net acquisition of financial assets 17849 10603
Overall deficit 56213 67563
Finance resources 56213 67563
Domestic finance 35401 6604
Banking finance -17662 -4701
Non-banking finance 53063 11305
Used Part of Blocked Account 0 38970
External borrowing 3581 11439
Arrears -693 -56
Others 19320 15154
Finance for eliminations 0 1
Exchange rate revaluation -432 -4276
Net privatization proceeds 172 673
Difference between treasury bills face value
& present value -1168 -1149
Discrepancy 32 203
67
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.
3/4: Balance of Payments and External Trade
Egypts transactions with the external world showed a satisfactory performance

for the fourth year in a row. As such, Egypts BOP* realized an overall surplus of
US$ 5.4 billion during FY 2007/2008**, due to a net inflow of US$ 7.1 billion in the
capital and financial transactions, and a surplus of US$ 0.9 billion on the current
account.
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
As a reflection of the improvement of Egyptian economy growth, stronger

domestic demand (particularly investment spending), and soaring world prices,
merchandise imports increased by 37.8 percent and merchandise exports by 33.3
percent. Accordingly, trade deficit widened by 43.7 percent, to US$ 23.4 billion
during FY 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
Current Account Items

US$ bn
18
15.0
16
14 11.5
12 9.3
10 8.2
7.1
8 5.5
6
4 2.3
1.8 0.9
2
0
-2
-4
-6
-8
-10
-12
-14 -12.0
-16
-18 -16.3
-20
-22
-24
-26 -23.4
2005/2006 2006/2007 2007/2008
Services Balance Transfers

Trade Balance Current Account
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
Distribution of FDI in Egypt by sector (excluding the petroleum sector)

showed that the finance sector came in the forefront, with a share of US$ 2.2 billion.
Manufacturing followed with US$ 1.5 billion, services US$ 0.9 billion, construction
US$ 0.4 billion, real estate US$ 0.4 billion, and agriculture US$ 0.1 billion.
Portfolio investments in Egypt achieved a net outflow of US$ 1.4 billion
against US$ 0.9 billion in FY 2006/2007.
Other assets and liabilities unfolded net outflows of US$ 3.4 billion against
US$ 10.2 billion in the preceding FY.
Medium- and long-term loans and facilities resulted in net repayments of US$
1.6 billion against US$ 0.4 billion.
The following table shows the main economic indicators of external
transactions:
Balance of Payments Indicators
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
3/4/1: Trade Balance
The volume of external trade of Egypt rose by 36.1 percent during FY

2007/2008 compared with the previous FY, reflecting more economic openness to the
external world. Exports and imports increased by 33.3 percent and 37.8 percent,
respectively, to US$ 29.4 billion and US$ 52.8 billion.
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.
The pickup in import payments reflected higher imports of all commodity

groups, particularly intermediate goods, a matter which had a key role to play in
enhancing production and enlarging the role of exports in strengthening economic
growth. In parallel, investment goods scaled up as a result of the upsurge in the FDI
flows in Egypt during the reporting period.
It is worth noting that total merchandise imports chiefly increased because of

the higher prices of foodstuffs whose imports are classified mostly under
merchandise groups. Another affecting factor was the increase in the prices of oil and
its products which spilled over into the prices of other goods, particularly iron and
steel.
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
. Merchandise Foreign Trade
(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
Exports Imports Trade Balance

71
3/4/1/1: Distribution of Exports
The proceeds of merchandise exports rose by US$ 7.3 billion during FY

2007/2008, to US$ 29.4 billion or 18.1 percent of GDP. The public sector contributed
46.5 percent of these proceeds, followed by the private sector (41.5 percent), and the
investment sector (12.0 percent).
Exports by Degree of Proces s ing

(US$ bn)
16.0
12.0
8.0
4.0
0.0
Fuels , Mineral Oils & Raw Materials Semi-f inished Goods Finished Goods
Products
2005/2006 2006/2007 2007/2008
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.
Petroleum and Non-Petroleum Exports

(US$ bn)
35.0
30.0
25.0
20.0
15.0
10.0
5.0
0.0
2005/2006 2006/2007 2007/2008
Petroleum Exports Non-Petroleum Exports Total Exports

72
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.
The following graph shows the breakdown of merchandise exports by relative

importance during FY 2007/2008.
Commodity Exports
US$ 29.4bn
Oil 49.3%
Non-oil 50.7%
US$14.5 bn
US$14.9 bn
Raw Semi - finished Finished Natural gas Crude oil Petroleum

materials goods goods 22.6% 33.9% products
7.3% 12.3% 73.4% 32.9%
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
3/4/1/2: Distribution of Imports
Merchandise import payments scaled up by 37.8 percent to US$ 52.8 billion,

of which oil imports represented 18.1 percent against 10.8 percent a year earlier, due
to the marked increase in world oil prices.
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
Fuels,Mineral Oils & Products Raw Materials

Intermediate Goods Investment Goods
Consumer Goods
Imports of consumer goods stepped up by 61.3 percent, reaching US$ 8.5

billion or 16.1 percent of total imports. The increase was ascribed to the surge of 79.1
percent in the imports of durable goods to US$ 2.4 billion, because car imports
almost doubled, probably due to the pickup in the credit to the household sector.
Likewise, imports of non-durable goods rose by 55.3 percent to US$ 6.1 billion.
Imports of intermediate goods scaled up by 46.1 percent to US$ 15.4 billion

during FY 2007/2008. This group contributed 33.6 percent of the total increase in
merchandise imports. The increase was ascribed to the rise in the imports of some
goods, particularly iron and steel products.
74
Imports of Iron & Steel Products

(US$ bn)
4.5
4.0
4.0
3.5
3.0
2.5
2.0
1.5
1.9
1.5
1.0
0.5
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
Fuel & mineral Consumer Raw Investment Intermediate

oils goods materials goods goods
9.3% 16.1% 18.3% 22.5% 29.2%
Durable Non-Durable Main Main Main

Main goods goods commodities: commodities: commodities:
commodities: 27.9% 72.1% Crude oil Parts & Iron & steel
Petroleum Wheat accessories of products.
products Main Main commodities: Maize motor vehicles Organic &
commodities: Pharmaceuticals Metal ores Cranes and inorganic
Vehicles for Miscellaneous bulldozers & chemicals.
transport of edible preparations parts thereof Plastic &
persons. Ready-made Electric articles thereof
Household clothes appliances for Animal and
electric-motor Meat and edible telephones & vegetable
appliances offals telegraph fats&greases.
75
3/4/1/3: Geographical Distribution of Merchandise Transactions
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:
Egypt's Volume of Trade with its partners

