central bank of egypt · banks (excluding the cbe), of which: 458.1 489.7 to government and public...

CENTRAL BANK OF EGYPT

ECONOMIC REVIEW

Vol. 52 No. 2

2011/2012

Statistics and Economic Reports Sector

The Economic Review is issued by the Statistics and Economic Reports Sector at the Central Bank of Egypt (CBE) on a quarterly basis. It aims to make available to a broad readership of specialists and non-specialists a wide range of information on the performance of the Egyptian economy during the reporting period. The CBE posts the Review on its website: www.cbe.org.eg.

Contents

Page

Main Monetary and Financial Indicators Leading Article: Capital Asset Pricing Model (CAPM) versus Arbitrage Pricing Theory (APT): A Case Study on the Egyptian Stock Market

1 1- Macroeconomic Performance 1/1 - Gross Domestic Product (GDP) …………………………………… ... 14 1/2 - Labor Force, Employment and Unemployment...................................... 22 1/3 - Inflation………………………………………………………………... 22 1/4 - Tourism ……………………………………………………………..... 28 2- Monetary and Banking Developments 2/1 - Monetary and Banking Policy and Monetary Aggregates……………. 35 2/1/1- Monetary Policy……………………………………………………...... 35 2/1/2- Interest Rates………………………………………………………….. 35 2/1/3- Open Market Operations........................................................................ 37 2/1/4- Reserve Money (M0)………………………………………………...... 38 2/1/5- Domestic Liquidity (M2) and Counterpart Assets ………………….... 43 2/1/6- Payment Systems and Information Technology (IT)………………...... 47 2/1/7- RTGS and SWIFT Local Services……………………………………… 50 2/2 - Banking and Credit Developments ………………………………….... 52 2/2/1- Banking Reform……………………………………………………….. 52 2/2/2- Supervision Sector…………………………………………………...... 57 2/2/3- Overview of the Aggregate Financial Position of Banks……………….. 62 2/2/4- Interbank Transactions ………………………………………………..... 64 2/2/4/1 Transactions with Banks Abroad……………………………………....... 64 2/2/4/2 Interbank Transactions in Egypt……………………………………........ 64 2/2/5- Deposits ……………………………………………………………...... 65 2/2/6- Lending Activity ………………………………………………………. 66 3- Non-Banking Financial Sector 3/1 - Stock Market ……………………………………………………….... 71 3/2 - Mutual Funds ………. ………………………………………………. 75 4- Public Finance and Domestic Public Debt 4/1 - Consolidated Fiscal Operations of the General Government ………....... 76 4/1/1- Budget Sector ………………………………………………………....... 76 4/1/2- Budget Sector, NIB and SIFs………………………………………….... 79 4/2 - Domestic Public Debt ………………………………………………..... 82

4/2/1- Debt of the Government (Net)…………………………………………. 82 4/2/2- Debt of Public Economic Authorities (Net)…………………………… 85 4/2/3- Debt of the National Investment Bank (Net) ……………..................... 86 4/2/4- Intra-Debt……………………………………………………………... 86 4/2/5- Domestic Public Debt Service…………………………………………. 87 5- External Transactions 5/1 - Foreign Exchange Market……………………………………………... 88 5/2 - Balance of Payments………………………………………………….. 90 5/2/1- Current Account ………………………………………………………. 91 5/2/1/1- Trade Balance …………………………………………………………. 91 5/2/1/2- Balance of Services and Transfers…………………………………….. 92 5/2/2- Capital and Financial Account………………………………………… 97 5/3- External Trade…………………………………………………………. 100 5/3/1- Distribution of Export Proceeds and Import Payments……………….. 100 5/3/2- Sectoral Distribution of Merchandise Transactions…………………… 102 5/3/3- Geographical Distribution of Merchandise Transactions……………… 104 5/3/4- Breakdown of Trade by Main Commodities………………………….. 105 5/4- International Finance ………………………………………………….. 107 5/4/1- Foreign Direct Investment (FDI) in Egypt …………………………… 109 5/4/2- External Official Grants …………………………..…………………... 113 5/4/3- External Debt…………………………………………………………... 115 Annex

- Statistical Section…………………………………………………………….. 123

Main Monetary and Financial Indicators

July/December

2010/2011 2011/2012 GDP (LE bn) GDP at Current Market Prices 705.4 779.4 Annual Growth Rate (%) 16.7 10.5 Real GDP at Factor Cost 439.1 440.7 Annual Growth Rate (%) 5.6 0.3

GDP Growth Rate (at Factor Cost) by Sector (%)

A) Productive Sectors Of which: Agriculture, Irrigation & Fishing 3.1 3.0 Manufacturing (Oil Refining & Others) 6.1 -3.1 Electricity 8.0 4.1 Water 6.5 4.2 Construction & Building 12.6 -1.6

B) Services Sectors Of which: Tourism 13.9 -8.6 Suez Canal 11.1 7.2 Communications 11.0 3.7 Wholesale and Retail Trade 6.3 00 Finance 4.9 0.8

Price Index (%) 2010/2011 2011/2012 - Change rate in consumer price index (urban) (January 2010 = 100) 7.1 4.9 - Change in producer price index (2004/2005 =100)

8.7

-0.6

July/December 2010/2011 2011/2012 Monetary Survey (LE bn)

End of Period Domestic liquidity (M2) 974.0 1038.9 Growth rate (%) 6.2 2.9 Reserve money 218.4 257.3 Growth rate (%) 7.5 2.5 Money supply (M1) 223.5 255.6 Growth rate (%) 4.4 2.8

Currency in circulation/Money supply (%) 64.3 69.1 Banking system foreign assets, of which: 354.4 230.9

CBE foreign assets 206.3 107.2 Banking system foreign liabilities, of which: 49.2 40.8

CBE foreign liabilities 8.1 10.4 Total deposits with banks (excluding the CBE) 944.0 981.3

In local currency 735.3 747.3 In foreign currencies 208.7 234.0

Foreign currency deposits/total deposits (%) 22.1 23.8 Total lending and discount balances extended by banks (excluding the CBE), of which: 458.1 489.7

To government and public economic authorities 38.2 37.2

To business sector (public and private) 303.6 330.0 Portfolio of securities and TBs with banks (excluding the CBE), of which: 441.2 503.3

TBs and government bonds 341.7 445.8 Loans/deposits with banks (%) 48.5 49.9 Investment in securities, TBs and equity participations/deposits (%)

46.7

51.3

US Dollar Exchange Rate Announced by the CBE

(PT/Dollar)

- Buy and Sell Exchange Rates (Average of the Period) 572.9 597.6 - End of the Period (Buy Rate) 579.3 601.7

July/December - Annual Discount and Interest Rates (%) 2010/2011 2011/2012

End of Period CBE Lending and Discount Rate 8.50 9.50 Interest rate on T-bills Repo Operations - 9.75 CBE Overnight Deposit and Lending Rates Deposit 8.25 9.25 Lending 9.75 10.25 Interest Rate on Deposits of More than 1 Month

and up to 3 Months 6.60 7.20 Interest Rate on One Year or Less Loans 10.70 11.80

Consolidated Fiscal Operations of the General Government (Budget Sector)

2011/2012

Estimates FY Actual (July/Dec.)

LE bn - Total Revenues 349.6 116.6 - Total Expenditures 490.5 189.7 - Cash Deficit (or Surplus) 140.9 73.1 - Net Acquisition of Financial Assets

-6.6 0.7

Overall Deficit ( Surplus) . 134.3 73.8 Total Finance 134.3 73.8 - Domestic Finance 151.9 86.1 Banking 117.1 64.5 Non-Banking 34.8 21.6 - Foreign Borrowing -16.5 -2.1 - Arrears - - - Others -1.4 5.8 - Revaluation Differences - 0.1 - Net Privatization Proceeds 0.3 - - Difference between TBs Face Value and Present

Value - -2.9

- Discrepancy - -13.2 - Cash Deficit (Surplus) as a Percentage of GDP 9.0 4.7 - Overall Deficit (Surplus) as a Percentage of GDP

8.6 4.7

- Expenditures as a Percentage of GDP 31.2 12.1 - Revenues as a Percentage of GDP 22.3 7.4

End of

Domestic Public Debt

June 2011

Dec. 2011

LE bn Gross, due on: 1044.9 1133.0 - Government (net) 808.1 894.6 - Public Economic Authorities (net) 66.3 66.5 - NIB Debt (net) Minus Intra-Debt 170.5 171.9

Balance of Payments (US$ bn) July/December 2010/2011 2011/2012 Current Account & Transfers -2.6 -4.1 Trade Balance -14.5 -15.6 Merchandise Exports 12.7 13.6

Oil and its Products % 42.9 49.6 Others % 57.1 50.4 Merchandise Imports 27.2 29.2 Intermediate Goods % 29.6 28.7 Consumer Goods % 24.1 23.7

Fuel, Raw Materials and Others % 26.3 30.3 Investment Goods % 20.0 17.3

Services Balance 5.6 3.1 Receipts, of which: 13.1 10.6

Transportation % 32.0 40.4 Travel % 53.2 47.6

Investment Income % 1.6 1.0 Payments, of which: 7.5 7.5

Transportation % 11.2 8.0 Travel % 16.5 17.5 Investment Income % 40.7 42.7

Transfers 6.3 8.4 Official % 2.6 6.2 Private % 97.4 93.8 Capital and Financial Account 2.8 -2.4 Overall Surplus/(Deficit) 0.6 -8.0

The Leading Article

- 1 -

Capital Asset Pricing Model (CAPM) versus Arbitrage Pricing Theory (APT): A Case Study on the Egyptian Stock Market١

I. Introduction and Motivation:

Tracing the behavior of the shares' price movements, and examining the relationship between the return and risk that govern their pricing have been of a great interest by many researchers. There exists a vast range of literature covering the asset-pricing concept. However, the study at hand will concentrate on two important and essential theories in financial economics, namely, the Capital Asset Pricing Model (CAPM) and the Arbitrage Pricing Theory (APT).

An enormous amount of literature has been written on the two models.

Empirically, it is believed that the APT performance exceeds the CAPM's, because APT overcomes the CAPM's shortcomings. APT is much more preferred, nevertheless, APT's main criticism is that the model says nothing about the factors that are believed to govern the return of a particular asset. Against this background, the paper’s main objective is to examine which pricing theory really expresses the expected return of the Egyptian stocks. This will be achieved by estimating the expected returns on a particular set of stocks twice, once by the CAPM and the second by using the APT after including the macroeconomic factors that are believed to affect the movement in stocks prices, and consequently affecting their returns.

The rest of the paper will be organized as follows: the second section will

be dealing with the CAPM methodology and its results, the third section will be presenting the APT technique and estimated results and section four will incorporate a comparative assessment of the two models outcomes. In addition, the paper will sum up by some concluding remarks.

II. Capital Assets Pricing Model (CAPM): A. Background:

Sharpe (1964), who highlighted one of the important issues of the modern financial economics, first introduced the Capital Asset Pricing Model (CAPM).

١ The paper is prepared by Dina Rofael Farag under the department's supervision.

- 2 - The issue is concerned with the quantification of the trade-off between risk and expected return. Advocates of the CAPM argue that (β), a measure of systematic risk relative to the market portfolio, is the only determinant of return, and this type of risk can not be diversified away or avoided. Any additional volatility caused by events that is unique to the individual stock can be avoided and in that sense it is argued that capital markets do not reward risks borne unnecessarily (Cagnetti, 2002). B. Data:

The Egyptian Stock Exchange (ESE) publishes the development in price movements of a group of shares that belong to a particular economic sector for 12 sectors. These indices might be considered as a portfolio. In this context, the CAPM is utilized to test its ability in pricing the Egyptian stocks by measuring the systematic risk relative to the market portfolio (β), on nine price indices corresponding to nine economic sectors (portfolios). These sectoral indices are industrial products and services, tourism, real estates, banking, food and beverages products, communications, personal and household products, basic resources, and finally the health and pharmaceutical sector. However, three sectors are excluded from the analysis, because one of the essential assumptions of the CAPM is that the returns should be normally distributed٢ [refer to the appendix table (A1) for Jarque Bera Normality Test results].

In addition, the stock market index (EGX30) is used as a proxy for the

market portfolio, because it incorporates the most 30 active companies in the economy reflecting some stability in the included companies’ shares. Accordingly, it is preferable to EGX70 or EGX100, which exhibit instability in the inclusion and exclusion of companies from month to month based on their activity. Therefore, for technical purposes, it is more favorable to rely on EGX30 for consistency issues especially when a time series analysis is applied.

Additionally, monthly frequency (rather than daily or weekly) is utilized

to avoid high volatility and outliers in data. The sample period spans from January 2007 till January 2011. The starting point was uncontrollable because

٢ Excluding construction, chemicals and financial services (less banking) because the returns are not

normally distributed, thus their inclusion would have violated one of the basic assumptions of the CAPM.

- 3 - this is the first time the ESE publishes the sectoral indices. However, the rationale behind the sample deliberate termination is attributed to the structural break (shock) that took place in Egypt in January 2011 due to the revolution. Evidently, the ESE has closed for two consecutive months, and this caused the discontinuity of the data series for the stock market. C. Methodology and Results:

The test used for both the CAPM and APT is a two-step test, which is extensively used in literature (see Roll and Ross (1986), Chen (1983), and Cheng (1995)). The first step involves the use of time series to estimate the betas for the shares, while the second step regresses the sample mean returns on the beta in a cross-sectional context.

1. Step One: CAPM (Beta Estimation):

This step is responsible for the estimation of the (βs) for the returns of each sector in a time series framework using the excess returns form of the Sharpe (1964) version of the CAPM; the results are displayed in table (1). The returns are calculated as the relative change in the value of the index (which measures the price movements in the shares of each sector). The first step of the CAPM is estimated using the following formula:

εβα itmtimimit ZZ ++= (1)

Where : refers to the excess returns on the shares belonging to a particular sector (i) at time (t), : refers to the excess returns of the market portfolio proxied by the market index (EGX30), refers to the excess return that is earned more than the risk-adjusted market return, and measures the systematic risk for excess return of sector (i) relative to the market portfolio. Finally, is the unsystematic risk that belongs to sector (i).

- 4 -

Table (1): Summary Table for CAPM Step (1)

OLS Estimates for the Excess Returns of the Nine Sectors during the Period (Feb. 2007 – Jan. 2011)

Sector (1)

Sector (2)

Sector (3)

Sector (4)

Sector (5)

Sector (6)

Sector (7)

Sector (8)

Sector (9)

βim 0.979 1.097 1.126 0.636 0.898 0.966 0.770 0.890 0.384 t-statistics 7.293 7.969 7.163 7.134 5.551 6.532 8.134 7.386 5.286 αim 1.534 0.049 2.157 -1.719 -0.478 -0.224 -3.876 -1.744 -4.820 t-statistics 0.873 0.027 1.048 -1.472 -0.225 -0.116 -3.126 -1.105 -5.068 R2 0.536 0.580 0.527 0.525 0.401 0.481 0.590 0.543 0.378

Source: Eviews estimations output. Data is obtained from the Egyptian Stock Exchange, the Central Bank of Egypt and the International Financial Statistics (IFS, IMF)

The results show that only two sectors (2) and (3), namely, tourism and real estate, respectively, are aggressive (β > 1), in the sense that their excess returns are highly sensitive to the market portfolio risk. Moreover, most of the

appear statistically insignificant except for sectors (7) and (9), namely, communications, and health & pharmaceuticals, in order. Nevertheless, the estimates have negative signs implying that the risk-adjusted market return exceeds the excess return earned from sector (i), therefore, those shares with negative intercepts are not recommended for investment. The explanatory power of each regression is measured by the coefficient of determination (R2), which ranges between 38% and 59%, while the rest is left unexplained referring to the sector-specific risk that cannot be diversified away.