Egypt's Volume of Trade with its Partners
during Fiscal Year 2007/2008
during Fiscal Year 2007/2008
(US$ mn)
30000
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
Geographical Distribution of Merchandise Transactions
(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)
3/4/2: Balance of Services and Transfers
The services balance unfolded a surplus of US$ 15.0 billion, as a reflection of a

33.0 percent rise in invisible receipts to US$ 27.2 billion, exceeding the 36.7 percent
increase in invisible payments which recorded US$ 12.2 billion.
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
Travel Suez Canal
Calculated on the basis of the number of tourist nights multiplied by average tourist spending per
night.
78
Services Receipts Item s as a Percentage of Total

Services Receipts
FY 2007/2008
Other Receipts
19.6%
Go vernment Transpo rtatio n

Receipts 27.8%
0.7%
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.
- Transportation by 27.3 percent because of the rise in transfers by foreign

navigation and aviation companies, and transfers for aircraft repair and hiring at
foreign airports.
79
- Investment income by 11.0 percent due to the pickup in transfers of interest

payments and dividends of bonds and securities, as well as interest payments for
external debt.
- Government expenditure by 9.9 percent as an outcome of the increase in the
salaries and expenses of government employees seconded abroad, and the
expenses of Egyptian embassies abroad.
- Other payments by 66.0 percent due to the pickup in transfers abroad by Egyptian
and foreign petroleum companies, and the increase in the payments for
communications services, and construction and contracting services, and legal and
consultation fees.
Services Paym ents Item s as a Percentage of Total Services

Paym ents
FY 2007/2008
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:
- The pickup in private transfers by 33.8 percent as a main result of higher

remittances of Egyptian workers abroad.
- The increase in official transfers by 20.0 percent due to the rise in cash grants and
the fall in commodity grants.
80
Egyptian Workers' Rem ittances

By Main Country
FY 2007/2008
Other Countries Saudi Arabia

19.2% 11.2%
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
As a result of the above-mentioned developments in FY 2007/2008, the current

account ran a surplus of US$ 0.9 billion. This was an outcome of the rise in current
receipts by US$ 16.4 billion or 33.0 percent to US$ 65.9 billion, exceeding the rise in
current payments by US$ 17.7 billion or 37.6 percent to US$ 65.0 billion.
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
3/4/3: Capital and Financial Account
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:
- Net investments of US$ 6.4 billion as green-field investments or capital raises,

against US$ 5.2 billion.
- Net investments of US$ 4.1 billion in the oil sector, against US$ 3.0 billion.
- Privatization proceeds of US$ 2.3 billion, against US$ 2.8 billion.
- Direct real estate investments of non-residents of US$ 394.9 million, against US$
39.0 million.
Net Foreign Investm ent in Egypt
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
2005/2006 2006/2007 2007/2008
Net FDI in Egypt

Net Portfolio Investm ent in Egypt
The sectoral distribution of total foreign direct investment flows in Egypt

(apart from the oil sector) denoted that investments in the finance sector ranked first
for the second year in a row, amounting to US$ 2.2 billion. The manufacturing sector
came next (US$ 1.5 billion), followed by services (US$ 0.9 billion), and construction
(US$ 0.4 billion). The sector of communications and information technology came
last during the reporting year.
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
Sectoral Distribution of Total FDI Inflows

FY 2007/2008
Other 4.1%
Construction 2.4%
Services 5.2%
Petroleum 45.5%
Manufacturing 8.6%
Finance 12.3%
Undistributed 21.9%
B- Net portfolio* investment in Egypt revealed the following:
- 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
3/5: Stock Exchange
To press forward with the enhancement of trading on the Stock Exchange,

Presidential Decree No. 123/2008 was issued, amending specific provisions of the
Executive Regulations of the Capital Market Law No. 95/1992. According to the
Decree, the nominal value of corporate shares shall be determined by the companys
statute, provided that it should not be less than ten piasters and not more than one
thousand Egyptian pounds. Moreover, any legal person desiring to issue securities
should notify the Capital Market Authority. If the Authority does not object within
seven days from the date of receiving the notification, the legal person may proceed
with the issuing arrangements. Also, no securities shall be offered for public
subscription without a prospectus to be certified by the Authority. A special registry
will be assigned to auditors who are entitled to audit securities companies, companies
listed on the Stock Exchange, public subscription companies and mutual funds at
banks and insurance companies. Penalties of imprisonment and/or fines for violating
the provisions of this Law have become severer. In addition, both Cairo and
Alexandria Stock Exchanges were combined into one legal entity called the Egyptian
Exchange (EGX).
The Minister of Investment issued Decree No. 126/2008, amending certain

provisions of Article 175 of the Executive Regulations of the Capital Market Law
No. 95/1992. By virtue of this Decree, banks and insurance companies may carry out
the activities of money market funds. A money market fund is a managed investment
scheme that fully invests its assets in short-term investments. Furthermore,
companies engaged in primary dealers activity may establish money funds, provided
that they maintain a stable net asset value for their certificates, as to be determined by
CMA Board of Directors. Moreover, the Minister of Investment issued Decree No.
144/2008, by virtue of which, companies established before 13 June 2006, for the
purpose of practising underwriting and promotion activities in the fields of
investment (e.g. underwriting and venture capital) stated in item (11) of Article One
of the Executive Regulations of Law No. 8/1997 are required to raise their minimum
issued capital to three million Egyptian pounds, at least half of which should be paid-
up capital, within a period not to exceed one year from the date of its enforcement
(3/6/2008).
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.
In support of the activity of the Nile Stock Exchange (Nilex), launched in

October 2007, CMA approved the licensing of eight companies to act as sponsors of
small and medium enterprises (SMEs) that desire to list their securities on Nilex.
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.
As for trading on the Stock Exchange, CASE Trading Committee decided to

add 27 companies to the list of companies that are licensed to trade without price
limits. The decision took effect on the session dated 20/4/2008. The trading indices
showed a notable surge during the reporting year. CASE 30 index went up by 25.9
percent during the year to stand at 9827.3 points. Likewise, CMA index moved up by
21.8 percent to 3329.7 points at the end of June 2008. It is worth mentioning that the
Egyptian Stock Exchange showed a buoyant performance at the beginning of the first
half of 2008. Indicative of this, CASE 30 index hit an unprecedented level of 12
thousand points on the 1st of May. However, the performance started to decline in
May and June as a reflection of some indigenous and exogenous factors, namely May
economic decisions, and the repercussions of the global financial and subprime
mortgage crisis.
85
CMA & CASE 30 Indices
14000 CASE 30
12000 Capital Market Authority
10000
8000
6000
4000
2000
-07 -07 g-0

7 -07 t-07 v-0
7 -07 -08 -08 r-0
8 r-08 y-0
8 -08
Jun Jul Au Sep Oc No Dec Ja n Feb Ma Ap Ma Jun
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.
Companies: Listing and Capital
End of June 2005 2006 2007 2008

No. of listed companies (unit) 770 656 544 377
- Official 132 141 147 121
- Unofficial 612 503 394 255
- Transitional 26 12 3 1
No. of listed shares (mn) 6985 10457 14993 19859
- Official 4236 7881 11450 12484
- Unofficial 2646 2560 3534 7370
- Transitional 103 16 9 5
Nominal value of shares (LE mn) 108209 109165 121072 137974
Market capital (LE mn) 337059 377070 601826 813341
Market capital/GDP (%) 62.6 61.0 82.3 90.7
CMA index 1763.4 1696.9 2733.7 3329.7
CASE 30 4828.7 4772.8 7803.4 9827.3
86
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 FY 2004/2005 2005/2006 2006/2007 2007/2008

No. of Transactions (000) 2436 5904 7698 12974
a- Shares, bonds, and mutual fund
certificates (listed) 2272 5696 7482 12374
b- Shares, bonds, and mutual fund
certificates (unlisted) 164 208 216 600
No. of Dealt-in Securities (mn) 3251 7024 11259 23615
Value of Transactions (LE mn) 83715 254609 277009 610591
Source: CMA's Monthly Report.
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
Transactions of Foreign Investors on the Exchange

LE mn
120
100
80
60
40 2006-2007
20 2007-2008
0
-20
-40
-60
Purchases Sales Net
3/6: Insurance Sector
At end of June 2007, investments of the insurance sector* reached LE 291.9

billion, up by LE 13.1 billion or 4.7 percent during FY 2006/2007, against a rise of
LE 26.4 billion or 10.5 percent in the previous FY.
Investments of Insurance Sector

(LE bn)
End of June 2006 2007
Insurance National Total Insurance National Total
Companies Authority Companies Authority
and Funds for Social and Funds for Social
Insurance Insurance
Grand Total 35.4 243.4 278.8 39.6 252.3 291.9
Real estates 0.8 - 0.8 0.8 - 0.8
Securities 22.8 2.0 24.8 25.5 204.3 229.8
Deposits at NIB - 241.4 241.4 - 48.0 48.0
Loans 0.4 - 0.4 0.5 - 0.5
Fixed deposits
at banks 11.3 - 11.3 12.5 - 12.5
Other
investments 0.1 - 0.1 0.3 - 0.3
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
It is worthy noting that during FY 2006/2007 there was a change in the

structure of investments of the National Authority for Social Insurance in terms of
deposits at the NIB and securities investments. Accordingly, the NIB obligations to
the insurance and pension funds were transferred to the government which, in return,
issued bonds in favor of these two funds as of 1/7/2007.
Investments of insurance companies and funds rose by LE 4.2 billion during

the year, of which 64.3 percent went to securities, and 28.6 percent to deposits at
banks.
It is noteworthy that investments of the National Authority for Social Insurance

increased by LE 7.4 billion or 2.5 percent during FY 2007/2008, thereby reaching LE
254.9 billion at end of June 2008.
Annex
Statistical Section
89
Statistical Section
(1) Central Bank of Egypt

(1/1) Financial Position
(1/2) Banknote Issue by Denomination
(1/3) Activity of Clearing Houses
(2) Monetary Developments

(2/1) Banking Survey: Domestic Liquidity and Counterpart Assets
(2/2) Banking Survey: Deposits in Local Currency
(2/3) Banking Survey: Deposits in Foreign Currencies
(2/4) Banking Survey: Foreign Assets and Liabilities
(2/5) Banking Survey: Domestic Credit / Other Items (Net)
(2/6) Total Saving Vessels
(3) Domestic and External Debt

(3/1) Government Domestic Debt & Economic Authorities Debt
(3/2) National Investment Bank (Resources & Uses)
(3/3) External Debt
(3/4) Distribution of External Debt by Main Currencies
(4) Training in the Banking System

(4/1) Participants in the CBE Training Programs
(4/2) Activities of Banking Institute
(4/3) Structure of the Egyptian Banking System as at 30/6/2008
(4/4) Representation Offices Registered with the CBE (on June
30, 2008)
(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
(6) Domestic Economic Indicators

(6/1) GDP at Factor Cost by Economic Sector at 2006/2007 Prices
(6/2) GDP by Expenditure at 2006/2007 Prices
(6/3) Consumer Price Index (Urban Population) (January 2007 =100)
(6/4) Producer Price Index (PPI) (2004/2005 =100)
(7) Public Finance

(7/1) Summary of Consolidated Fiscal Operations of the General
Government 2004/2005 2005/2006
(7/2) Summary of Consolidated Fiscal Operations of the General
Government 2006/2007 2007/2008
(8) External Transactions

(8/1) Balance of Payments (US$)
(8/2) Average Foreign Exchange Rates (In Piasters Per Foreign Currency
Unit)
(9) Financial Market Developments

(9/1) Trading in Shares on the Stock Exchange
(9/2) Trading in Bonds on the Stock Exchange
(9/3) Foreigners Transactions on the Stock Exchange
(9/4) Investments of the Insurance Sector
(1/1) CBE : Financial Position
( LE mn )
End of June 2002 2003 2004 2005 2006 2007 2008
Foreign Assets 61643 86212 88111 108520 129454 160176 181973
Balances with correspondents abroad 43529 64299 65266 85788 72763 43425 20876
Foreign securities 14061 16424 16908 16404 48069 107362 149577
Gold and other foreign balances 4053 5489 5937 6328 8622 9389 11520
Domestic Assets 147064 195698 245143 283009 226876 287375 261394
Claims on government, of which: 113231 131689 175579 218450 167685 170338 137743
Government securities 98484 116512 163629 206034 164761 166724 123123*
Claims on National Investment Bank 130 - - - 10 10 10
Central Bank of Egypt - Annual Report 2007/2008