2. Step Two: Testing the CAPM's Explanatory Power:

As per Chen (1983), to test the model's explanatory ability for the dataset, model (2) is estimated in a cross-sectional framework; wherein the expected returns of each sector is the dependent variable and the estimated (βs) obtained from step (1) are the independent variable.

νβλλ iiiR ++= ˆ10 (2)

- 5 -

Table (2): Summary Table for CAPM Step (2)

Cross-Sectional OLS Estimates for Expected Returns and the Estimated Risk Measure (Beta)

Estimates t- Stat. R2 Adj. R2 F-statistic Probability (F) λ1 -0.383 -0.203 λ0 -8.270 -4.921 0.006 -0.136 0.041 0.845

Source: Eviews estimations output

The results displayed in table (2) indicate that the CAPM has zero explanatory power measured by (R2). In addition, the F-test does not reject the null hypothesis that the whole model is insignificant. Accordingly, the CAPM appears to be an inappropriate pricing approach for the Egyptian stocks, because an insignificant relationship between (β) and returns exists. Alternatively, the Arbitrage Pricing model will be examined in the next section by incorporating additional factors that are believed to have an explanatory power on the shares’ price behavior, thus increasing the overall explanatory power of the model.

III. Arbitrage Pricing Theory (APT): A. Background:

As per Ross (1976) and others, the APT assumes that asset markets are perfectly competitive and each asset return is linearly related to (k) factors plus its own idiosyncratic disturbance as given in equation (3):

ελλλλ iikkiii bbbR +++++= ...22110 (3)

Where refers to the return on the risk free asset, is interpreted as the risk premium of stock (i) that corresponds to factor (k), while, ( is the sensitivity of the return of asset (i) to factor (k). Worth mentioning, Ross (1976) highlighted some of the prespecified macroeconomic factors that were believed to directly affect the return of a particular stock. Among these factors are the gross national product, employment rate, inflation expectations, interest rates, etc.

B. Data:

The utilized prespecified factors are captured from the theory. It is suggested to include those factors that are believed to govern the Egyptian economy and being the sources of the systematic asset risk (Chen et al,1986),

- 6 - concerning the monetary, fiscal, financial and real variables. Moreover, they might affect the rate of return or the future cash flow expectations of the firm (Iqbal ét al, 2005). The monetary variables include the money supply (M1), inflation expectations, the exchange rate and the 3-month deposit rate٣. As for the fiscal indicators, the 3-month treasury bills rate is included. The financial variable refers to the Egyptian stock market performance proxied by the EGX30. As for the real variable, the monthly rate of growth in the real GDP is calculated.

All the data are introduced to the model after calculating the monthly growth rates. As for the GDP, the monthly data is not available, thus an interpolation method on the annual series has been carried out using the univariate temporal disaggregation technique in the MATLAB package. The inflation expectation series is calculated as the monthly change in the logarithm of the Consumer Price Index (CPI). The monthly changes in both the deposits and Treasury bill rates are derived. The rationale behind these transformations on the dataset is to facilitate the estimation since the dependent variable is calculated as the monthly growth in the sector index, thus eliminating any statistical problem or measurement errors such as the non-stationarity of the data.

Since the APT does not put any constraints concerning the distribution of stocks' returns, all of the 12 sectoral indices are introduced to test if the APT fits the Egyptian stocks pricing process. The same time span just as in the CAPM (February 2007 till January 2011) is utilized.

C. Methodology and Results:

The APT methodology involves three main stages: the first step concerns the Principle Component Analysis (PCA) to create the unknown factors in the dataset, known as the factor scores. The second step estimates the factor loadings (βs) for each individual sector returns. The created factors from the PCA are the independent variables, while the sector's return is the

٣ Mishkin (1996) introduced what is known as the "monetary transmission mechanism channels". He

tried to highlight the different economic channels that the central banks utilize to affect the overall macro-economic stability. Among these channels is what is known as the "Asset Price Channel", through which the central bank uses its tools to affect the investment and consumption decisions of the market participants.

- 7 - dependent variable. As for the last step, it involves measuring the explanatory power of the APT. As such, a cross-sectional estimation for the risk premia for all involved stocks is employed. In that framework, the estimated factor loadings obtained from second step are introduced as the independent variables, while the dependent variables are the expected returns of each sector over the period under investigation.

1. Step One: Principle Components Analysis (PCA):

PCA extracts the Eigen Vectors that are essential for the creation of the unknown factor scores. Empirically, the Eigen vectors (correlation-based matrix) for the prespecified factors٤ are calculated, then, the method moves to the derivation of the feature vector of factors, which is the matrix of vectors, organized by highest to lowest Eigen values. This matrix gives the components in order of significance, as illustrated in table (3):

Table (3): Principle Components Analysis and Eigen Vectors Comp 1 Comp 2 Comp 3 Comp 4 Comp 5 Comp 6 Comp 7

Eigen Value 2.236 1.596 1.087 0.889 0.548 0.365 0.279 Variance Prop. 0.319 0.228 0.155 0.127 0.078 0.052 0.040

Cumulative Prop. 0.319 0.547 0.703 0.830 0.908 0.960 1.000 Eigen Vectors

Variable Vector 1 Vector 2 Vector 3 Vector 4 Vector 5 Vector 6 Vector 7 DEPOSIT 0.504 -0.142 0.148 -0.466 0.312 0.484 0.394

EGX30 -0.473 0.409 0.052 -0.011 -0.219 0.747 -0.023

EXCHANGE 0.278 0.194 -0.761 0.169 0.343 0.215 -0.337 GDP 0.511 0.097 0.462 0.119 -0.235 0.151 -0.651

INFEXP 0.086 0.551 0.346 0.485 0.493 -0.111 0.279 M1 -0.107 0.532 0.032 -0.711 0.168 -0.331 -0.249

TBILL 0.407 0.423 -0.249 0.011 -0.640 -0.132 0.408


Additionally, the last step of PCA deals with the creation of the new dataset using matrix algebra as presented in equation (4). The resulted new dataset is available in the appendix in table (A2).

(4)

٤ Smith (2002) states that for PCA to work efficiently, it should be applied on the adjusted macro-

economic variables (normalized data), in the sense that each variable is obtained after subtracting its mean value. The morale is to get a dataset with zero mean.

- 8 -

2. Step Two: APT Estimation:

Turning to the second stage of the APT, the return's sensitivity coefficients, denoted by for each sector are estimated in relation to the rotated factor scores derived from the PCA in stage one, denoted by to . Therefore, the seven-factor models are employed twelve times equivalent to the number of sectoral returns, given by equation (5).

εµ ittititiiit FbFbFbR ++++=− 772211 ... (5)

Table (4): APT and Returns' Sensitivity (bi) to Factor Scores

Sector b1 b2 b3 b4 b5 b6 b7 R2

Adjusted

Industrial Products and Services

-2.226 1.001 0.902 -0.882 -0.300 -1.205 -0.664 0.058

Tourism -2.694 0.377 -0.409 0.786 0.656 -0.356 -2.070 0.466

Real Estate -0.170 -0.483 0.830 -1.874 1.842 2.085 0.497 0.404

Construction -7.129 2.083 -1.269 5.592 -3.596 -5.453 -5.661 0.476

Banking 0.055 -0.176 0.359 -1.195 0.301 0.858 1.987 0.178

Financial Services -1.842 0.993 0.623 -0.614 -0.082 -0.634 -0.982 0.468

Food and Beverages 3.136 -1.267 2.594 -2.729 1.341 4.199 2.950 0.354

Basic Resources -4.489 1.269 0.591 1.805 -1.263 -2.989 -3.712 0.417

Communications 0.912 -1.169 1.351 -2.943 3.717 3.155 0.235 0.509

Personal and Household Products

2.266 -0.497 1.455 -3.795 2.809 3.522 1.910 0.465

Chemicals 0.146 0.248 0.995 -1.193 0.814 0.984 -0.350 0.390

Health and Pharmaceutical -2.094 -0.072 -0.117 1.105 -0.011 -1.007 -1.120 0.206


Finally, the last stage in the APT estimation is to derive the risk premia (λ) for the stocks in a cross-sectional framework, where the estimated betas are the independent variables and the expected returns of each sector are the dependent variable.

- 9 -

12,...,2,1,... 7722110 =++++= ibbbR iiii λλλλ (6)

The results of the APT show that four out of the seven estimated risk premia are statistically significant at 90% confidence level namely those related to factors (F2), (F3), (F4), and (F5). This implies that the risks associated with these factors are priced. However, the coefficients related to factors (1), (6) and (7) are insignificant. In addition, the overall goodness of fit indicators show that the model is highly significant with 2 (82%) and F-test rejects the null hypothesis that the model is insignificant. Accordingly, it is observed that there are three sources of risk that would affect the expected returns of the included Egyptian stocks, based on the APT analysis.

Table (5): Cross-Sectional Estimates of APT and Risk Premia (λi) Estimate P-value

λ0 3.088 0.066 λ1 -0.325 0.534 λ2 -7.743 0.056 λ3 -4.379 0.067 λ4 -6.553 0.056 λ5 -7.484 0.047 λ6 0.632 0.261 λ7 -3.461 0.109

F-statistics 8.156 0.030 R2 Adjusted 0.820


These risks are due to monetary policy, fiscal policy, and the exchange rate risks. As for the monetary policy risks, factors (2) and (4) which have high loadings on inflation expectations and money supply, respectively (see table (3)), lead to a reduction in the expected returns by λ2=7.7 and λ4=6.5, respectively. This implies that the expected returns due to these factors fall short of the risk free returns. Similarly, the fiscal policy risk is demonstrated in factor (5) and has a high loading on the Treasury bill rate, causing the reduction of the expected returns by λ5=7.5٥. Turning to the exchange rate risk due to factor (3), we find that although it adversely affects the expected returns, yet its effect is with a lower magnitude (amounting to λ3=4.4) in comparison to the monetary and fiscal risks. Finally, the intercept of the model indicates that there exists a risk free asset which causes the increase in the expected returns by λ0=3.1.

٥ As cited by Iqbal ét al, 2005, (Chen (1991) shows that the cyclical behavior of T-bill rates captures

the cyclical variation in equity risk premiums.

- 10 -

In this context, an extremely important issue should be highlighted. The attained negative risk premia that are associated with the above-mentioned factors imply that the investors are risk averse and they tend to hedge against risks accompanied with changes in the economic fundamentals by rushing into less risky assets. Importantly, the paper came up with these results, because the period under investigation involved an uncertainty episode. This episode started from September 2007 (due to the Subprime crisis) moving to the spillovers of the global financial crisis taking place in September 2008 that lasted for a long period in Egypt until the economy started to recover by the end of 2009. Even if this is the case, the APT seems to be an extremely appropriate pricing method for the Egyptian stocks as it succeeded to capture such behavior for a unique episode. IV. Comparative Analysis and Conclusions:

The paper applied two pricing models that are believed to have striking contributions to the modern financial economics theory, namely, the CAPM and APT. Empirically, the results support the research’s prior hypothesis stating that "the APT outperforms the CAPM", in the sense that APT can be considered an appropriate stocks pricing method for the Egyptian case. The results are drawn from a sample of 12 sectoral indices measuring the monthly development in the stocks prices; from which the return and expected returns are calculated.

The estimations show the existence of a significant relationship between

the expected returns of shares and the risk measure (β). Additionally, APT can explain about 82% of the variations that stem from systematic risks, while only 18% are left unexplained due to idiosyncratic disturbances, as a result of the inclusion of some prespecified macroeconomic variables including a proxy for market portfolio (EGX30). On the contrary, the CAPM indicates an insignificant relationship between the expected returns and the risk measure (β) as it explains zero percentage of the variations in expected returns.

- 11 -

Worth noting, the APT concluded that the risk generated from factor (6), which has a high loading on EGX30 appears to have an insignificant impact on the expected returns of the shares. This conclusion supports the evidence that CAPM is not an appropriate pricing method for the Egyptian case, because this framework incorporates the EGX30 as the only explanatory variable for the variations in the shares' expected returns.

Finally, the empirical work demonstrates one of the shortcomings of the CAPM, because three price indices are excluded from the analysis due to the normality condition. However, while applying the APT, all of the 12 indices are included. Therefore, excluding some of the proposed shares might result in biased results because this result in the inclusion of the only "well-behaved" firms (Cheng, 1995). Moreover, the concept of the bivariate relationship seems to be inadequate for the Egyptian stocks pricing and instead, the paper presented a multivariate framework verified by the APT.

V. References:

Cagnetti, Arduino, (2002), "Capital Asset Pricing Model and Arbitrage Pricing Theory in the Italian Stock Market: an Empirical Study", Management School and Economics, The University of Edinburgh, report no., CFMR.

Chen, N-F., Roll, R. and Ross, S.A. (1986), Economic forces and the stock market, Journal of Business, 59, 383-403.

Chen, N.F., (1983), "Some Empirical Tests of the Theory of Arbitrage Pricing", Journal of Finance, Vol. 38, No 5.

Cheng, A.C.S., (1995), “The UK Stock Market and Economic Factors: a New Approach”, Journal of Business Finance and Accounting, Vol.22

E-Views version 4.0, October 16, 2001, Standard Edition. E-Views Manual (February 2002), "E-Views 4 User's Guide", Quantitative

Micro Software, LLC, U.S.A. Iqbal, Javed and Aziz Haider, (2005), "Arbitrage Pricing Theory: Evidence

From An Emerging Stock Market", The Lahore Journal of Economics, Vol. 10, Issue 1, Summer 2005, pp. 123-139.

International Monetary Fund (IMF) database, International Financial Statistics (IFS), online access, accessed on May 2011.

MATLAB version 7.6.0.324 (R2008a), February 10, 2008.

- 12 -

Mishkin, F.S. (1996), “The Channels of Monetary Transmission: Lessons for Monetary Policy”, NBER Working Paper No. 5464.

Sharpe, William F., (1964), “Capital Asset Prices: A Theory of Market Equilibrium under Conditions of Risk”. Journal of Finance. 19:3, pp. 425-442.

Smith, L.I.(2002), “A tutorial on Principal Components Analysis”, http://www.cs.otago.ac.nz/cosc453/student_tutorials/principal_components.pdf Ross, Stephen A., (1976), “The Arbitrage Theory of Capital Asset Pricing.”

Journal of Economic Theory. 13:3, pp. 341-360. http://www.egyptse.com/arabic/homepage.aspx http://www.cbe.org.eg/ VI. Appendix:

Table (A1): Jarque Bera Normality Test for Sectoral Returns

Sector Jarque Bera Probability Industrial Products and Services 7.023 0.030 Personal and Household Products 7.465 0.024 Financial Services 12.458 0.002 Food and Beverages 2.107 0.349 Construction 11.970 0.003 Communications 1.900 0.387 Chemicals 9.225 0.010 Banking 8.240 0.016 Tourism 1.144 0.565 Basic Resources 8.692 0.013 Real Estate 2.727 0.256 Health and Pharmaceuticals 2.387 0.303

Source: E-views results, Jarque Bera Null hypothesis (H0: Data is normally distributed, H1: Data is not normally distributed). Values in bold all failed to reject the null hypothesis that the data is normally distributed. Only three sectors returns reject the null hypothesis, namely, financial services, construction and chemicals.