Claims on banks in Egypt 11314 10649 10184 11835 16537 76230 96788
Other domestic assets 22389 53360 59380 52724 42644 40797 26853
ASSETS = LIABILITIES 208707 281910 333254 391529 356330 447551 443367
Foreign Liabilities 53047 75268 79840 72863 69440 66168 5140*
Domestic Liabilities 155660 206642 253414 318666 286890 381383 438227
Note issue 45427 52219 59703 67527 79017 93240 112430
Claims to government 41504 54284 75869 97519 53079 52006 50495
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
Provisions 22 235 307 302 50 41 115
Other domestic liabilities 6372 7721 7151 5575 2737 3705 5769
Source : Central Bank of Egypt
91
* The decline was ascribed to the settlement of rescheduled debts -under Paris Club agreement- between the CBE and the government.
92
(1/2) CBE: Banknote Issued By Denomination
( LE mn )
End of June 2002 2003 2004 2005 2006 2007 2008
Total 45633 52432 59922 67753 79253 93499 112705
Currency By Denomination + 45427 52219 59703 67527 79017 93240 112430
PT 25 128 136 118 120 136 144 147
PT 50 225 235 203 220 241 240 252
LE 1 427 455 515 517 545 565 608
LE 5 1047 1119 1226 1279 1121 1071 1169
LE 10 5745 5728 5490 5074 4274 3470 2938
LE 20 12005 12110 11010 10329 9226 8796 7394
LE 50 15035 19381 22686 24517 27959 28152 25646
LE 100 10815 13055 18455 25471 35515 47552 54987
LE 200* 3250 19289
Subsidiary Coins** 206 213 219 226 236 259 275
+ Including coins denominations of 50, 100 piasters
* The LE 200 note has been in circulation as of May 2007
** Issued by the Ministry of Finance

(1/3) CBE: Activity of Clearing Houses*
During FY ending June 2002 2003 2004 2005 2006 2007 2008
First : Cairo Branch
Number of cheques (thousands) 6737 9250 8856 8618
Value of cheques (LE mn) 232323 215703 215091 231943

Second : Alexandria Branch
Third : Port - Said Branch
Fourth : All Branches
Number of cheques (thousands) 7918 10025 9591 9321 9508 10481 11724
Value of cheques (LE mn) 270543 244581 248224 262423 288715 356900 483113

*
As of 1/1/2006, the manual Clearing Houses in Alexandria and Port-Said were cancelled, and all their activities
93
were transferred to Cairo Automated Clearing House.
94
(2/1) Banking Survey : Domestic Liquidity and Counterpart Assets
( LE mn )
End of June 2002 2003 2004 2005 2006 2007 2008
First : Domestic Liquidity 328728 384262 434911 493884 560356 662688 766664
a - Money Supply 59805 67212 77606 89685 109274 131290 170579
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
b - Quasi-Money 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
Second : Counterpart Assets
Net foreign assets 17285 25429 45241 80913 133385 218629 303680 *
Domestic credit 360090 387446 422040 466771 509532 531314 570953*
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 )
End of June 2002 2003 2004 2005 2006 2007 2008
Total Deposits in Local Currency 210224 230964 255283 309676 349223 421854 502191
First : Demand Deposits 17506 18954 21673 26656 35035 44430 65923

Public business sector * 2813 2937 2857 3027 4934 6278 8698
Private business sector 7385 7989 9235 12228 15863 20681 34301
Household sector 8255 8674 10306 11985 14831 18378 24003
Minus: Purchased cheques & drafts 947 646 725 584 593 907 1079
Second : Time and Saving Deposits 192718 212010 233610 283020 314188 377424 436268
95
* Including all public sector companies subject or not to Law No. 203 for 1991.
96
(2/3) Banking Survey : Deposits in Foreign Currencies
( LE mn )
End of June 2002 2003 2004 2005 2006 2007 2008
Total Deposits in Foreign Currencies 76205 105040 123695 121179 136894 153974 159817
First : Demand Deposits 8267 12159 16280 18140 18533 26917 26581
Minus: Purchased cheques & drafts 191 128 186 166 211 172 183
Second : Time and Saving Deposits 67938 92881 107415 103039 118361 127057 133236
(2/4) Banking Survey : Foreign Assets and Liabilities
( LE mn )
End of June 2002 2003 2004 2005 2006 2007 2008
Net Foreign Assets 17285 25429 45241 80913 133385 218629 303680
First : Foreign Assets 90125 126068 145297 174328 218982 304968 330770

Central Bank of Egypt 61894 86287 88313 108737 129477 160197 182021
Banks 28231 39781 56984 65591 89505 144771 148749
Second : Foreign Liabilities 72840 100639 100056 93415 85597 86339 27090
Central Bank of Egypt 52078 73944 78455 71443 68176 64825 1688 *
Banks 20762 26695 21601 21972 17421 21514 25402
* Rescheduled debts -under Paris Club agreement- were settled between the CBE and the government.
97
98
(2/5) Banking Survey : Domestic Credit / Other Items (Net)
( LE mn )
End of June 2002 2003 2004 2005 2006 2007 2008
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
A- Securities 162675 203845 258178 311375 295974 278011 271788**
B- Credit facilities 33580 33493 33075 41364 28044 52151 67732
C- Government deposits 100832 133820 164910 192850 139887 151839 165515
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
Capital accounts -68579 -76905 -83821 -94179 -102139 -114534 -135401
Net unclassified assets and liabilities 19932 48292 51451 40379 19578 27279 27432**
** Rescheduled debts -under Paris Club agreement- were settled between the CBE and the government.
(2/6) Total Saving Vessels
( LE mn )
End of June 2002 2003 2004 2005 2006 2007 2008

Total Saving Vessels 335651 395068 445887 498190 560229 655376 742177
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
100
(3/1) Government Domestic Debt & Economic Authorities Debt
(LE mn)
Balances at End of June 2003 2004 2005 2006 2007 2008
Total Domestic Debt 370619 434846 510805 593493 637197 666144

Government Domestic Debt 252185 292721 349169 387719 478173 478699
- Balances of Bonds & Bills 208592 272074 340898 349957 562897 568848
- Treasury bonds, of which : 137192 171809 200284 231125 230848 208628
Local currency bonds with public sector banks 4000 4000 4000 4000 4000 4000
Euro sovereign bonds (US$) offered abroad * 4612 5647 5122 5109 3868 3750
- Government notes to compensate for the actuarial
deficit in social insurance funds 2000 2000 2000 2000 2000 2000
- Housing bonds 132 128 124 122 119 117
- Treasury bills 55318 83774 124907 103144 118657 146439
- Foreign currency bonds with
public sector commercial banks 12610 12938 12070 12014 11886 11126
- The equivalent of the retained 5% of companies profit
to purchase government bonds 1340 1425 1513 1552 1588 1636
- Bonds of the two insurance funds (against the transfer of
NIB debt to the treasury) 0 0 0 0 197799 198902
- Net Government Balances with the Banking System -80346 -113678 -135480 -104860 -89241 -92492
- Amounts paid against Insurance Funds' deposits with the Treasury 0 0 0 0 4517 2343
- Government Borrowing from NIB 123939 134325 143751 142622 0 0
Economic Authorities Debt 39195 40064 47176 47387 44557 50123

- Net balances of economic authorities with the banking system -10899 -13707 -11089 -2809 -7177 -1156
- Borrowing of economic authorities from NIB 50094 53771 58265 50196 51734 51279
Source: The Ministry of Finance, Central Bank of Egypt & National Investment Bank.
* Holdings of financial institutions resident in Egypt ( the banking system and the insurance sector ).
(3/2) National Investment Bank
(Resources & Uses)
(LE mn)
Balances at End of June 2003 2004 2005 2006 2007 2008
Resources: 262354 294550 321393 354962 169152 192492

. Social Insurance Fund for Gov. Employees 95886 108991 122913 135735 27428 29076
. 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

. Accumulated interest on Investment Certificates (category A) 6560 6737 6852 7028 7579 7509
. Proceeds from US dollar development bonds 1736 1738 1418 824 483 152
. Post Office Savings 22300 27776 33902 39097 43518 49257
. Others * 1707 1964 1730 2537 1085 5152
Uses: 262354 294550 321393 354962 169152 192492

. Government 123939 134325 143751 142622 0 0
. Economic authorities 50094 53771 58265 50196 51734 51279

. Holding companies, entities, concessional Ioans & others 79239 102061 114460 158387 114467 137322
. 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
102
(3/3) External Debt
(US$ mn)
End of June 2002 2003 2004 2005 2006 2007 2008 +
Total External Debt* 28661 29396 29872 28949 29593 29898 33893
Rescheduled bilateral debt ** 15337 16192 16385 15734 15229 14847 15606
ODA 7456 7900 8053 7836 7611 7397 7788
Non-ODA 7881 8292 8332 7898 7618 7450 7818
Other bilateral debt 4057 4350 4433 4291 4295 4346 4972
Paris Club countries 3405 3320 3264 3530 3590 3630 4130
Other countries 652 1030 1169 761 705 716 842
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
Long-term deposits *** 0 0 0 500 300 0 0
Private sector debt (non-guaranteed) 542 217 85 115 89 79 18
Short-term debt 2150 1865 1967 1855 1633 1449 2519
Deposits 1338 1305 1267 819 633 536 1048
Other facilities 812 560 700 1036 1000 913 1471

Source: Loans & External Debt Department - CBE.
+ Provisional
* The difference from World Bank data is in short-term debt.
** 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
Canadian dollar 167.0 0.5 169.0 0.5 2.0
Australian dollar 139.0 0.5 148.0 0.4 9.0
Swiss franc 526.0 1.8 596.0 1.8 70.0
Sterling pound 260.0 0.9 246.0 0.7 (14.0)

Japanese yen 3200.0 10.7 3601.0 10.6 401.0
Danish krone 146.0 0.5 162.0 0.5 16.0
Norwegian krone 1.0 0.0 1.0 0.0 0.0
Swedish krona 37.0 0.1 39.0 0.1 2.0
Kuwaiti dinar 1601.0 5.4 1810.0 5.3 209.0
Saudi riyal 31.0 0.1 29.0 0.1 (2.0)
UAE dirham 41.0 0.1 37.0 0.1 (4.0)
Euro 9793.0 32.8 11376.0 33.6 1583.0
Egyptain pound 0.0 0.0 1106.0 3.3 1106.0
SDRs 1503.0 5.0 1472.0 4.3 (31.0)
Source: Loans & External Debt Department- CBE
* Provisional.
103
** Including other liabilities due in US dollar.
104
(4/1) Participants in the CBE Training Programs
2006/2007 2007/2008
First : CBE Employees, through:
1- Banking Institute Programs 4928 3602
Specialized & Managerial Programs, Computer & English 2923 2717
Qualifying Programs (Specialized & Managerial, Computer & English) 2005 885
2- External Entities 1099 948
Specialized & Managerial Programs, Computer & English 259 929
Qualifying Programs (Specialized & Managerial, Computer & English) 840 19
3- Computer Laboratory 869 803
4- External Missions (Regional & International Institutions) 87 98
Second : Training in the CBE Departments (Foreigners) 99 28
Total 7082 5479
Source: Central Bank of Egypt

(4/2) Activities of Banking Institute
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

.Treasury & Investment 25 457 24 375
.Accounting & Auditing 18 354 23 354
.Legal Aspects 38 1000 29 662
.Economic Programs 3 39 4 67
.Management & HR 76 1541 65 1379
.Marketing & Customer Service 18 403 21 430
- Complementary Programs 335 6367 303 5262
Computer 226 3770 245 3662
English language 109 2597 58 1600
2- Special and Contractual Programs 332 7441 519 11622
Second: Specialized Certificates 137 733 64 566
Third: Senior Management Programs 20 22 35 27
Fourth: Seminars & Conferences 9 198 19 392
105
Total 1232 23018 1357 25764
Source: Egyptian Banking Institute (EBI)
106
(4/3) Structure of the Egyptian Banking System

As at 30/6/2008*
Public Sector Banks 3
Branches 837
Commercial Banks Private & Joint Venture Banks 27
Branches 1145
Off-Shore Banks 7
Branches 63
Specialized Banks
Industrial Development Bank of
Industrial 1
Egypt
Branches 14
Real Estate Egyptian Arab Land Bank 1
Branches 28
Principal Bank for Development &

Agricultural 1
Agricultural Credit
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
(4/4) Representation Offices Registered with the CBE

(on June 30, 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
Deutsche Bank AG 10/11/1994 6 Bolis Hana St., El Doki.
Intesa San Paolo SPA 13/03/1995 3 Abo Elfeda St.Zamalek, 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
JP Morgan Chase Bank N/A 05/08/1996 3 Ahmed Nessim St., 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
Credit Suisse 16/03/1998 7B Ibn Shamar St., Giza
Wachovia Bank National Association 06/05/1998 9 El-Gomhoria El-Motahida Square, Dokki, Giza
ING Bank N.V. 12/07/1999 9 Hode El-Laban St.,Garden City, Cairo
Credit Industriel et Commercial, CIC 22/07/1999 28 Sherif St., Cairo
B.H.F Bank AG 02/08/1999 8 El-Sadd El-Aley St.,Dokki , 12311,Giza
Royal Bank Of Scotland (RBS) 17/11/1999 31 Gezirat El-Arab St., Mohandeseen, Giza
Natexis 22/03/2000 50 Abd El Khalek Sarwat St., Cairo
Den Norske Bank 27/05/2001 19 El-Gabalaya St., Zamalek, Cairo
Bank of Valleta PLC 10/07/2003 7 EL-Thawra Sq.,Dokki,7th Floor,Room No.71.
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 )
End of June 2002 2003 2004 2005 2006 2007 2008
Assets
Cash 4453 5557 5412 6594 6813 7705 10261
Securities & investments in TBs, of which: 87726 111337 137431 170659 193965 176098 201858
CBE notes - - - - 21563 17617 -
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
Other assets 33939 35650 34814 41990 42494 58645 68790
Assets = Liabilities 495464 577938 633436 703628 761562 937923 1083311
Liabilities
Capital 12531 18155 20346 22949 27112 33037 37295
Reserves 11238 11805 11454 12419 13418 12552 16141
Provisions 35869 40099 44584 49541 54950 53469 62314
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
Total deposits 340868 403144 461697 519649 568841 649953 747199
Other liabilities 33977 38043 40078 49883 49457 69936 86051