- 13 -

Table (A2): New Dataset Obtained from the PCA

Explanatory Variables of APT Rotated Factors (Factors Scores)

Factor 1 Factor 2 Factor 3 Factor 4 Factor 5 Factor 6 Factor 7 2007M02 -3.121 -2.976 -2.607 -3.806 -2.515 2.248 -1.135 2007M03 -1.751 -3.502 -3.154 -3.804 -2.569 0.242 -0.618 2007M04 -3.650 -4.771 -3.872 -5.643 -4.415 2.320 -1.639 2007M05 -3.524 -6.270 -5.158 -5.241 -5.526 3.232 -1.622 2007M06 -3.939 -3.607 -4.427 -6.778 -4.224 1.788 -1.733 2007M07 -5.410 2.071 -1.426 -4.124 -2.222 3.605 0.650 2007M08 2.110 -0.997 -0.894 0.428 2.230 -5.119 2.276 2007M09 -2.845 8.193 4.870 4.906 4.832 2.075 3.924 2007M10 -4.252 3.874 1.942 -0.089 -1.131 5.125 0.593 2007M11 -3.489 -4.836 -4.747 -8.489 -8.378 5.101 -5.179 2007M12 -3.156 -0.957 -0.938 -3.342 -5.069 5.838 -3.077 2008M01 2.842 19.599 12.905 17.679 16.523 -1.063 7.689 2008M02 1.420 6.344 6.047 3.822 4.484 -1.068 0.460 2008M03 1.032 12.400 8.863 9.962 6.437 2.565 3.338 2008M04 0.971 10.044 7.515 3.562 4.187 0.331 0.285 2008M05 9.918 12.941 2.627 10.507 10.736 -4.821 1.309 2008M06 2.658 -5.915 6.168 -1.909 -5.500 -3.278 -1.244 2008M07 9.269 3.969 7.351 8.738 7.719 -8.570 1.772 2008M08 10.358 6.495 6.084 8.232 9.571 -10.602 2.452 2008M09 6.012 -6.312 -3.128 -2.856 -3.024 -4.459 -4.078 2008M10 15.522 -21.618 -6.206 -2.578 0.207 -19.091 -4.390 2008M11 6.147 -13.211 -3.385 -6.540 -3.306 -9.447 -4.656 2008M12 1.845 -19.049 -8.847 -10.987 -11.931 -1.475 -7.672 2009M01 1.265 -5.459 -2.502 -0.830 -2.993 0.333 -1.694 2009M02 7.848 -7.488 -1.013 1.963 4.283 -11.192 0.270 2009M03 -3.885 5.033 0.973 1.751 0.036 6.001 0.573 2009M04 -11.435 15.655 4.313 3.909 -0.642 17.090 2.552 2009M05 -8.694 8.386 1.489 0.589 -1.943 11.506 0.931 2009M06 -4.444 -2.156 -2.861 -4.143 -4.799 4.457 -1.110 2009M07 1.758 6.331 4.655 7.035 8.549 -5.633 5.965 2009M08 -6.494 8.194 2.575 3.247 1.533 7.837 3.037 2009M09 -2.105 7.580 3.376 3.942 4.875 0.587 3.970 2009M10 -0.939 8.274 4.865 7.980 6.633 0.336 5.856 2009M11 1.088 -8.861 -5.547 -7.501 -4.516 -4.286 -2.561 2009M12 -1.417 -17.651 -10.493 -11.829 -12.481 1.198 -6.213 2010M01 -2.635 -0.521 -0.822 -0.343 -1.730 3.096 0.637 2010M02 -3.022 -3.813 -3.771 -4.496 -4.920 3.610 -1.963 2010M03 0.629 -3.853 -2.373 -2.052 -1.310 -1.663 -0.421 2010M04 -5.448 2.722 -1.700 -1.946 -3.362 8.060 -0.956 2010M05 4.434 -8.219 -4.806 -1.749 -1.105 -5.771 -1.225 2010M06 2.068 -4.010 -2.837 -5.138 -0.503 -4.745 -1.887 2010M07 3.914 7.149 5.793 10.218 10.071 -5.294 5.975 2010M08 -1.275 14.727 7.869 9.893 10.384 1.203 5.971 2010M09 -1.060 5.228 2.937 4.135 3.594 1.328 2.786 2010M10 -0.784 3.603 0.439 2.555 2.369 1.928 1.405 2010M11 -2.192 -12.513 -7.772 -10.161 -9.818 2.126 -5.661 2010M12 -2.128 -11.003 -7.405 -7.974 -10.190 3.507 -4.152 2011M01 -0.015 0.755 -0.967 -0.704 0.868 -1.097 0.206 Source: E-views results, derived by (1) Principle Component Analysis (PCA) and then the matrix algebra for rotated factors.

- 14 -

1 - Macroeconomic Performance 1/1- Gross Domestic Product (GDP)

The Egyptian economy has not recovered yet from the adverse effects of

the unstable conditions in Egypt. As a result, real GDP growth at factor cost noticeably slackened to 0.3 percent in the first half of FY 2011/2012 (from 5.6 percent in the corresponding period of the previous FY). However, a slight improvement was seen in Oct./Dec. 2011/2012 compared with the performance of the previous quarter (July/Sept.) as real GDP at factor cost registered 0.4 percent (against 0.3 percent) and at market prices 0.4 percent (against 0.2 percent).

GDP (at Constant Prices*)

Value (LE bn) Growth Rate (%) July/Dec. July/Dec. 2010/11 2011/12

July/Sept. 2011/12

Oct./Dec. 2011/12 2010/11 2011/12

July/Sept. 2011/12

Oct./Dec. 2011/12

GDP at factor cost

439.1 440.7 222.2 218.5 5.6 0.3

0.3 0.4 Indirect Taxes (Net)

19.5 19.4 9.6 9.8 4.3 -0.5

-2.0 1.0 GDP at constant market prices

458.6 460.1 231.8 228.3 5.5 0.3

0.2 0.4 Source: Ministry of Planning. * At 2006/2007 prices.

GDP at Factor Cost (2006/2007 prices)

A follow-up of the performance of the productive sectors shows that the relative weight of the domestic demand-driven sectors represented about 177.1 percent of real GDP growth in July/Dec. 2011/12 (against 82.9 percent in the corresponding period of the preceding FY). The underperformance was clearly seen in the manufacturing sector (negative 0.48 point against 0.94 point), construction and building (negative 0.09 point against 0.63 point), wholesale and retail trade (nil against 0.66 point), and communications (0.15 point against 0.43 point).

- 15 - The relative weight of the external demand-driven sectors represented

about -77.1 percent of real GDP growth in July/Dec. 2011/2012 (against 17.1 percent in the previous corresponding period). The decline was mainly ascribed to the poor performance of tourism (negative 0.40 point against 0.61 point), extractions (negative 0.10 point against 0.01 point), and Suez Canal (0.23 point against 0.34 point).

Real GDP Growth by Main Economic Sectors at Factor Cost

(percentage point) Share in Real GDP Growth Growth Rate (%)

July/Dec. July/Sept. Oct./Dec. July/Dec. July/Sept. Oct./Dec. Sector 2010/11 2011/12 2011/12 2011/12 2010/11 2011/12 2011/12 2011/12

Domestic Demand-Driven Sectors

Agriculture, Irrigation and Fishing 0.44 0.42 0.48 0.35 3.11 3.02 3.12 2.90 Manufacturing 0.94 -0.48 -0.51 -0.45 6.09 -3.06 -3.29 -2.83 Electricity 0.11 0.06 0.08 0.04 8.02 4.10 5.34 2.82 Construction & Building 0.63 -0.09 -0.14 -0.03 12.55 -1.61 -2.76 -0.59 Transportation & Storage 0.27 0.02 0.04 -0.03 6.32 0.55 0.96 0.12 Communications 0.43 0.15 0.14 0.16 11.03 3.71 3.72 3.71 Wholesale & Retail Trade 0.66 0 0.03 -0.04 6.26 -0.04 0.31 -0.35 Finance 0.2 0.03 0.03 0.03 4.94 0.79 0.74 0.85 Social Insurance 0.19 0.07 0.09 0.06 5.40 2.08 2.51 1.63 Real Estates 0.12 0.07 0.06 0.07 4.52 2.52 2.21 2.82 General Government 0.38 0.24 0.23 0.26 4.39 2.83 2.66 3.00

Social Services 0.21 0.1 0.13 0.06 5.13 2.33 3.22 1.45 Other Sectors* 0.06 0.03 0.03 0.07 6.09 2.83 3.30 2.44 Sum Total 4.64 0.62 0.69 0.56

External Demand-Driven Sectors Extractions 0.01 -0.1 -0.12 -0.09 0.04 -0.81 -0.96 -0.66

Suez Canal 0.34 0.23 0.28 0.19 11.05 7.21 8.39 5.99 Tourism 0.61 -0.4 -0.52 -0.29 13.94 -8.57 -10.41 -6.49 Sum Total 0.96 -0.27 -0.36 -0.19 Grand Total 5.60 0.35 0.33 0.37 5.6 0.3 0.3 0.4

*Including water, sanitation, information, and insurance sectors The relative improvement in GDP growth in Oct./Dec. 2011, relative to

July/Sept. was mainly due to the tentative signs of recovery of some sectors, namely tourism, construction and building, and manufacturing. However, the GDP growth in Q2 relative to Q1 was mitigated by the underperformance of agriculture, irrigation and fishing; Suez Canal; wholesale and retail trade; and social services.

- 16 -

- GDP and Sectoral Analysis of the Output Gap

The output gap which shows the current business cycle of the Egyptian economy was calculated by deriving the potential GDP growth rates* and comparing them to actual rates (excluding seasonal factor). The analysis illustrated that although the negative gap of GDP has persisted since Jan./March 2011 (-7.6 percent) recording -3.3 percent in Oct./Dec. 2011, it relatively improved when compared with its level in July/Sept. (-3.6 percent).

* The trend component was calculated by using the quarterly data of both GDP and a set of economic sectors

during the period of 2001/02 - 2010/11, by applying the approach of Hodrick-Prescott Filter. The cyclical component which reflects the output gap is then derived.

Real Growth Rates during July/Dec (on annual basis)

-3.1

4.1

0.53.7 3.5

0.0 0.82.5

7.2

3.0

-0.8

3.90.6

2.1

-8.6

2.84.22.3

-1.6

-10

-5

0

5

10

15

20

Agri

cultu

re, I

rrig

atio

n &

Fis

hing

Ext

ract

ions

Man

ufac

turi

ng

Ele

ctri

city

Wat

er

San

itatio

n

Con

stru

ctio

n &

Bui

ldin

g

Tran

spor

tatio

n &

Sto

rage

Com

mun

icat

ions

Info

rmat

ion

Sue

z C

anal

Who

lesa

le &

Ret

ail T

rade

Fina

nce

Insu

ranc

e

Soc

ial I

nsur

ance

Tour

ism

Rea

l Est

ates

Gen

eral

Gov

ernm

ent

Soc

ial S

ervi

ces

July/Dec 2011/2012 (0.3%) July/Dec 2010/2011 (5.6%)

- 17 -

Actual Growth Rates (Seasonally Adjusted) and the Output Gap of Main Economic Sectors

Output Gap

Economic Business Cycle (%) Actual Growth Rate

(%)

Oct./Dec. 2011

July/Sept. 2011

Oct./Dec. 2010

Oct./Dec. 2011

July/Sept. 2011

Oct./Dec. 2010

-3.3 -3.6 1.6 0.4 0.2 5.7 Real GDP -5.2 -5.3 0.4 3.7 3.8 10.4 Communications

-8.2 -10.6 3.5 -0.5 -2.7 12.3 Construction and Building

-2.4 0 2.4 2.7 5.2 7.8 Electricity -2.9 -3.1 -1.3 -0.8 -0.9 1.2 Extractions -3.0 -3.0 0.6 2.1 2.1 4.7 Finance -0.8 -0.9 0.7 2.9 2.9 4.6 General Government -9.7 -17.6 10.7 -5.9 -13.8 15.3 Tourism -5.5 -6.3 2.9 -2.8 -3.5 6.0 Manufacturing -0.9 -1.4 0.5 2.7 2.2 4.2 Real Estates 2.6 5.6 6.6 6.0 9.1 9.9 Suez Canal

-4.3 -3.6 1.5 -0.5 0.2 5.6 Wholesale and Retail Trade

-4.3 -3.8 0.7 0.3 0.8 5.7 Transportation and Storage

Source: Based on the Ministry of Planning data.

Development of Real GDP Growth Rate Divided into GDP Trend and GDP Gap (on annual basis)

-3.3-3.6

1.6 0.40.2

5.73.8

-10.0-8.0-6.0-4.0-2.00.02.04.06.08.0

10.0Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4 2

011/

12 Q

1 2

011/

12 Q

2

2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11

%

GDP Gap - Business Cycle GDP Growth Rate - Seasonally Adjusted Potential GDP-Trend

- 18 -

When applying the above methodology to the different economic sectors,

it is found that the relative improvement in the economic performance in Oct./Dec. 2011 relative to July/Sept. was owed to the decline in the negative output gaps of most economic sectors. In the forefront of these sectors came tourism, construction and building, manufacturing, real estates, extractions, and the general government. However, such an improvement could have been more tangible but for the increase in the negative gaps of other sectors, namely wholesale and retail trade, and transportation and storage. Although the Suez Canal sector was the only sector that achieved a positive output gap, it further slackened, as evidenced by the contraction in its output gap from 5.6 percent to 2.6 percent.

Turning to the public and private sectors' contribution to economic growth (0.3 point) in July/Dec. 2011/2012, the former sector added 0.4 percentage point (against 1.6 point in the same period a year ealier), while the contribution of the latter was negative (-0.1 percentage point against positive 4.0 percentage points). The decline in the share of the private sector was most pronounced in tourism, manufacturing, construction and building, extractions, and wholesale and retail trade. In the meantime, the retreat of the public sector's share was traced to the lower contributions of electricity, manufacturing, finance, communications, and construction and building.

Contribution of the Private Sector to Real GDP Growth(at Factor Cost)

0.42-0.01

-0.380.00

-0.080.02

0.190.000.01

-0.400.060.09

-0.60 -0.40 -0.20 0.00 0.20 0.40 0.60 0.80 1.00

Agriculture, Irrigation & FishingExtractions

ManufacturingElectricity

Construction & BuildingTransportation & Storage

CommunicationsWholesale & Retail Trade

FinanceTourism

Real EstatesSocial Services

July/Dec 2010/2011 (4.04 percentage point) July/Dec 2011/2012 (-0.08 percentage point)

- 19 - - GDP by Expenditure (at 2006/2007 market prices)

On the demand side, the negative contribution of net external demand (exports of goods and services minus imports of goods and services) aggravated to record -3.4 points in July/Dec. 2011/2012 (against -0.4 point in July/Dec. 2010/2011). Moreover, the share of capital formation (including the change in stock) retreated to a negative 0.6 point (against a positive 1.6 point). Government consumption also fell to 0.3 point (from 0.4 point). By contrast, private consumption rose to 4.0 points (from 3.9 points).

Contribution of the Public Sector to Real GDP Growth(at Factor Cost)

-0.10-0.10

0.060.01

0.00-0.01

0.00-0.04

0.000.23

0.000.02

0.070.00

0.010.24

0.010.02

-0.20 -0.10 0.00 0.10 0.20 0.30 0.40 0.50

Extractions Manufacturing

ElectricityWater

SanitationConstruction & BuildingTransportation & Storage

CommunicationsInformationSuez Canal

Wholesale & Retail TradeFinance

Social InsuranceTourism

Real EstatesGeneral Government

Social ServicesOthers

July/Dec 2010/2011 (1.56 percentage point) July/Dec 2011/2012 (0.41 percentage point)

Shares of Consumption, Investment and Net Exports in Real GDP Growth

-2.3

0.5

-1.7

4.34.44.2

-3.4

-0.4

-4.5

-0.6

1.6

4.3

-4.5-3.5-2.5-1.5-0.50.51.52.53.54.55.5

July/Dec. 2011/2012

July/Dec. 2010/2011

Oct/ Dec. 2011/2012

July/Sept. 2011/2012

Net ExportsCapital FormationFinal Consumption

(Per

cent

age

poin

t)

- 20 -

Notably, the slight improvement in real GDP at market prices in Oct./Dec.

2011 (0.4 percent) relative to July/Sept. (0.2 percent) was largely driven by the higher contribution of capital formation (including the change in stock) registering a positive 0.5 point, against a negative 1.7 point. As such, fixed investment (excluding the change in stock) jumped by 63.0 percent in Q2 as compared with Q1, posting LE 44 billion.

Growth Rates of Demand Components and their Share in Real GDP Growth at Market Prices

Source: Based on the Ministry of Planning data. Over the first half of 2011/12, implemented investments (at 2006/2007

prices) amounted to LE 71.0 billion, down by 14.4 percent (compared with a 14.7 percent increase in the corresponding half a year earlier). The decline in investments came on the back of the lower contribution of both the private sector (negative 12.8 points against positive 13.7 points) and the public sector (-1.6 point against 1.0 point). At the level of the private sector, the most responsible sectors for the decline were manufacturing, communications, wholesale and retail trade, and construction and building. The major public sectors that experienced a slowdown in their investments were social services, real estates and manufacturing.

Growth Rate (%)

Share in GDP Growth (Percentage Point)

July/Dec. July/Sept. Oct./Dec. July/Dec. July/Sept. Oct./Dec. 2010/11 2011/12 2011/12 2011/12 2010/11 2011/12 2011/12 2011/12 Real GDP Growth 5.5 0.3 0.2 0.4 5.5 0.3 0.2 0.4 1- Domestic

Demand

5.7

3.5

2.4

4.7

5.9

3.7

2.5

4.9 A- Final Consumption

5.0

5.0

4.7

5.3

4.3

4.3

4.2

4.4

Private 5.2 5.3 5.0 5.6 3.9 4.0 3.9 4.1 Public 3.6 2.9 2.8 3.0 0.4 0.3 0.3 0.3

B- Capital Formation (Including Change in the Stock)

9.4

-3.5

-11.4

2.3

1.6

-0.6

-1.7

0.5 2- Net External

Demand

11.6

93.3

57.8

136.5

-0.4

-3.4

-2.3

-4.5 A- Exports of Goods & Services

10.9

-4.7

-2.9

-6.5

3.0

-1.4

-0.8

-2.0

B- Imports of Goods & Services

10.9

6.0

4.5

7.6

3.4

2.0

1.5

2.5

- 21 -

The sectoral distribution of implemented investments ran as follows: 19 percent for extractions, 5.5 percent for manufacturing, 7.4 percent for electricity, 4.4 percent for water and sanitation, 2.3 percent for agriculture, and 0.7 percent for construction and building. The productive sectors got 27.5 percent of total investments, while social services and others got 33.2 percent.

Contribution of the Private Sector in the Real Growth of Investment (July/Dec)

-0.63-1.78

-9.78-2.31

0.46-3.22

-0.37-3.19

-1.115.11

-1.135.15

-12.0 -10.0 -8.0 -6.0 -4.0 -2.0 0.0 2.0 4.0 6.0

Agriculture, Irrigation & ReclamationExtractions

ManufacturingConstruction & BuildingTransportation & Storage

CommunicationsInformation

Wholesale & Retail TradeTourism

Real EstatesSocial Services

Others

July/Dec 2011/2012 (-12.78 percentage points)July/Dec 2010/2011 (13.67 percentage points)

Contribution of the Public Sector in the Real Growth of Investment (July/Dec)

0.76

-1.31

0.92

-1.17

-0.16

0.67

-0.08

-0.31

0.10

-0.20

0.00

-0.47

-2.20

-0.01

-2.03

-0.01

-0.05

3.97

-6.0 -5.5 -5.0 -4.5 -4.0 -3.5 -3.0 -2.5 -2.0 -1.5 -1.0 -0.5 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5

Agriculture, Irrigation & Reclamation

Extractions

Manufacturing

Electricity

Water

Sanitation

Construction & Building

Transportation & Storage

Communications

Information

Suez Canal

Wholesale & Retail Trade

Finance

Insurance & Social Solidarity

Tourism

Real Estates

Social Services

Others

July/Dec 2011/2012 (-1.58 percentage point)July/Dec 2010/2011 (0.99 percentage point)

- 22 - 1/2 - Labor Force, Employment and Unemployment

According to the quarterly Labor Force Survey (LFS) data issued by CAPMAS, labor force reached some 26.8 million persons at end of Dec. 2011, against 26.2 million persons at end of Dec. 2010, up by 2.3 percent (indicating a rise of 0.5 percent above the end of Sept. 2011). Hence, labor force made up around one third of the population (32.9 percent) at end of Dec. 2011.

The number of employed persons declined to 23.46 million (18.84 million males and 4.62 million females), against some 23.86 million persons (19.27 million males and 4.59 million females) at end of Dec. 2010, with a decrease of 399 thousand or 1.7 percent. This was an outcome of the 2.2 percent fall in the number of employed males and the 0.5 percent increase in the number of employed females. Accordingly, annual unemployment rate accelerated to 12.4 percent at end of Dec. 2011 (from 8.9 percent at end of Dec. 2010 and 11.9 percent at end of Sept. 2011). The rise in unemployment was attributed to the surge in the number of jobless males by 9.1 percent at end of Dec. 2011 (against 4.8 percent at end of the corresponding period of the previous FY); and jobless females by 23.6 percent (against 22.8 percent).

Source: Labor Force Survey ( LES) data, released by CAPMAS.

1/3- Inflation First: Consumer Price Index (CPI)

In the first half (July/Dec.) of FY 2011/2012, the annual rate of headline

CPI inflation (urban) decelerated to 4.9 percent, from 7.1 percent in the corresponding period a year earlier. The decrease was largely pronounced in the group of food and non-alcoholic beverages (1.9 percentage point, against

8.9% 8.9%11.9% 11.8% 11.9% 12.4%

-5.0%

0.0%

5.0%

10.0%

15.0%

Sept. 2010 Dec. 2010 Mar. 2011 June 2011 Sept. 2011 Dec. 2011

Unemployment Labor Force Employment

Labor Force & Employment Indicators

- 23 -

4.0 points). Decreases were also seen in education (0.5 point against 1.1 point), tobacco and narcotics (0.6 point against 1.0 point), restaurants and hotels (0.1 point against 0.5 point), healthcare (nil against 0.1 point), and communications (-0.1 point against nil). Conversely, the share of housing, electricity, gas and fuel went up (1.4 point against nil) and so did culture and recreation (0.2 point against 0.1 point). Source: CAPMAS

The drop in the share of food and non-alcoholic beverages was traced to the decline in the inflation rate of the group (to 4.3 percent, against 9.6 percent), on the back of the continuous decrease in international food prices, registering a negative rate of 8.5 percent at end of Q2 of 2011/2012.

Source: IMF – International Financial Statistics bulletin (IFS)

Annual CPI and Price Index of Food and Non-Alcoholic Beverages (Urban)

10.1

10.4

10.9

11.0

11.0

10.2

10.3

10.8

10.7 11.5

12.1

11.8

11.8

10.4

8.5

8.2

7.1 9.

1 9.6

0

4

8

12

16

20

24

Jun-10

Jul Aug Sep Oct Nov Dec Jan-11

Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec-11

%

All Items Food and Non-alcoholic Beverages

The Change in International Prices of Basic Foodstuffs

10.3

-8.5

-4.0

0.5

11.8

7.4

-10.0-8.0-6.0-4.0-2.00.02.04.06.08.0

10.012.014.0

Q1 Q2 Q3 Q4 Q1 Q2

2010/2011 2011/2012

%

- 24 -

The fall in the share of food and non-alcoholic beverages was ascribed to

the lower contributions of most subgroups, namely bread and cereals (nil against 0.9 point), meat and poultry (0.8 point against 1.6 point), fruit (-0.4 point against 0.1 point), oil and fats (0.1 point against 0.3 point), sugar (0.1 point against 0.2 point), and milk, cheese and eggs (0.1 point against 0.2 point). However, the share of the group of vegetables inched up (1.1 point against 0.7 point), and so did fish (0.1 point against nil).

The notable jump in the share of housing, electricity, gas and fuel group (1.4 point against nil) was mainly driven by unofficial price hikes of butane cylinders and solar, especially over the last two months of the period under review.

The following table illustrates the shares of the CPI groups (urban) in headline inflation in the periods of review and comparison:

Contribution of Main Items of Food to Headline Inflation (Annually)During July/Sept.

-0.6

-0.3

0.0

0.3

0.6

0.9

1.2

1.5

1.8

Bread &Cereals

Meat &Poultry

Fruit Oil & Fats Sugar Milk, Cheeseand Eggs

Vegetables Fish

Percentage point

2010/20112011/2012

- 25 -

(Jan. 2010=100)

Inflation Rate in July/Dec.

(%) Share in Headline Inflation in July/Dec. (Percentage Point) Main CPI Groups

2010/11 2011/12 2010/11 2011/12 General Index 7.1 4.9 7.1 4.9 Food & non-alcoholic beverages 9.6 4.3 4.0 1.9 Alcoholic beverages, tobacco and narcotics 46.9 18.8 1.0 0.6 Clothing and footwear 3.1 4.5 0.2 0.2 Housing, water, electricity, gas & fuel 0.2 8.6 0.0 1.4 Furnishings, household equipment and routine maintenance 1.1 4.2 0.1 0.1 Healthcare 1.3 0.1 0.1 0.0 Transportation 0.6 0.7 0.0 0.0 Communications 0.0 -5.1 0.0 -0.1 Culture & recreation 3.2 7.7 0.1 0.2 Education 24.3 9.9 1.1 0.5 Restaurants & hotels 11.6 1.4 0.5 0.1 Miscellaneous goods & services 1.1 1.1 0.0 0.0

CPI inflation (urban) decelerated to 0.8 percent (m/m) on average during the period under review, compared with 1.1 percent in the period of comparison. Affected by the rise of 1.0 percentage point in housing, electricity, gas & fuel (making up 71.4 percent of the monthly inflation rate in Sept. 2011), the monthly headline inflation reached its highest level in the said month, posting 1.4 percent.

Monthly Inflation Rate According to CPI (Urban)

-1.0-0.50.00.51.01.52.02.53.03.5

Jun-10 Ju

lAug

Sep OctNov

DecJa

n-11

Feb Mar AprMay Ju

n Jul

AugSep Oct

Nov

Dec-11

%

- 26 -

Second: Producer Price Index (PPI)

Following the same downtrend of the CPI, annual headline PPI inflation noticeably fell in the first half of FY 2011/2012, registering -0.6 percent, down from 8.7 percent in the previous corresponding period.

The drop in PPI inflation was attributed to the decline in mining and quarrying (-0.3 percentage point against 3.6 points) reflecting the lower contribution of crude oil (-0.6 point against 5.5 points). Add to this the fall in the share of agriculture and fishing (-0.9 point against 2.3 points) especially vegetables (-0.7 point against 0.2 point), fruits (-0.4 point against 0.4 point), cotton (-0.2 point against 0.5 point), and cereals and leguminous crops (0.2 point against 0.7 point). The share of manufacturing declined as well (0.4 point against 2.2 points), due to the lower contribution of iron and steel (-0.3 point against 0.3 point) along with that of cement (-0.2 point against nil).

The following table shows the inflation rates and shares of the PPI groups

in headline inflation during the two periods of review and comparison.

Annual Inflation Rate According to PPI (2004/2005 = 100)

02468

1012141618202224

Jun-1

0 Jul

Aug Sep OctNov Dec

Jan-11 Feb Mar Apr

May Jun Ju

lAug Sep Oct

Nov

Dec-11

%

- 27 -

Share of PPI Groups in Headline Inflation (2004/2005= 100)

Inflation Rate (%)

during July/Dec. Main PPI Groups

2010/11 2011/12

Share in Headline Inflation (Percentage Point)

July/Dec. 2010/11 2011/12

General Index 8.7 -0.6 8.7 -0.6 1-Agriculture and Fishing,

of which: 6.9 -2.7 2.3 -0.9 Cereals and leguminous crops 19.1 5.4 0.7 0.2 Rice 28.6 -7.4 0.3 -0.1 Vegetables 2.7 -9.8 0.2 -0.7 Fruit 6.5 -6.3 0.4 -0.4 Cotton 87.4 -20.4 0.5 -0.2 Poultry and eggs -2.0 -2.0 -0.1 -0.1 Fish -0.9 5.5 0.0 0.1 2-Mining and Quarrying, of which:

17.9

-1.5

3.6

-0.3

Crude oil 23.7 -2.0 5.5 -0.6 Sand and stone 1.1 -0.7 0.0 0.0 3-Manufacturing, of which: 6.2 1.3 2.2 0.4

Processed food products, of which:

11.1

3.0

1.0

0.2

Oils and fats 1.1 0.1 0.0 0.0 Dairy products 7.6 2.8 0.1 0.0

Fertilizers 2.4 4.4 0.0 0.0 Wood & products -0.4 5.4 0.0 0.0 Cement 1.2 -17.4 0.0 -0.2 Iron and steel 7.6 -7.1 0.3 -0.3 4-Electricity and Gas, of which:

0.0 0.0 0.0 0.0

Electric power generation, transmission and distribution 0.0 0.0 0.0 0.0 5-Water Supply Activities 0.0 7.4 0.0 0.1 6-Transportation and

Storage, of which: 2.0 3.0 0.0 0.0 Land transportation 0.0 0.0 0.0 0.0 7- Accommodation and

Food Services, of which: 17.0 1.8 0.6 0.1 Meal serving services in

limited service facilities 17.0 0.0 0.1 0.0 8-Information and Communications 0.0 0.0 0.0 0.0 Source: CAPMAS.

- 28 - 1/4- Tourism

Statistics of the Ministry of Tourism showed that political unrest in Egypt

still cast its shadow over the tourism industry. During July/December of FY 2011/2012, the number of Egypt's visitors declined 26.8 percent, reaching 5.7 million tourists (compared with 7.8 million in the period of comparison).

Following suit, the number of tourist nights by departure fell 12.7 percent, to 71.3 million nights (against 81.7 million). However, the average stay per tourist picked up from 10.5 nights to 12.5 nights.

Number of Tourists

2.8 2.9

5.7

7.8

4.23.6

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

July/Sept. Oct./Dec. July/Dec.

mn

2010 2011

Number of Tourist Nights

81.7

37.4 33.9

71.3

38.743.0

0.010.0

20.030.0

40.050.0

60.070.0

80.090.0


mn

2010 2011

- 29 -

The slowdown in tourism activity in the reporting period (relative to the period of comparison) took its toll on tourism revenues, pushing them down 27.1 percent to US$ 5.06 billion, from US$ 6.94 billion. This downtrend came on the back of the fall in the average spending per tourist a night in Q1 (July/Sept. 2011), to US$ 72.2 dollar a night, and further to US$ 69.6 in Q2 (October/Dec. 2011), compared with US$ 85 in July/December 2010.

During the period under study, tourism revenues made up 1.9 percent of

GDP figures at current market prices in FY 2011/2012, (compared with 2.9 percent in the period of comparison). They also contributed some 20.9 percent of total visible and invisible receipts during July/December 2011 (against 27.0 percent).

Tourist Revenues

6.94

3.653.29

1.97

3.18

5.15

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00


US

$ bn

2010 2011

Tourism Revenues Indicators during July/Dec.