(5/2) Banks : Deposits By Maturity
( LE mn )
End of June 2002 2003 2004 2005 2006 2007 2008
Total Deposits 340868 403144 461697 519649 568841 649953 747199
Demand deposits 30913 37233 46742 51557 62431 78759 100569
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

Demand deposits 21063 22929 27168 31606 41793 50366 71971
Second : In Foreign Currencies 90762 124965 150827 150582 167698 186633 195120
Demand deposits 9850 14304 19574 19951 20638 28393 28598
109
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
In Local Currency 250106 278179 310870 369067 401143 463320 552079
Government sector 38578 46071 54120 57649 49422 37233 44789
Foreign sector ** 356 498 742 1158 1905 3326 4021
In Foreign Currencies 90762 124965 150827 150582 167698 186633 195120
Foreign sector ** 1039 820 759 1985 1303 2159 1916
** Including counterpart deposits of US aid

(5/4) Banks : Lending and Discount Balances by Sector
( LE mn )
End of June 2002 2003 2004 2005 2006 2007 2008
Total 266100 284722 296199 308195 324041 353746 401425
In Local Currency 213008 218696 228159 233141 238926 248544 267166

Foreign sector 605 409 389 492 723 914 897
In Foreign Currencies 53092 66026 68040 75054 85115 105202 134259
Foreign sector 1631 1550 1333 1481 1829 2710 6299
Source : Central Bank of Egypt.
111
112
(6/1) GDP at Factor Cost by Economic Sector
At 2006/2007 prices
(LE mn)
Growth Rate (%)
Sectors 2006/2007 2007/2008 2007/2008
Public Private Total Public Private Total Public Private Total

GDP 266516.4 443871.3 710387.7 282626.8 478746.6 761373.4 6.0 7.9 7.2
Agriculture, Irrigation & Fishing 18.8 99934.3 99953.1 19.6 103279.5 103299.1 4.3 3.3 3.3
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
Value at LE bn Structure (%) Growth Rate (%)
2006/2007 2007/2008 2006/2007 2007/2008 2006/2007 2007/2008
1- GDP at Market Prices (2+5-6) 744.8 798.1 100.0 100.0 7.1 7.2

2- Total Domestic Expenditure (3+4) 778.9 835.6 104.6 104.7 9.1 7.3
3- Final Consumption 623.6 656.3 83.7 82.2 4.1 5.2
Private consumption 539.2 570.1 72.4 71.4 4.2 5.7
Government consumption 84.4 86.2 11.3 10.8 3.2 2.1
4- Gross Capital Formation 155.3 179.3 20.9 22.5 31.8 15.5
Investments 155.3 179.3 20.9 22.5 31.8 15.5
Change in stock 0.0 0.0 0.0 0.0 0.0 0.0
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.
114
(6/3) Consumer Price Index (Urban Population) (January 2007=100)*
End of Inflation Rate (%)
Group Relative June July / June

Weights 2006 2007 2008 2006/2007 2007/2008
All Items 100.0 93.1 101.1 121.5 8.6 20.2
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
Health 3.6 97.2 100.0 112.1 2.9 12.1

Transportation 5.2 91.1 100.0 120.1 9.8 20.1
Communications 3.6 98.8 100.0 104.0 1.2 4.0
Recreation & culture 3.4 83.7 100.0 121.7 19.5 21.7
Education
4.4 90.0 100.0 137.7 11.1 37.7
Restaurants, cafes & hotels 3.6 92.2 100.0 146.1 8.5 46.1
Miscellaneous goods and services
4.2 90.1 100.2 111.5 11.2 11.3
Source: Central Agency for Public Mobilization and Statistics(CAPMAS), (Monthry Bulletin of Consumer Price Index) .
* 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)
End of June Inflation Rate %

Relative
Group ( July / June )
Weights
2006 2007 2008 2006/2007 2007/2008
All Items 100.0 117.9 126.0 168.5 6.9 33.7

Agriculture, Forestry and Fishing 25.1 133.1 143.0 179.5 7.5 25.5
Mining and Quarrying 21.7 128.6 136.8 232.3 6.4 69.8
Manufacturing 38.9 106.8 115.7 144.4 8.3 24.8
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
Transportation and Storage 2.8 100.9 101.7 110.9 0.7 9.0
Accommodation and Food Service Activities 5.0 105.2 105.2 117.5 0.0 11.7
Information and Communications 2.1 107.8 107.8 107.8 0.0 0.0
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
(7/1) Summary of Consolidated Fiscal Operations of the General Government

( The Budget Sector, NIB & SIFs )
( 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
Total Revenues 110864 132926 151266 175929
Tax Revenues 75759 75759 97779 97779
Grants 2853 2853 2379 2379
Property Income 17758 23611 36373 43393
Sales of Goods and Services 7197 7197 7891 7891
Financing Investment 3146 3146 3705 3705
Others 4151 20360 3139 20782
Total Expenditures 161611 170790 207811 223625
Compensations of Employees 41546 42012 46719 47258
Purchases of Goods and Services 12613 12714 14428 14493
Interests 32780 29805 36815 34812
Subsidies, Grants and Social Benefits 29705 41223 68897 86056
Other Expenditures 21692 21738 19740 19762
Purchases of Non-Financial Assets (Investments) 23275 23298 21212 21244
Cash Deficit 50747 37864 56545 47696
Net Acquisition of Financial Assets 896 7404 -6159 8942
Overall Fiscal Balance Finance 51643 45268 50386 56638
Source : The Ministry of Finance.

117
(7/1) Summary of Consolidated Fiscal Operations of the General Government (Contd.)

( The Budget Sector,NIB & SIFs )
( LE mn )
Actual
During FY 2004/2005 2005/2006
The The Budget The The Budget

Budget Sector, NIB & Budget Sector, NIB &
Sector SIFs Sector SIFs
Financing Sources 51643 45270 50386 56638
Domestic Financing 63569 53998 54381 64949
Banking Financing 31395 29462 14802 27826
Central Bank 24764 24434 -11463 -9915
Other Banks 6631 5028 26265 37741
Non-Banking Financing 32174 24536 39579 37123
NIB 13433 7121 12599 13764
SIFs 1985 0 11000 0
Other 16756 16756 15980 15980
NIB Borrowing 0 659 0 7379
Special Accounts for Economic Authorities 0 0 0 0
Foreign Borrowing -4243 -4243 3641 3641
Arrears -2477 -2477 -1777 -1777
Others, of which: 1876 5074 -489 -4806
Special Accounts for Budget Entities
Exchange Rate Revaluation -3935 -3935 -311 -311
Net Privatization Proceeds 1012 1012 126 126
Difference between Treasurey Bills Face Value & Present

-3084 -3084 -709 -709
Value
Discrepancy -1075 -1075 -4476 -4475
Cash deficit (surplus) as a percentage of GDP 9.4% 7.0% 9.2% 7.7%
Overall fiscal balance as a percentage of GDP 9.6% 8.4% 8.2% 9.2%
Revenues as a percentage of GDP 20.6% 24.7% 24.5% 28.5%
Expenditures as a percentage of GDP 30.0% 31.7% 33.6% 36.2%

118
(7/2) Summary of Consolidated Fiscal Operations of the General Government

( The Budget sector , NIB & SIFs )
( LE mn )
Actual
During 2006/2007 2007/2008
The Budget The Budget

Sector,NIB & Sector,NIB &
Sector Sector
SIFs SIFs
Total Revenues 180215 205654 221404 248835
Tax Revenues 114326 114326 137195 137195
Grants 3886 3886 1463 1463
Property Income 45111 50593 52455 59308
Sales of Goods and Services 9776 9776 12038 12044
Financing Investment 4376 4376 5765 5765
Other 2740 22697 12488 33060
Total Expenditures 222029 244018 282290 305795
Compensations of Employees 52153 52746 62839 63531
Purchases of Goods and Services 17028 17121 18470 18790
Interests 47700 38368 50528 40956
Subsidies, Grants and Social Benefits 58442 88684 92371 124249
Other Expenditures 21208 21571 23891 23972
Purchases of Non-Financial Assets (Investments) 25498 25528 34191 34297
Cash Deficit 41814 38364 60886 56960
Net Acquisition of Financial Assets 12883 17849 236 10603
Overall Fiscal Balance Finance 54697 56213 61122 67563

119
(7/2) Summary of Consolidated Fiscal Operations of the General Government (Contd.)

( The Budget sector , NIB & SIFs )
( LE mn )
Actual
During FY 2006/2007 2007/2008
Sector, NIB & Sector, NIB &
Sector Sector
SIFs SIFs
Financing Sources 54697 56213 61122 67563
Domestic Financing 33283 35401 527 6604
Banking Financing -20926 -17662 -3187 -4701
Central Bank 3146 3196 -33394 -35306
Other Banks -24072 -20858 30207 30605
Non-Banking Financing 54209 53063 3714 11305
NIB 143 0 2271 0
SIFs 6861 0 119 0
Other 28525 28525 7545 7545
NIB Borrowing 0 5858 0 9981
Special Accounts for Economic Authorities 18680 18680 -6221 -6221
Blocked Account Used in Amortizing Part of CBE Bonds 0 0 38970 38970
Foreign Borrowing 3581 3581 11439 11439
Arrears -693 -693 -56 -56
Others, of which: 19922 19320 14791 15154
Special Accounts for Budget Entities 12952 12952 0 0
Financing Effects for Eliminations 0 0 0 1
Exchange Rate Revaluation -432 -432 -4276 -4276
Net Privatization Proceeds 172 172 673 673
Difference between Treasury Bills Face Value & Present Value -1168 -1168 -1149 -1149
Discrepancy 32 32 203 203

Cash Deficit (Surplus) as a percentage of GDP 5.7% 5.2% 6.8% 6.4%
Overall fiscal balance as a percentage of GDP 7.5% 7.7% 6.8% 7.5%
Revenues as a percentage of GDP 24.6% 28.1% 24.7% 27.8%
Expenditures as a percentage of GDP 30.4% 33.4% 31.5% 34.1%
Source : The Ministry of Finance .
120
(8/1) Balance of Payments

(US$ mn)
FY
2006/2007 2007/2008* Change
Value % Value % (-)
Balance of Current Account 2269.0 888.3 (1380.7)
Balance of Current Account (Excluding Transfers) (4792.3) (8449.3) (3657.0)
Receipts 42473.0 100 56566.8 100 14093.8
Export proceeds** 22017.5 51.8 29355.8 51.9 7338.3
Transportation, of which: 6371.3 15.0 7559.7 13.4 1188.4
Suez Canal dues (4169.6) (9.8) (5155.2) (9.1) (985.6)
Travel 8183.0 19.3 10826.5 19.1 2643.5
Investment income 3044.7 7.2 3289.4 5.8 244.7
Government receipts 253.5 0.6 188.3 0.3 (65.2)
Others 2603.0 6.1 5347.1 9.5 2744.1
Payments 47265.3 100.0 65016.1 100 17750.8
Import payments** 38308.1 81.0 52771.2 81.2 14463.1
Transportation 1272.9 2.7 1620.1 2.5 347.2
Travel 1917.6 4.1 2895.3 4.4 977.7
Investment income, of which: 1867.7 4.0 1929.7 3.0 62.0
Interest paid (608.2) (1.3) (674.9) (1.0) (66.7)
Government expenditures 1195.9 2.5 1313.8 2.0 117.9
Others 2703.1 5.7 4486.0 6.9 1782.9
Transfers 7061.3 100.0 9337.6 100.0 2276.3
Private (net) 6261.0 88.7 8377.1 89.7 2116.1
Official (net) 800.3 11.3 960.5 10.3 160.2
* Preliminary figures.
** Including exports & imports of free zones.

121
(8/1) Balance of Payments (Contd.)