2.9 1.9

27.0

20.9

0.0

5.0

10.0

15.0

20.0

25.0

30.0

2010 2011

%

Tourism Revenues/GDP Tourism Revenues/Total Current Reciepts

Main Countries of the European Group

0 200 400 600 800 1000 1200 1400 1600

Russia

Germany

Britain

Italy

Poland

Ukraine

France

Thousand

2010 2011

Main Countries of the Middle East Group

0 50 100 150 200 250 300

Liby a

Palestine

Saudi Arabia

Jordan

Sy ria

Thousand

2010 2011

- 30 -

Tourism Indicators

July/Dec. 2010/2011 2011/2012 Change + (-) %

Number of arrivals (000s) 7796 5710 -26.8 Number of nights for departures (000s) 81681 71323 -12.7 Tourism revenues (US$ bn) 6.94 5.06 -27.1 Average tourist stay (night) 10.5 12.5 19.0 GDP at current prices (LE bn) 1371.8 1570.0 14.4 GDP at current prices (US$ bn) 239.4 262.7 9.7 Average exchange rate in the period 5.729 5.976 4.3

Source: CBE and the ministries of tourism and planning. ∗ Average spending reached 85 dollars in July/Dec. 2010, decreasing to 72.2 dollars in July/Sept. 2011, and

further to 69.6 dollars in October/Dec. 1- Number of Arrivals

During the period in question, the number of visitors from all tourist markets totaled 5.7 million, down by 2.1 million visitors or 26.8 percent, below the level of the previous corresponding period. With a relative weight of 74.9 percent of total tourist flows, the European group remained in the lead, despite a decline in the number of tourists therefrom by 1.6 million or 27.0 percent. Sharing with 28.5 percent of total number of tourists from the European countries, Russia headed this group, exporting 1.2 million tourists, down by 14.1 percent. Germany came next (0.6 million tourists), down by 20.5 percent, followed by UK (0.5 million tourists), with a decline of 34.8 percent.

Relative Weight of The Number of Tourists by Group during July/Dec.

20102011

European

Middle EastAfrican

AmericanAsian

Other

- 31 -

Ranking second, the Middle East group accounted for 15.3 percent of total

tourist flows, with a fall of 0.1 million tourists or 12.5 percent. Libya topped the group, with a share of 0.3 million tourists or 31.1 percent of the total, up by 7.9 percent above the level of the corresponding period a year earlier. Also, arrivals from Palestine increased 28.2 percent, reaching some 0.2 million. By contrast, the number of visitors from Saudi Arabia decreased 48.2 percent, to 0.1 million.

The African group came third (3.8 percent of total visitors), denoting a

decline of 48 thousand tourists or 18.0 percent. Accounting for 46.3 percent of the total, the Sudanese visitors registered 0.1 million, up by 7.6 percent. In contrast, arrivals from Nigeria decreased by 14.3 percent, to reach 29 thousand, and those from Morocco fell by 38.1 percent to 19 thousand.

Number of Tourists

July/Dec.

2010/2011 2011/2012 No.

(000s) Relative Weight

No. (000s)

Relative Weight

Change + (-)

%

Total 7796 100.0 5710 100.0 -2086 -26.8 Europe 5859 75.2 4279 74.9 -1580 -27.0 Middle East 999 12.8 874 15.3 -125 -12.5 Africa 266 3.4 218 3.8 -48 -18.0 The Americas 294 3.8 146 2.6 -148 -50.3 Asia and the Pacific 360 4.6 180 3.2 -180 -50.0 Others 18 0.2 13 0.2 -5 -27.8

The Asian and Pacific group ranked fourth (3.2 percent of total tourist

flows), contributing 180 thousand tourists, with a fall of 150 percent below the corresponding period.

Australia registered the largest decline (52.8 percent), with 18 thousand tourists or 9.9 percent of the total, followed by Philippines (a decline of 39.3 percent), with 22 thousand or 12.2 percent of the total, and India (37.4 percent) as Indian tourists reached 35 thousand or 19.7 percent of total visitors from this group.

- 32 -

Down by 50.3 percent below the level of the previous corresponding period, the Americas group came last (2.6 percent of the total). Visitors from USA contributed 63.3 percent, and from Canada 18.0 percent.

2- Tourist Nights by Departure

Tourist nights showed the same downtrend, with the number of nights declining to 71.3 million (all departure groups), down by 10.4 million or 12.7 percent, relative to the period of comparison.

Number of Tourist Nights by Departure

July/Dec.

2010/2011 2011/2012

No. (000s)

Relative Weight

No. (000s)

Relative Weight

Change Value + (-) %

Total 81681 100.0 71323 100.0 -10358 -12.7 Europe 55846 68.4 45889 64.3 -9957 -17.8 Middle East 15610 19.1 17466 24.5 1856 11.9 Africa 3239 4.0 3419 4.8 180 5.6 The Americas 3100 3.8 1942 2.7 -1158 -37.4 Asia and the Pacific 3715 4.5 2486 3.5 -1229 -33.1

Others 171 0.2 121 0.2 -50 -29.2

The European group occupied first position (64.3 percent of the total), as the number of tourist nights spent by departures rolled back by 10.0 million nights or 17.8 percent to 45.9 million nights (compared with 55.8 million nights in July/December 2010). Russia came in the forefront, with a share of 14.4 million nights, down by 42.4 percent, followed by Germany and UK with respective shares of 12.0 and 11.5 million nights, registering declines of 19.7 percent and 23.1 percent, in order.

The Middle East group ranked second (24.5 percent of the total), recording a rise of 11.9 percent in the number of tourist nights, to score 17.5 million (against 15.6 million in the period of comparison). The rise was ascribed to the increase in the number of nights spent by tourists from Libya by 27.0 percent, Palestine (up by 44.3 percent), Jordan (54.9 percent) and Yemen (32.2 percent), while tourist nights by departures to Saudi Arabia dropped by 18.2 percent.

Relative Weight of The Number of Tourist Nights by Group during July/Dec.

20102011

European

Middle East

African

American

Asian

Other

- 33 -

The African countries ranked third, accounting for 4.8 percent of the total, up by 5.6 percent, with a share of 3.4 million nights. The rise reflects the pickup in the number of nights spent by tourists from Sudan and Nigeria by 24.3 percent and 20.6 percent, to 2.4 and 0.2 million nights, respectively.

Ranking fourth, the Asian

and Pacific markets contributed 3.5 percent of the total, registering 2.5 million nights, and indicating a drop of 33.1 percent. Australia and China recorded the largest declines (41.1 percent and 36.8 percent, respectively) with 0.3 million nights each.

The Americas group came last (2.7 percent of the total), with 1.9 million

nights, registering a decline of 37.4 percent. The USA topped this group, as the number of tourist nights spent by its tourists decreased by 34.2 percent, to 1.7 million nights, while Canada recorded a drop of 31.3 percent, contributing 0.5 million nights.

Tourists from the top ten markets exporting tourism to Egypt amounted to

3.7 million visitors or 65.6 percent of the total number of visitors during July/December 2011/2012, compared with 5.0 million visitors and 63.7 percent in the corresponding period a year earlier. Meanwhile, the number of tourist nights by departures reached roughly 44.0 million or 61.7 percent of total nights, against 51.2 million and 62.7 percent of the total, as illustrated in the following two tables.

- 34 -

Top Ten Markets in Terms of Arrivals .

July/Dec. 2010/2011 2011/2012

Country Number (000s)

% Country Number (000s)

%

Russia 1419 18.2 Russia 1219 21.3 UK 746 9.6 Germany 559 9.8 Germany 704 9.0 UK 486 8.5 Italy 594 7.6 Italy 330 5.8 Poland 339 4.3 Libya 272 4.8 France 293 3.8 Poland 248 4.3 Libya 252 3.2 Ukraine 175 3.1 Saudi Arabia 222 2.8 France 175 3.1 Ukraine 215 2.8 Palestine 159 2.8 USA 185 2.4 Netherlands 121 2.1 Total 4969 63.7 Total 3744 65.6 Grand Total 7796 100.0 Grand Total 5710 100.0

Top Ten Markets in Terms of Tourist Nights

by Departure

July/Dec. 2010/2011 2011/2012

Country Number (000s) %

Country Number (000s) %

Russia 12007 14.7 Russia 9343 13.1 UK 8176 10.0 Germay 7109 10.0 Germany 8000 9.8 UK 6150 8.6 Italy 5438 6.6 Libya 4974 7.0 Libya 3916 4.8 Italy 3875 5.4 Saudi Arabia 3565 4.4 Palestine 2928 4.1 Poland 2849 3.5 Saudi Arabia 2917 4.1 France 2689 3.3 Sudan 2382 3.3 USA 2541 3.1 Poland 2283 3.2 Palestine 2029 2.5 France 2036 2.9 Total 51210 62.7 Total 43997 61.7 Grand Total 81681 100.0 Grand Total 71323 100.0

- 35 -

2- Monetary and Banking Developments 2/1- Monetary and Banking Policy and Monetary Aggregates

2/1/1- Monetary Policy Embracing price stability as the ultimate objective of the monetary policy, the CBE seeks to bring inflation to an appropriate and stable level that helps build confidence and sustain appropriate levels of investment and achieve the targeted economic growth. The overnight interbank interest rate is considered the operational target of the monetary policy, by applying a framework based on 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. In light of the political events in Egypt, which influenced the pace of economic activity and the performance of financial markets, and in turn, liquidity in the market, the MPC decided, as of March, 2011, to launch weekly repo operations on a regular basis under the operational framework of the CBE monetary policy, to provide adequate liquidity for banking system units that may face potential liquidity pressures. The MPC set for these operations an interest rate of 9.25 percent per annum. Hereunder are the main developments that took place over the first half of 2011/2012: 2/1/2- Interest Rates The decisions taken by the MPC in the four periodic meetings held throughout July/December 2011/2012 were responsive to the changes in inflation and the Committee's assessment of inflationary pressures. In its three meetings on 21 July, 25 August and 13 Oct. 2011, the MPC decided to keep the CBE key interest rates (the overnight deposit and lending rate) unchanged at 8.25 percent and 9.75 percent per annum, in order. The lending and discount rate was also kept unchanged at 8.50 percent, as well as the repo rate at 9.25 percent. However, in its fourth meeting on November 24, 2011, the MPC

- 36 - decided to raise the overnight deposit rate by 100 bps to 9.25 percent and the overnight lending rate by 50 bps to 10.25 percent. The lending and discount rate was also raised by 100 bps to 9.50 percent and the repo rate by 50 bps to 9.75 percent per annum. At the time of preparing this Review, the said rates were kept applicable by virtue of the Committee’s decisions made in its meetings on 2 Feb. and 22 March 2012.

The following are the CBE’s key interest rates and the repo rate for 7 days maturity, as well as the CBE’s lending and discount rate according to the MPC’s decisions in its meetings held during the period: Overnight

Deposit Rate Overnight

Lending Rate Repo Rate Lending &

Discount Rate 9 June 2011 8.25% 9.75% 9.25% 8.50% 21 July 2011 Unchanged Unchanged Unchanged Unchanged 25 August 2011 Unchanged Unchanged Unchanged Unchanged 13 October 2011 Unchanged Unchanged Unchanged Unchanged 24 Nov. 2011 9.25% 10.25% 9.75% 9.50%

Given the continuous decline of liquidity at the banking system, the weighted average of the overnight interbank rate rose in the period under review, hovering around the middle of the corridor. (see the following chart)

- 37 -

The weighted average of the market interest rate on three-month, six-month and one-year deposits rose to 7.2 percent, 7.1 percent and 7.8 percent, respectively, in Dec. 2011 (against 6.6 percent, 6.9 percent and 7.4 percent in June). The weighted average of the market interest rate on one year loans also increased to 11.8 percent∗ in Dec., from 11.0 percent in June. 2/1/3- Open Market Operations In the period under review, the CBE continued to conduct repo operations to help a number of banks that face insufficient liquidity. Hence, the average value of the repo operations rose to about LE 17.2 billion in December 2011 from LE 8.2 billion in June. ∗ The interest rate on corporate loans after the application of the DMMS

Overnight Interbank Rate and Policy Rates

7.508.008.509.009.50

10.0010.5011.0011.5012.0012.5013.0013.5014.00

30-Jun-0

8

30-Sep-

08

30-Dec

-08

30-Mar-

09

30-Jun-0

9

30-Sep-

09

30-Dec

-09

30-Mar-

10

30-Jun-1

0

30-Sep-

10

30-Dec

-10

30-Mar-

11

30-Jun-1

1

30-Sep-

11

30-Dec

-11

( % )

Overnight Interbank Deposit facility rate Lending facility rate

- 38 - 2/1/4- Reserve Money (M0) Reserve money – known as monetary base (M0) or high-powered money – is considered the base for money in its broader definition. Reserve money consists of money in circulation outside the CBE and banks' deposits in local currency at the CBE. The counterpart assets of reserve money are made up of CBE net foreign and local assets, including net claims on both the government and banks, and net balancing items. Reserve money mounted by LE 6.4 billion or 2.5 percent in July/Dec. 2011/2012 (against a rise of LE 15.3 billion and 7.5 percent in the respective period a year earlier) recording LE 257.3 billion at end of Dec. 2011. The increase in reserve money echoed the rise in the currency in circulation outside the CBE by LE 8.2 billion or 4.6 percent to LE 187.3 billion, representing 72.8 percent of reserve money at end of Dec. 2011. The increase was held back by the contraction of LE 1.8 billion or 2.6 percent in banks' local currency deposits at the CBE.

Reserve Money and Counterpart Assets (LE mn)

Change in July/Dec. + (-) Balances at End of Dec.

2011 2010/2011 2011/2012

Value Growth

Rate Value Growth

Rate

(%) (%) Reserve Money 257346 15322 7.5 6354 2.5

- Currency in circulation outside CBE 187292 8956 6.2 8196 4.6

- Banks' local currency deposits 70054 6366 10.8 -1842 (2.6) Counterpart Assets 257346 15322 7.5 6354 2.5 Net Foreign Assets 96828 7973 4.2 -50369 (34.2) Foreign Assets 107201 7708 3.9 -49130 (31.4) Foreign Liabilities 10373 -265 (3.2) 1239 13.6 Net Domestic Assets 160518 7349 57.2 56723 54.6 Claims on the Government (Net) 153250 19641 24.4 50688 49.4 Claims on Banks (Net) -1665 10837 37.4 -1812 (1232.7) Net Balancing Items 8933 -23129 23.9 7847 722.6

- 39 -

The pickup in the currency in circulation outside the CBE was ascribed to

the increase of LE 10.3 billion or 5.7 percent in banknote issue in July/Dec. 2011/2012 (against LE 9.7 billion and 6.6 percent in the previous corresponding period), reaching LE 190.1 billion at end of Dec. 2011. As for the issue cover components, the value of gold made up LE 16.3 billion worth, Egyptian government bonds LE 129.1 billion, and foreign currencies and notes LE 44.7 billion worth. Accordingly, the structure of the cover at end of Dec. 2011 was as follows: Egyptian government bonds (67.9 percent), foreign currencies and notes (23.5 percent), and gold (8.6 percent).

The Banknote Issue and Components of the Cover

0153045607590

105120135150165180195

June 2010 Dec. 2010 June 2011 Dec. 2011

LE bn

Gold Foreign Banknotes and NotesEgyptian Government Bonds Issued Banknotes

5.83.1

4.4

4.4

3.3

-0.7

-8.00

-6.00

-4.00-2.00

0.00

2.00

4.006.00

8.00

10.00

2009/2010 2010/2011 2011/2012

Currency in Circulation outside theCBEBanks' Local Currency Deposits

Growth in Reserve Money(%)

Growth Rate of Reserve Money by ComponentDuring July / December

- 40 - As illustrated in the following chart, breakdown of the currency in circulation by denomination denotes a pickup in the relative importance of the LE 200 note, at the expense of the rest of denominations, posting 41.7 percent at end of Dec. 2011 (against 37.2 percent at end of June). Against these developments, the average value per note stepped up from some LE 36.0 at end of June, to LE 37.9 at end of December.

Relative Importance of the Currency in Circulation (At End of)

The pickup in reserve money during July/Dec. 2011/2012 was less than half the rise realized in the same period a year earlier. The main cause for that was the retreat of 34.2 percent in net foreign assets (against a 4.2 percent increase). Accordingly, the contribution of counterpart assets to reserve money (net foreign assets & net domestic assets) had changed. In figures, net domestic assets made a positive contribution of 22.6 percentage points, which was held back by the negative contribution of net foreign assets (20.1 points).

Reserve Money Growth Rate by Counterpart Assets

(Percentage Point) July/Dec. 2010 July/Dec. 2011 Net Domestic Assets 3.6 22.6 Net Foreign Assets 3.9 (20.1)

December 2011

41.7%

38.5%

10.8%

8.1%0.9%

LE 1 and lessLE 5 - LE 20

LE 50

LE 100

LE 200

June 2011

1.0%

37.2%

8.5%

12.4%

40.9%

- 41 -

Net foreign assets at the CBE rolled back by LE 50.3 billion worth, as an outcome of the drop in its foreign assets by LE 49.1 billion worth, and the rise in its foreign liabilities by LE 1.2 billion worth. The decline in the CBE’s foreign assets is traced to the necessary finance the Central bank had to provide for some basic commodity imports, taking into account the retreat in foreign currency resources (specifically, from tourism and foreign direct investment). Worth mentioning is that in 2011, foreign assets at the CBE fell by LE 99.1 billion worth or 48.0 percent.

Reserve Money Counterpart Assetsٌat End of Dec. 2011

Net Foreign Assets37.6%

Net Domestic Assets62.4%

Reserve Money Counterpart Assetsٌat End of June 2011

Net Domestic Assets 41.4%

Net Foreign Assets 58.6%

Central Bank Foreign Assets and LiabilitiesAt End of

0

50

100

150

200

250

June2010 Dec.2010 June2011 Dec.2011

Foreign Assets Foreign Liabilities Net Foreign Assets

LE bn

- 42 - Net domestic assets at the CBE went up by LE 56.7 billion, due to the rise in its net claims on the government, and in net balancing items, on the one hand, and the decline in the CBE’s net claims on banks, on the other. The CBE's net claims on the government mounted by LE 50.7 billion (owing to the pickup in its claims on the government by LE 44.2 billion, and the decline in government deposits therewith by LE 6.5 billion).

Expanding by LE 7.8 billion to LE 8.9 billion, net balancing items

exercised an expansionary effect on reserve money. This was partly ascribed to the LE 4.9 billion rise in the balance of open market operations (thanks to the increase of LE 5.3 billion in the repo balance), and partly to the decline of LE 2.9 billion in the negative balance of net unclassified assets and liabilities. Meanwhile, CBE net claims on banks fell by LE 1.8 billion, as a direct result of the decline in claims on banks.

Change in Components of Net Domestic Assets during July / Dec.

-40

-20

0

20

40

60

80

2010/2011 2011/2012

Net claims on government Net claims on banks Net balancing items Net domestic assets

LE bn

Change in Components of Net Balancing Items during July / December

-25-20-15-10

-505

10

2010/2011 2011/2012

Unclassif ied Assets and Liabilities Open Market OperationsNet Balancing Items

LE bn

- 43 -

2/1/5- Domestic Liquidity (M2) and Counterpart Assets Domestic liquidity (M2) consists of money in circulation outside the banking system and banks' deposits (in foreign and local currencies). Domestic liquidity amounted to LE 1038.9 billion at end of Dec. 2011, up by LE 29.5 billion or 2.9 percent in July/Dec. 2011/2012, against a rise of LE 56.5 billion and 6.2 percent in the same period a year earlier.

The pickup in domestic liquidity was reflected in the growth of money

supply and quasi-money. Money supply scaled up by LE 6.9 billion or 2.8 percent (against LE 9.4 billion and 4.4 percent); recording LE 255.6 billion (24.6 percent of domestic liquidity) at end of Dec. 2011. The rise in money supply came on the back of the increase in the currency in circulation outside the banking system by LE 8.7 billion or 5.2 percent, and the decrease in local currency demand deposits at banks by LE 1.8 billion or 2.2 percent (due to the drop in the deposits of public and private business sectors by LE 3.4 billion, which was held back by the LE 1.6 billion rise in those of the household sector).

Quasi-money grew by LE 22.6 billion or 3.0 percent in the period (against LE 47.1 billion and 6.7 percent), reaching LE 783.3 billion at end of Dec. 2011 and making up more than three quarters of domestic liquidity (75.4 percent). The bulk of the increase (about 82.0 percent) was in LE time and saving deposits that went up by LE 18.5 billion or 3.2 percent, to post LE 602.3 billion (accounting for 76.9 percent of quasi money and 58.0 percent of domestic liquidity at end of Dec. 2011). Interestingly, the surge in LE time and saving

Growth Rate of Domestic Liquidity by Component during July/December

1.70.7

5.1

2.2

1.1

2.6

0.01.02.03.04.05.06.07.08.0

2009/2010 2010/2011 2011/2012

(%)Quasi MoneyMoney SupplyDomestic Liquidity Grow th

- 44 -

deposits of the household sector exceeded the total increase in this type of deposits. In figures, LE time and saving deposits of the household sector edged up by some LE 24.7 billion or 4.9 percent, scoring LE 525.1 billion. However, it was mitigated by the LE 4.0 billion drop in the deposits of the public business sector, and the LE 2.2 billion decline in those of the private business sector.

Foreign currency deposits increased by LE 4.1 billion worth or 2.3 percent in the period under review (against a retreat equivalent to LE 0.1 billion) reaching LE 181.0 billion worth or 21.0 percent of total deposits at banks (dollarization ratio) at end of Dec. 2011 (almost the same ratio recorded at end of June). The increase in foreign currency deposits was broadly concentrated in the last quarter of the period (LE 4.0 billion worth), despite the rise in interest rates on local currency deposits. However, the deposits ratio (dollarization) remained at the same level of the beginning and end of the period under review, attesting to the importance of the Egyptian pound as a saving instrument. The pickup in foreign currency deposits was ascribed to the growth in the deposits of the private business sector by LE 3.5 billion worth, and of the public business sector by LE 1.1 billion worth. On the other hand, deposits of the household sector retreated by LE 0.5 billion worth.

Dollarization Rate (Deposits in US$/Total Deposits)& Interest Rates on Deposits in LE & US$

0.01.02.03.04.05.06.07.08.0

Dec07

Mar08

Jun08

Sep08

Dec08

Mar09

Jun09

Sep09

Dec09

Mar10

Jun10

Sep10

Dec10

Mar11

Jun11

Sep11

Dec11

(Interest Rate %)

17.0

19.0

21.0

23.0

25.0

27.0

29.0

(Dollarization Rate %)

Interest Rate more than 3-month Deposits in LE Interest Rate on 3-month Deposits in US$

Dollarization Rate

- 45 -

Moving to the contribution of counterpart assets to domestic liquidity, net domestic assets added 9.2 percentage points, which was limited by the negative contribution of net foreign assets (6.3 points). The surge in net domestic assets (LE 92.8 billion) was brought about by the increase in domestic credit by LE 94.6 billion or 10.6 percent (compared with LE 29.8 billion and 3.8 percent in the corresponding period), to stand at LE 987.4 billion at end of Dec. 2011. Meanwhile, the negative balance of net balancing items moved up by LE 1.8 billion or 1.4 percent, to LE 138.7 billion.

The bulk of the increase in domestic credit (82.9 percent) went to the government sector, as net claims on the government markedly scaled up by LE 78.4 billion or 17.9 percent (against LE 38.5 billion and 11.8 percent in the same period a year earlier), bringing its balance to LE 515.8 billion, or more than half of the credit granted by banks (52.2 percent) at end of Dec. 2011. The rise in net claims on the government resulted from the increase in its loans by LE 43.1 billion, and the pickup in banks' holdings of government securities and treasury bills by LE 32.1 billion, coincided with the decline in government deposits at banks by LE 3.2 billion. The tangible increase in net claims on the government is ascribed to its reliance on loans from the CBE and to banks’ subscriptions for government bills and bonds to finance the bulk of the budget deficit.

Growth in Domestic LiquidityDuring July / December

0.212.49

-6.27

6.19

9.38

-2.17

0.42 -0.183.254.23

6.16

2.92

-8.0-6.0-4.0-2.00.02.04.06.08.0

10.012.0

2009/2010 2010/2011 2011/2012

(%)

Net Foreign Assets

Domestic Credit

Net Balancing Items

Domestic Liquidity Growth

- 46 -

Credit granted to the household sector climbed by LE 6.7 billion or 6.7

percent (against LE 2.9 billion and 3.1 percent), to record LE 105.9 billion (representing 10.7 percent of the total). The share of the public business sector also picked up by LE 5.9 billion or 17.8 percent (against a rise of LE 2.5 billion and 8.3 percent), bringing its indebtedness to LE 38.8 billion (3.9 percent of the total). Credit to the private business sector expanded by LE 3.6 billion or 1.1 percent (against a decline of LE 14.1 billion and 4.3 percent) bringing its debts to banks to LE 326.9 billion and making up 33.1 percent of total domestic credit at end of Dec. 2011. Most of the pickup in the credit to the private business sector went to the manufacturing and services sectors.

Net foreign assets at the banking system steeply declined by LE 63.3

billion worth or 25.0 percent in the reporting period (against a surge of LE 22.8 billion worth and 8.1 percent in the period of comparison), to register LE 190.2 billion worth at end of Dec. 2011. The decline came as a result of (i) the drop in net foreign assets at the CBE by LE 50.4 billion worth or 34.2 percent and (ii) the fall in net foreign assets at banks by LE 12.9 billion worth or 12.2 percent.

Growth in Domestic Credit by Sector During July / December

-4.00

1.00

6.00

11.00

16.00

2009/2010 2010/2011 2011/2012

(%)

Government Sector (net) Public Business SectorPrivate Business Sector Household SectorDomestic Credit Growth

- 47 -

In 2011, net foreign assets at the banking system retreated by LE 115.1

billion worth or 37.7 percent, on the back of the fall in net foreign assets at the CBE by LE 101.4 billion worth or 51.1 percent and in those at banks by LE 13.7 billion worth or 12.8 percent. 2/1/6- Payment Systems and Information Technology (IT)

The CBE went ahead with its efforts to upgrade the payment systems and

information technology to bolster the soundness and stability of the financial system, reduce credit risk, expedite payment settlements, and ensure their reliability and confidentiality. The existence of a national payment system reinforced the financial and banking stability in Egypt, especially during the events of the Revolution. Among the measures taken in this regard during July/December 2011/2012 were the following: Payment Systems • The continued use of the RTGS to perform interbank transfers among

Egyptian banks. The RTGS serves as a tool to eliminate systemic risks, and to mitigate liquidity risk to preserve financial stability.

• The project of automating the payment of government employees salaries

through cards is moving forward in cooperation with the Ministry of Finance after a transitional pause over the 25th of January Revolution. A number of other governmental units were put into operation at the National Bank of Egypt Among the vast benefits of this project was minimizing the risks of cash transfers of salaries from banks to the related government units.

Net Foreign Assets w ith the

CBE64.9%

Net Foreign Assets

w ith Banks35.1%

Relative Structure of Net Foreign Assets At End of December 2010

Net Foreign Assets w ith Banks49.1%

Net Foreign Assets w ith the

CBE50.9%

Relative Structure of Net Foreign Assets At End of December 2011

- 48 - • A revision of Automated Clearing House (ACH) direct debit rules has been

finalized. Direct debit services will be executed between the EBC "Egyptian Banks Company for Technological Advancement" and commercial banks in Egypt and is planned to go through a pilot phase in the first half of 2012. This service, besides the direct credit services, provides a full fledge of payment services to the Egyptian market, and facilitates the expansion of electronic-based payments.

• The CBE is currently gearing to join the COMESA Clearing House. This

initiative aims at enriching the commercial and financial exchange with the COMESA countries as a major contributor to the Egyptian national security. The relevant internal rules and procedures are under consideration by the Central Bank of Egypt, parallel to the sign-off of the related agreements with COMESA and the Central Bank of Mauritius.

Information Technology • The establishment of a permanent Disaster Recovery (DR) site for the CBE

is on track, to be functional in emergencies as an alternative to the main center at El-Gomhoria building. This is intended to ensure the continuity of IT services, in a timely and accurate manner, taking into account that the DR site should meet international rules and standards. The site is to be located in the CBE building in Tanta, and a study was approved in this regard. The CBE in cooperation with the project consultant are preparing the REP for the site preparation, providing that another RFP will be issued for IT equipment.

• The CBE is in the process of preparing studies for developing a Business

Continuity Site designed to enable the employees in the investment sector and the external relations sector, as well as affiliated units, to have access to it and use the bank's different systems in cases of emergency. A study will also be conducted about the possibility of providing these services to other sectors of the bank afterwards.

• In respect of the IT development plan at the Printing Press, the course of

action to be taken to complement the development of the other three systems (accounts - monitoring of inventory - costs) is currently under consideration, together with modernizing the IT infrastructure of the Press.

- 49 - • Under the plan of developing the CBE branches and modernizing their IT

applications, the accounting system of the CBE “CAS” started operation in Alexandria branch (regarding the operations of government accounts). The operation of CAS in other branches (Mohandessin & Port Said) is currently under study.

• The installation and implementation project of the IT infrastructure has been

started and necessary precautions were taken to put the GATS system for electronic government transfers into operation. The project aims at enabling the Ministry of Finance to transfer government payments to the CBE to electronic (cashless) government payments. Such a step would increase the efficiency of making the accounting entries with more accuracy and speed on the same day of its receipt, and minimizes the human factor risk in the transfer and settlement operation.

• The installation and implementation project of the IT infrastructure has been

started and necessary precautions were taken to put the Straight Through Processing system of the automated clearing house (ACH-STP) into operation. The project aims at linking the CBE with the current interbank ACH. This enables the CBE to receive electronic transfers from other banks and to automatically and directly affect the government accounts on the CAS system at the bank, which increases the efficiency and speed of settling incoming government receipts through the ACH of banks.

• In cooperation with some central banks at the European Union, the CBE is

currently in the process of introducing the “Enterprise Data Management” project (Analysis Phase). The project aims at working out a comprehensive analysis for establishing a central database for all supervision-and financial indicators-related data of the banking sector, accessible to decision makers at CBE sectors that are concerned with monetary and banking stability.

- 50 - 2/1/7- RTGS and SWIFT Local Services

Data on local banking transfers under the RTGS system over the first half of 2011/2012 showed a decline in the number and value of the executed messages, registering 633.5 thousand messages at a value of LE 4606.5 billion (against 637.2 thousand messages and LE 8147.5 billion in the first half of the preceding fiscal year).

RTGS and SWIFT Local Services in Local Currency

During Number of Messages (Unit)

Value of Transfers (LE mn)

Change During the Period

Number Value July/December 2009/2010

558070 6223996 146745 4733455

July/December 2010/2011

637156 8147509 79086 1923513


633463 4606479 (3693) (3541030)

According to the statistics of the CBE Automated Clearing House, included

in the RTGS since its launch, the number of exchanged papers decreased in the reporting period to 6.2 million (from 6.4 million). Meanwhile, their total value edged up to LE 319.5 billion from LE 308.8 billion during the same period the previous FY. As a result, the average value per paper inched up to LE 51.4 thousand from LE 47.9 thousand.