(US$ mn)
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
(8/2) Average Foreign Exchange Rates

(In piasters per foreign currency unit)
End of June 2007 June 2008
First : Interbank Rates (US$)
Minimum 569.64 533.00
Maximum 569.68 533.61
Weighted average 569.67 533.31
Second : Market Rates Buy Sell Buy Sell
US dollar 568.92 570.73 532.36 534.92
Euro 766.17 768.72 838.74 842.82
Pound sterling 1139.09 1142.78 1059.99 1065.19
Swiss franc 463.18 464.77 521.87 524.59
100 Japanese yens 462.69 464.28 504.04 506.65
Saudi riyal 151.66 152.19 141.96 142.66
Kuwaiti dinar 1974.32 1981.30 2008.84 2020.02
UAE dirham 154.89 155.40 144.92 145.64
Chinese yuan 77.67 78.04

Source: CBE
The interbank system started as of 23/12/2004.

(9/1) Trading in Shares on the Stock Exchange
During FY 2006/2007 2007/2008
Number of Number of
Amount M.Value Amount M.Value
Transactions Transactions
(Thousands) (mn) (Thousands) (mn)
in unit in unit

In LE 7427195 10159593 242992 12667587 21775522 550194
Floor Transactions 7210676 8521503 228365 12075405 18206357 495847
Over the Counter Trading 216519 1638090 14627 592182 3569165 54347
In Foreign Currencies (US$) 279483 1082893 3260 305158 1815588 6538
In Foreign Currencies (Euro) 0 0 0 42 674 72
123
Source : Capital Market Authority (CMA).
124
(9/2) Trading in Bonds on the Stock Exchange
During FY 2006/2007 2007/2008
Number of Number of
Amount M.Value Amount M.Value
Transactions Transactions
(in unit) (in Thousands) (in unit) (in Thousands)
In LE 923 16627995 15266118 1101 23172211 23941416
Over the Counter Trading - - - - - -
In US$ 10 209527 23492 - - -
Floor Transactions 9 207327 21292 - - -
Over the Counter Trading 1 2200 2200 - - -
Source : Capital Market Authority (CMA).

(9/3) Foreigners' Transactions on the Stock Exchange
During FY 2006/2007 2007/2008

LE US$ LE US$
Net Number of Transactions (unit) 178688 11162 157788 2486

765591 42678 1220528 54001
Purchases

586903 31516 1062740 51515
Sales
Net Volume of Securities (mn) 464 -276 261 -16

1710 216 3068 354
Purchases
1246 492 2807 370
Sales
Net Value of Securities (mn) 21206.1 -1264.2 -4071.2 308.7

72094.9 478.8 113004.7 1281.2
Purchases
50888.8 1743.0 117075.9 972.5
Sales
125
Source : Monthly Report- Capital Market Authority (CMA).
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
First : Real Estates 497 0 261 758 624 0 207 831
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
Securities Held-to-maturity 3351 0 16 3367 2888 0 16 2904
Third : Deposits with the National

0 241438 0 241438 0 48002 0 48002
Investment Bank
Fourth : Loans 233 0 198 431 245 0 202 447
To the government 0 0 0 0 0 0 0 0
Guaranteed by other guarantees 233 0 198 431 245 0 202 447
Fifth : Fixed Deposits with Banks 6880 0 4363 11243 8044 0 4492 12536
Deposits at banks 4156 0 4363 8519 4750 0 4492 9242
Saving certificates 2724 0 0 2724 3294 0 0 3294
Sixth : Other Investments 0 0 109 109 0 0 279 279
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
Name of Publication Language Periodicity
1 -Monthly Statistical Bulletin Arabic and English Monthly
2 -Economic Review Arabic and English Quarterly
3 -Annual Report Arabic and English Every fiscal year
4 -External Position of the English Quarterly

Egyptian Economy
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.

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Central Bank of Egypt

Governor and Chairman of the Board

Deputy Governor Deputy Governor

Dr. Mahmoud Abd El-Fadeel Hussein Mr. Aladdin Saba

Chapter 1 Central Bank of Egypt

Chapter 2 Banking Developments

Chapter 3 Domestic Economic Developments

Central Bank of Egypt Annual Report 2007/2008

The global economic performance continued to slacken in FY 2007/2008,

At the level of domestic economy, the strong performance was sustained in

Central Bank of Egypt Annual Report 2007/2008

In pursuit of an adequate level of monetary stability, the CBE continued to

Central Bank of Egypt Annual Report 2007/2008

In the context of restructuring and risk management of state-owned banks,

Central Bank of Egypt Annual Report 2007/2008

Central Bank of Egypt Annual Report 2007/2008

In the context of information technology (IT), a new electronic accounting

The aggregate financial position of banks (excluding the CBE) scaled up by

The Egyptian stock market witnessed increased activity in terms of the

Central Bank of Egypt Annual Report 2007/2008

Central Bank of Egypt Annual Report 2007/2008

As regards the anti-money laundering efforts, the Money Laundering Com-

The CBE Governor

1/1- Developments in the Financial Position of the CBE

Central Bank of Egypt Annual Report 2007/2008

1/1: Developments in the Financial Position of the CBE

CBE: Assets Analysis

Claims on the government decreased by LE 32.6 billion due to the amortization

Central Bank of Egypt Annual Report 2007/2008

Breakdown of Domestic Assets at end of June

CBE: Liabilities Analysis

Central Bank of Egypt Annual Report 2007/2008

Breakdown of Domestic Liabilities at end of June

1/2: Banknote Issue

Central Bank of Egypt Annual Report 2007/2008

Currency in Circulation outside the CBE*

1/3: Monetary Policy

According to this institutional framework and until fully meeting the

Central Bank of Egypt Annual Report 2007/2008

Monetary Policy Performance

First: Interest Rates:

Central Bank of Egypt Annual Report 2007/2008

O/N Interbank rate and policy rates

The monetary policy transmission mechanisms improved as a result of adopting

Second: Open Market Operations

1/4: Payment Systems and Information Technology (IT)

Central Bank of Egypt Annual Report 2007/2008

Hereunder are the main achievements made during FY 2007-2008:

- Information Technology (IT)

Central Bank of Egypt Annual Report 2007/2008

1/4/1: SWIFT Local Services and Clearing Houses Activity

SWIFT Local Service Activity in Local Currency

Number of Value of Change during the

Moreover, transactions executed via SWIFT in foreign currencies mounted to

SWIFT Local Service Activity in US Dollar

Number of Value of Change during the

Central Bank of Egypt Annual Report 2007/2008

CBE Clearing Houses* Activity

1/5: Domestic Liquidity and Counterpart Assets

Domestic liquidity (M2) went up by LE 104.0 billion or 15.7 percent during

Analysis of M2 components shows that the first component [money supply

Growth Rate of Domestic Liquidity by Component

Central Bank of Egypt Annual Report 2007/2008