CBE Clearing House Activity

During Number of

Papers (thousand)

Value of Papers

(LE mn)

Change Number Value


6358 275761 11.0 2.2


6442 308849 1.3 12.0


6220 319474 (3.4) 3.4

Transactions executed in foreign currencies under the Fin-Copy system, via

SWIFT, showed an increase in terms of number. Executed transactions reached 7.4 thousand transactions (against 6.8 thousand). In contrast, their value decreased to US$ 35.2 billion (from US$ 41.5 billion).

- 51 -

SWIFT Local Activity in US Dollar

During Number of

Messages (Unit) Value of Transfers

(US$ mn) Change During the

Period Number Value

July/December 2009/2010 5505 29701 (1704) (26028) July/December 2010/2011 6838 41478 1333 11777 July/December 2011/2012 7357 35229 519 (6249)

- 52 -

2/2 - Banking and Credit Developments 2/2/1- Banking Reform

In continuation of the banking reform program, launched in September

2004, the CBE has already finished the implementation of the second phase (2009 - 2011). The phase aims at raising the efficiency and soundness of the Egyptian banking sector, and enhancing its competitiveness and ability for risk management so that it can perform its role in financial intermediation in a way beneficial to the national economy, and achieve the targeted development. The second phase of the reform program is based on a number of pillars, namely:

Preparing and implementing a comprehensive program for the financial and administrative restructuring of specialized state-owned banks (the Principal Bank for Development and Agricultural Credit, Egyptian Arab Land Bank, and Industrial Development and Workers Bank of Egypt), which is expected to positively affect these banks’ performance.

Following up periodically on the results of the first phase of restructuring the commercial state-owned banks (the National Bank of Egypt (NBE), Banque Misr (BM) and Banque du Caire (BdC). The follow-up showed that the first phase of the banking sector reform program (2004-2008) had already borne fruit and positively affected the performance of those banks. In the second phase, all requirements necessary for enhancing the efficiency of the said banks - in terms of financial intermediation, risk management, human resources, and IT - have been met to ensure the continued improvement of their financial performance and competitiveness.

Applying Basel II standards in Egyptian banks to enhance their risk management practices. In this context, a protocol had been signed with the European Central Bank and seven European central banks to provide a three-year technical assistance program launched in January 2009, to implement Basel II requirements in the Egyptian banking sector. It is worthy to note that the strategy of the CBE in implementing Basel II framework, which was announced for Egyptian banks and the

- 53 -

relevant parties in an extensive meeting held in Oct. 2009, is based on two main principles; simplicity and consultation with banks, to ensure banks’ compliance with these standards. According to the above-said strategy, Basel II standards should be phased in gradually over the following phases:

• The first phase (January - June 2009) focused on the capacity

building of the CBE’s core team and elaboration on the Egyptian strategy for Basel II implementation. This phase was successfully completed.

• The second phase (July 2009-June 2011) - the pivotal phase of the

reform program - covers extensive coordination with the banking sector, through dis cussion papers related to the most important topics and selection of the most appropriate methods for application in Egypt, taking into consideration similar experiences in other countries that have implemented Basel II. Moreover, the quantitative impact of the possible consequences of Basel II standards will be measured before the mandatory application. That phase was also successfully completed.

• The third phase (July - December 2011) will focus on the fine-

tuning of future supervisory regulations related to Basel II, taking into account the legal aspects and development of corrective action plans commensurate with the different types of banks, according to the simulation results for each bank on a case-by-case basis. The draft regulations and some relevant proposals for banks that may require further actions to help them abide by the established minimum requirements of the capital adequacy standard have already been prepared. A study of the qualitative impact was also conducted on a sample of banks related to the level of internal audit in preparation for the issuance of related supervisory regulations. In addition, some of the resources provided by the EU have been used to develop the regulatory performance of the Supervision Sector. Moreover, a parallel run of existing regulations will be applied upon issuance, and a new data warehousing framework will be implemented to support the future updated supervisory regime.

- 54 -

• The fourth phase (implementation is under way) - a parallel run of Basel II and the existing regulations on capital adequacy will be applied upon issuance. Moreover, the data warehousing framework will be completed.

The aforementioned program which was guided by the positive results of

the first phase of the banking reform program (2004-2008) had been finalized by the end of March 2012. Foremost of these results were the efforts exerted to contain the impact of the recent global financial crisis, as was the case in most other international financial markets and banking systems and, not least, the resilience of the Egyptian banking system amid the events of January Revolution. On the other hand, the European Central Bank took part in the first phase of upgrading the CBE Supervision Sector by concluding a cooperation agreement in 2005, whereby a shift was made from compliance-based to risk-based supervision. Concurrently, the MIS system was upgraded to ensure the accuracy and timeliness of accessible data.

In this light, the application of Basel II to the Egyptian banking sector has

become one of the centerpieces of the second phase of the banking reform program initiated by the CBE in 2009. In other words, it is considered an integral part of the regulatory framework of Egypt, that aims at the following:

- Enhancement of the management of all risk types to ensure bank

stability. - A more efficient management of capital, in order to address virtual

risks. - Keeping pace with the international best practices, to help improve

the competitiveness of the Egyptian banking system. However, it should be taken into consideration that Basel standards

develop and change in their own right -by virtue of their dynamic nature- so as to cope with the challenges of the global banking market. In this context, Basel III has been launched on the international level, and its full and timely implementation in the world banking market is expected to be completed by 2019. While making arrangements for the application of Basel II, the CBE has been also considering Basel III applications in order to facilitate their future adoption in the Egyptian banking sector.

- 55 -

The actual application of the executive instructions of Basel II standards

to the Egyptian banking system is scheduled to commence in 2012. For banks with fiscal year ending in June, these standards shall be binding as of June 2013, and for the other banks, as of Dec. 2012.

Embracing an initiative promoting the development and growth of banking activities/services catering and access to finance for various sectors, especially small- and medium-sized enterprises (SMEs). In this regard, to encourage banking credit to small- and medium-sized enterprises (SMEs), the CBE exempted banks' deposits-equivalent to the size of loans extended thereby to finance SMEs-from the 14 percent reserve requirement ratio (RRR was decreased to 12 percent during Q1, then 10 percent during Q2 of 2012). Needless to say that poor access to adequate, timely and reliable statistical data and information is one of the main obstacles to the development and finance of small- and medium-sized enterprises (SMEs). Hence, the Central Bank of Egypt and the Egyptian Banking Institute (EBI), in collaboration with the Central Agency for Public Mobilization and Statistics (CAPMAS), embarked on a field survey of small- and medium-sized enterprises (SMEs) covering all the governorates of Egypt, on the basis of the full count approach. The first phase, conducted in Al Sharqiya Governorate, had been completed, and in the light of its results, the survey was carried out in the rest of the governorates. It is worthy to mention that all other governorates were surveyed up to December 2011. Moreover, the database has been inaugurated on the EBI website in February 2012 and will be periodically updated.

Revising and issuing corporate governance rules in the Egyptian banking sector and the CBE. In this respect, the instructions of bank governance rules were approved by the CBE Board on July 5, 2011 (as stated above), after consultation with the Egyptian Financial Supervisory Authority (EFSA) within the framework of coordination among the regulatory authorities of the financial sector. Moreover, the draft of the said instructions was presented to all banks to get their feedback (comments and proposals) to avoid the difficulties of application.

- 56 - The second phase of the banking reform program was launched after the

successful implementation of the first phase, which was centered on four pillars: (1) consolidation and privatization of the banking sector, (2) financial and managerial restructuring of state-owned banks, (3) addressing the non-performing loans issue, and (4) upgrading the Supervision Sector at the CBE.

As for the first pillar, some voluntary and state-forced mergers took place,

leading to a decrease in the number of banks operating in Egypt from 57 at end of December 2004 to 39 banks at end of December 2008. Under this program, 80 percent of the share of the capital of the Bank of Alexandria was sold to Italy’s Sanpaolo Bank, besides the divestiture of the shareholdings of state-owned banks in a number of joint venture banks.

Regarding the second pillar, state-owned banks were restructured under a

comprehensive time-lined program, designed by the Banking Reform Unit at the CBE. The program was intended to develop the practices of all departments and technological systems, besides establishing new departments, particularly risk management, information technology (IT), and human resources. The project of applying the international best practices was finalized as scheduled, with the assistance of foreign advisors. In addition, the state-owned banks have undergone full audit reviews for the period from 2004 to 2008, in accordance with international accounting standards. Moreover, to provide public banks with adequate expertise, qualified senior staff and cadres were recruited to satisfy the requirements for progress and development.

Concerning the third pillar, to address the problem of non-performing

loans, the CBE's NPL Management Unit worked out a variety of approaches and programs that helped settle more than 90 percent of NPLs (excluding debts of the public business sector). With regard to the non-performing loans of public business sector enterprises to public banks, about 62 percent was repaid in cash to the public commercial banks. As for the remaining debts (38 percent), an agreement was signed on 14/9/2009 whereby the in-kind repayment of the outstanding debt was made by the end of June 2010.

- 57 -

A program to reform the Supervision Sector was devised to achieve the following targets: enhance the efficiency of this sector by benefiting from the international best practices, and apply the concept of risk-based supervision to ensure the sector’s robustness and soundness. Furthermore, efforts were exerted to recruit highly qualified staff versed in advanced technology, enhance the efficiency of human cadres to be capable of managing this key sector, and upgrade the management information system (MIS) to ensure timely access to accurate data. In this context, a technical assistance program - in collaboration with the European Central Bank (ECB) and four European central banks - was completed in the last quarter of 2007. Moreover, Basel II applications program which was introduced in the Egyptian banking sector, with the participation of seven European central banks - in coordination with the European Central Bank - was finalized at the end of Q1 of 2012 as mentioned above.

It is worthy to note that the successful and timely implementation of the

first phase of the CBE's banking reform program has helped this sector to weather the adverse effects of the global financial crisis and to deal efficiently with the current circumstances.

2/2/2- Supervision Sector

Being the regulator of banks in Egypt, the CBE aims to ensure the soundness of banks’ financial positions and evaluate their performance from the perspective of risk-based supervision. In addition, it ascertains banks’ compliance with the established regulatory standards, including the minimum reserve requirement and liquidity ratios, the maximum limits of a bank’s exposure to a single customer along with his related parties, and exposures abroad, as well as the asset-liability matching in terms of maturity and currency. This is in addition to a number of qualitative standards that ensure the soundness of banks’ performance and the safety of depositors’ funds, including governance rules; information systems efficiency rules; and eligibility and competency criteria for officials and managers of key sectors at banks.

- 58 -

Evidently, the instructions and reform policies adopted by the CBE to restructure banks, raise their capital and strengthen their risk management systems proved instrumental in containing the effects of the crisis. Moreover, the CBE had thoroughly monitored the financial crises in many countries, especially in the euro area, so as to be capable of making immediate decisions - when necessary - to counteract the spillovers of the crisis in due time.

Hereunder are the main bank instructions issued by the CBE Supervision

Sector during the reporting period:

• Instructions on updating the credit registry system at the CBE, in line with the changes and conditions of the banking sector, with the aim of providing clear and accurate data on clients with delinquencies and payment delays. This is in addition to removing from the negative lists the unjustified cases, and setting fair listing rules, in order to guarantee that banks' transactions with clients should be transparent enough to achieve the soundness of the credit system in the banking sector.

• Discussing, in the meeting of the Federation of Egyptian Banks dated

December 27, 2011, the request of a number of clients for the execution of direct transfers to suppliers abroad on account of import transactions, to guarantee the execution of such transfers before the receipt of documents. The CBE set a number of rules to be followed by banks when executing transfers, in order to tighten supervision over those transactions.

• Extending cover cash exemptions on all meat, poultry and sugar imports –

by merchants (for trading purposes) or by government entities – from the 50 percent minimum insurance cash cover for additional six months ending at end of June 2012. Banks were also allowed to determine the ratio of cash cover unrestricted by a minimum limit.

• On its session dated 5 July 2011, the CBE Board of Directors issued a

decision on banks' governance rules. Banks were required to set or develop their governance systems accordingly, in line with the volume and complexity of their respective activities, policies and risk management capacity; no later than 1 March 2012. In case any bank fails to abide by any of these rules, the matter should be referred to the CBE, with reasonable justifications.

- 59 - The aforementioned governance rules mainly focused on the following: The formation of the board; A clear definition of the responsibilities and obligations of the

members of the board of directors, besides emphasizing that the senior management is accountable to the board;

The roles of the Board's committees and their formation; The supervisory role of the Board over the risk management systems

and internal control; Formulation of effective policies for salaries and remunerations and

for the management of conflicts of interest; and The principle of transparency and disclosure of important financial and

non-financial information, as well as the disclosure of the total value (on a monthly average basis) of the pay (salaries and rewards) earned by the twenty highest paid employees in a bank, based on the financial statements made in December 2011 or June 2012 according to the date of the end of the fiscal year in each bank.

In this respect, on its session dated 6 April 2004, the CBE Board of

Directors approved the competency criteria for chairmen, board members and executive directors of banks to make sure that they are qualified for their posts. Competency criteria were modified on 24 November 2009, where a new criterion was introduced, prohibiting any official to simultaneously occupy the two positions of a senior manager in one bank and a member of the board of directors of another. The new criterion was applicable to future nominations, with the exception of those banks entirely owned by the CBE. This modification was intended to prevent any conflict of interests, in compliance with the good governance practices. In addition, interviews should be made with chairmen, deputy chairmen, delegated members, executive board members of banks and executive directors to ensure their eligibility for the positions they are nominated for, particularly as far as the candidates for risk- and compliance-related positions are concerned.

As for foreign nominees at banks (board members and executive

directors), a criterion was set, whereby the regulatory authority of the parent bank, or the bank where the nominee was last employed (as the case may be) is to be consulted about the nominee in question, to identify his/her eligibility for the vacant position.

- 60 -

In this context, the register of banks witnessed the addition of 41 positions

of the ones referred to in Article 43 of Law No. 88 of the year 2003 promulgating the Law of the Central Bank, the Banking Sector and Money.

In the light of Article 32/3 of the said Law which states that the Governor of the Central Bank, following consent of the Board of Directors, shall approve the statute of the bank, and any modification thereto, amendments of certain articles of the statutes of 6 banks were added to the register of banks during the period under review.

In consistency with the policy of the CBE that promotes the growth and geographical expansion of banks by opening new branches nationwide, the applicable criteria for approving the establishment of new branches/ agencies for banks were revised, with a view to streamlining and simplifying the relevant procedures. Moreover, a number of guidelines were set for applicant banks that give due regard to the soundness of banks' financial positions, internal control systems, the efficiency of their information systems and capital adequacy to ensure that they can better face the risks arising from the expansion in their activities. In this respect, twenty one new branches of eleven banks were added to the register of banks in the period under review.

Recently, banks have been eager to provide e-banking services to keep

pace with the technological progress in this field. Such services are either traditional or innovative (effected via electronic networks) and had been regulated earlier by the rules issued by the CBE Board of Directors on 28 February 2002. Later, on 2 February 2010, the CBE Board of Directors approved the regulations governing the operation of payment orders via mobile phones in Egypt. Furthermore, the CBE is currently updating the rules of e-banking operations and the rules regulating the electronic payment services, in order to limit the risks of banks' exposure as a result of offering such services. In this concern, four banks have been licensed to offer e-banking services including the issue of credit and debit cards, and electronic bill display and payment.

To organize dealing in the Forex market in Egypt and increase the savings

of workers abroad, Forex dealers and money transfer companies in Egypt were subjected to off-site supervision, according to the Law of the Central Bank, Banking Sector and Money. In this respect, one exchange dealer company was de-listed according to the CBE Governor's Decision No. 112 for 2011, and 7 branches of existing Forex dealers were registered, thus bringing their total number to 466 nationwide.

- 61 -

Moving to tourism services, the CBE - pursuant to the aforesaid Law - had already licensed shops in the customs areas at airports to sell in foreign currencies, alongside the Egyptian pound, with the aim of covering part of the State’s resources of foreign currencies and encouraging tourism. However, no new shops were granted such a license during the period. Thus, the total number of licensed shops remained 81 at the end of the period, while the number of licensed shops in the free zones reached 25 at the end of the same period.

The CBE allowed banks to participate in the establishment of different

types of mutual funds, to cater for risk-averse investors who have cash money but lack the necessary experience, know-how, or time to invest in such tools that yield good returns. Therefore, mutual funds were designed to gather the savings of small investors for the purpose of investing in a variety of instruments, and are run by specialized institutions that seek the highest earnings. Yet, no more banks have been licenced to establish mutual funds in the period in question.

In order to encourage individuals to save, registered banks were allowed

to issue saving systems of three years or more, with some privileges, to be able to raise their market interest rates above the short-term interest rates. Hence, banks were permitted, during this period, to issue new saving vessels and to make adjustments to the existing ones, with the aim of increasing the volume of medium- and long-term savings, to help banks finance production and industrial enterprises.

As part of the efforts made to enhance the efficiency and transparency of

the credit registration system to help take informed credit decisions, the CBE BOD - in its session dated 3 January 2012 - issued Decision No. 104/2012 to amend the provisions of the BOD Decision dated 26 April 2005 pertaining to the regulations of the CBE credit registration system, especially the rules related to dealing with customers who delay their repayments, the instructions on their inclusion in the negative lists, and the course of action to be taken in this regard .

Turning to on-site supervision, the CBE made progress with its plan for the inspection of the banking sector units (banks) and Forex dealers. Under this plan, a bank is inspected (either in whole or in part), taking into account its current conditions, the level of its risks and the quality of its products and activities. Furthermore, considerable efforts have been made to monitor the transfers made by Egyptian banks and verify their purposes and parties, in accordance with the relevant CBE instructions to help take immediate corrective actions.

- 62 -

In addition, the system of specialization-based examination was adopted to enable bank inspection to be conducted by inspectors specialized in the relevant activities (e.g. retail banking, market risks, IT, etc.). That approach is bound to render the inspection process more effective and in-depth by providing a thorough risk profile of the inspected bank, and monitor progress on the execution of corrective actions in collaboration with off-site supervision.

The inspection reports made lately have helped to upgrade the risk

management framework in several banks and further the application of the international best practices in this area. In addition, the cooperation agreement with the European Union has been used for the benefit of developing on-site inspection, with a focus on Basel II applications, and improving the level of internal audit at Egyptian banks.

On the other hand, the Supervision Sector at the CBE continued to

cooperate with the supervisory and judicial authorities in settling the complaints filed by bank customers and providing the required banking expertise. 2/2/3- Overview of the Aggregate Financial Position of Banks

The aggregate financial position of the 39 registered banks in Egypt posted LE 1.3 trillion at end of Dec. 2011, up by LE 38.3 billion or 3.0 percent in July/Dec. 2011/2012 (against a rise of LE 62.3 billion and 5.1 percent in the previous corresponding period). On the liabilities side, nearly two third of the increase (63.2 percent) was brought about by the growth of LE 24.2 billion or 2.5 percent in deposits at banks (against a pickup of LE 51.5 billion and 5.8 percent), registering LE 981.3 billion and 75.0 percent of the aggregate financial position at end of Dec. 2011. Other affecting factors were banks’ augmentation of their equities by LE 0.5 billion or 0.7 percent and the pickup in other liabilities balances by LE 17.8 billion or 16.6 percent. However, such increases were held back by the drop in provisions by LE 2.2 billion or 4.0 percent; the decline in obligations to banks abroad by LE 1.6 billion worth or 10.7 percent and also in obligations to local banks by LE 0.7 billion or 2.5 percent.

- 63 -

The pickup of 76.0 percent on the assets side was largely driven by the increase in banks' investments in securities and TBs by LE 29.1 billion or 6.1 percent, to score LE 503.3 billion or 38.5 percent of the aggregate financial position at end of Dec. 2011. Similarly, lending and discount balances scaled up by LE 15.6 billion or 3.3 percent, and so did the balances with local banks (by LE 2.2 billion or 1.9 percent), and other assets (by LE 5.0 billion or 5.4 percent). These increases were curbed by the fall in the balances with banks abroad by the equivalent of LE 13.2 billion or 13.8 percent, and in cash by LE 0.4 billion.

The increase in banks' investments in securities and bills during the period was traced, in the first place, to the rise in their investments in government bonds by LE 20.1 billion and in treasury bills by LE 13.6 billion. The rise was, however, held back by the contraction in banks' investments in corporate equities by LE 2.8 billion; in foreign securities by LE 1.2 billion and non-government bonds by LE 0.6 billion.

Growth Rate of Banks' Liabilities during July/Dec.

10.0

1.2

(23.3)

16.7

19.6

5.8

8.3

1.7

(2.1)

(4.0)

1.1

(10.7)

(56.5)

2.5

16.6

(16.0)

30.7

26.1

Capital

Reserves

Provisions

Bonds & Long-term Loans

Obligations to Banks Abroad

Obligations to the CBE

Obligations to Local Banks

Total Deposits

Other Liabilit ies

%

2011/20122010/2011

Growth Rate of Banks' Assets during July/Dec.

7.3

8.7

17.2

11.2

(1.7)

(2.8)

6.1

(13.8)

(2.2)

3.3

(15.1)

8.65.4

23.3

Cash

Securities & Investments

Balances with Banks Abroad

Balances at the CBE

Balances with Local Banks

Loan & Discount Balances

Other Assets

%

2011/2012

2010/2011

Relative Structure of Banks' Portfolio Investment

4.16.92.3

52.4

33.8

4.6

52.1

2.16.0

35.7

0

10

20

30

40

50

60

Treasury Bills Gov. Bonds Non-gov.Bonds

Corp. Equities ForeignSecurities

%June 2011Dec. 2011

- 64 -

2/2/4- Interbank Transactions

2/2/4/1- Transactions with Banks Abroad

In July/Dec. 2011/2012, local banks’ transactions with correspondents

abroad revealed a decrease of LE 11.6 billion worth or 14.3 percent in their net credit balances at banks abroad, thus posting LE 69.3 billion worth at end of Dec. 2011 (against LE 80.9 billion worth at end of June). The decline was brought about by the fall in their balances at banks abroad by LE 13.2 billion worth, and the decline in their obligations thereto by LE 1.6 billion worth.

Transactions with Banks Abroad

(LE mn) Change during July/Dec. June Dec. June Dec. 2010/2011 2011/2012 At End of 2010 2010 2011 2011 Value % Value %

Net Financial Position 37066 42922 80912 69314 5856 15.8 (11598) (14.3) Balances with banks abroad 57371 67217 96080 82853 9846 17.2 (13227) (13.8) Obligations to banks abroad 20305 24295 15168 13539 3990 19.6 (1629) (10.7)

2/2/4/2- Interbank Transactions in Egypt

The volume of interbank transactions in Egypt, in terms of deposits, surged by LE 4.4 billion or 23.3 percent (against a drop of LE 3.0 billion or 15.1 percent in the period of comparison), bringing deposits up to LE 23.4 billion at end of Dec. 2011. The rise reflects the pickup in local and foreign currency deposits by LE 3.9 billion and LE 0.5 billion worth, respectively.

Deposits in the Interbank Money Market(End of)

9.4

13.3

9.5 10.0

0.0

5.0

10.0

15.0

June 2011 Dec. 2011

LE bn

Local Currency Foreign Currencies

- 65 - 2/2/5- Deposits

In July/Dec. 2011/2012, deposits at banks (including government deposits) edged up by LE 24.2 billion or 2.5 percent (against LE 51.5 billion and 5.8 percent in the previous corresponding period), posting LE 981.3 billion (75.0 percent of the aggregate financial position) at end of Dec. 2011. The bulk of the increase (92.4 percent) was contributed by local currency deposits, which expanded by LE 22.4 billion or 3.1 percent, to register LE 747.3 billion, and to account for more than three quarters (76.2 percent) of total bank deposits at end of Dec. 2011. In the meantime, deposits in foreign currencies went up by only LE 1.8 billion worth or 0.8 percent, to LE 234.0 billion worth at end of Dec. 2011. That was indicative of the continued propensity for saving in the Egyptian pound, supported by the comparatively higher interest rates on LE deposits, relative to foreign currencies.

Deposits at Banks by Sector

(LE mn)

Local Currency Foreign Currencies End of June 2011 Dec. 2011 June 2011 Dec. 2011

Total 724878 747254 232159 234004 Government sector 56728 62097 51403 49261 Public business sector 29278 24444 7549 8652 Private business sector 103965 99261 60241 63818 Household sector 532032 558396 109248 108719 External sector 2875 3056 3718 3554

Scaling up by LE 26.3 billion or 5.0 percent, to post LE 558.4 billion

(74.7 percent of total LE deposits) at end of Dec. 2011, the volume of increase scored by local currency deposits of the household sector exceeded that of total LE deposits. Those of the government sector also rose by LE 5.4 billion or 9.5 percent to LE 62.1 billion; along with the external sector’s (by some LE 0.2 billion). Conversely, deposits of the public and private business sectors rolled back by LE 4.8 billion and LE 4.7 billion, respectively.

The increase in foreign currency deposits was mainly spurred by the private business sector's (growing by LE 3.6 billion worth) and the public business sector's (by LE 1.1 billion worth). Meanwhile, deposits of the government sector fell by LE 2.2 billion worth, of the household sector by LE 0.5 billion worth and of the external sector by LE 0.2 billion worth.

- 66 - 2/2/6- Lending Activity

Banks markedly expanded their lending activity in the first half of the FY compared with the respective period a year before. Lending and discount balances grew by LE 15.6 billion or 3.3 percent (against a decline of LE 7.9 billion or 1.7 percent), to post LE 489.7 billion at end of Dec. 2011, thus making up 37.4 percent of total assets and roughly half of the deposits at banks (49.9 percent). The pickup in the lending and discount balances was an outcome of the rise in those granted in local currency by LE 17.6 billion or 5.4 percent, to score LE 345.4 billion (70.5 percent of total balances at end of Dec. 2011), and the decline in those granted in foreign currencies by LE 2.0 billion worth or 1.4 percent, posting LE 144.3 billion worth.

Bank Loans by Sector

in July/December (LE mn)

2010/2011 2011/2012 Local

Currency Foreign

Currencies Local

Currency Foreign

Currencies Total (6103) (1806) 17617 (2027) Government sector 4068 (5280) (1347) (1228) Public business sector 2727 (314) 5201 753 Private business sector (15448) (286) 6685 (61) Household sector 2555 342 7428 (736) External sector (5) 3732 (350) (755)

Rate of Change in Deposits by Sector during July/December

(25)

(15)

(5)

5

15

25

35

2010/2011 2011/2012 2010/2011 2011/2012


%

Government Sector Public Business Sector Private Business SectorHousehold Sector External sector

- 67 -

The pickup in lending and discount balances in local currency was largely driven by the rise of LE 7.4 billion or 7.7 percent in the share of the household sector, making up 42.2 percent of the total increase (against a rise of LE 2.6 billion or 2.8 percent), to score LE 103.5 billion and 30.0 percent of total LE lending and discount balances at end of Dec. 2011. Moreover, loans received by the private business sector went up by LE 6.7 billion or 3.6 percent (against a decline of LE 15.4 billion or 8.3 percent), reaching LE 194.5 billion (56.3 percent of total LE lending and discount balances). Likewise, loans to the public business sector mounted to LE 29.8 billion, up by LE 5.2 billion or 21.2 percent (against LE 2.7 billion and 13.0 percent). In contrast, the share of the government sector decreased by LE 1.3 billion or 7.4 percent. The same was true for the external sector which registered a drop of LE 0.4 billion or 32.1 percent.

As stated above, lending and discount balances in foreign currencies fell, on the back of the lower share of the government sector (down by LE 1.2 billion worth or 5.7 percent), of the external sector (by LE 0.8 billion worth or 4.5 percent) and of the household sector (by LE 0.7 billion worth or 23.8 percent). The decline was somewhat curbed by the rise in loans to the public business sector by LE 0.7 billion worth. The relative distribution of loans by economic activity indicates that the manufacturing sector was the major recipient of bank loans in local and foreign currencies alike, with a share of 36.5 percent of both at end of Dec. 2011. The services sector came next (27.2 percent), followed by the unclassified sectors – including the household sector – (25.1 percent), trade (9.6 percent), and agriculture (1.6 percent).

Credit Facilities by Economic Activity At End of December 2011

0

50

100

150

200

Agriculture Manufacturing Trade Services Unclassified

LE bn


- 68 -

At end of Dec. 2011, bank loans and advances by maturity (excluding discounts) registered LE 486.5 billion, up by LE 15.2 billion or 3.2 percent during the period in question. The increase reflects higher short-term loans (one year and less) by LE 8.9 billion or 4.1 percent (as an outcome of the expansion in local currency loans by LE 9.5 billion and the contraction in those in foreign currencies by LE 0.6 billion worth). Additionally, long-term loans (more than one year) surged by LE 6.3 billion or 2.5 percent, reflecting the rise of loans in local currency by LE 7.6 billion and the retreat of those in foreign currencies by the equivalent of LE 1.3 billion.

Loans & Advances by Banks Excluding Discounts(End of)

0

40

80

120

160

200

June 2011 Dec. 2011 June 2011 Dec. 2011

One Year or Less Over One Year LE bn


- 69 -

3- Non-Banking Financial Sector*

In Oct. /Dec. of FY 2011/2012, progress has been made with the efforts to develop the regulations governing the stock market, with the aim of protecting dealers’ rights and activating the role of small and medium enterprises' market (SMEs) to support the Egyptian economy at this critical juncture. As such, the EFSA Board of Directors issued a number of decisions, paramount of which was the following: - Decision no. 738 regarding the rules of trading, clearing, and settlement of

the listed shares of small and mid cap companies. Accordingly, these shares shall be traded in a daily trading session that lasts for an hour, with the same applicable trading mechanism in the main market. Moreover, the price limits are allowed to fluctuate 5% above or below the open price; and settlement of small and mid cap stocks shall take place two days after the day of trading (T+2).

- Decision no. 80 of 2011 on the rules of listing the executive and marketing branches of brokerage companies at EFSA registry. The decision mainly included the reduction of the fees charged for listing the branches of brokerage companies at the EFSA registry.

- Decision no. 81 of 2011 regarding the rules of listing securities issued by SMEs. According to this decision, SMEs are defined as joint stock companies whose issued capital shall not exceed LE 560 million or its equivalent in foreign currencies, when applying for listing for the first time; and shall not exceed LE 100 million or its equivalent in foreign currencies thereafter. Listing of SMEs on the EGX shall be enacted according to the following rules: the minimum shares offered shall not be less than 10% of the total issued shares; founders and board members of the company shall maintain a minimum of 25% of the issued shares for at least two fiscal years starting from the offering date. In addition, the number of shareholders shall not be less than 25; the number of issued shares to be listed shall not be less than 100 thousand; the issued capital shall be fully paid; and shareholders’ equity shall not be less than the company's paid-in capital in the last annual financial statements preceding the application for listing. Moreover, these companies shall attach to the listing application an undertaking signed by

Source: EFSA and monthly reports of the EGX.*

- 70 -

the company and the nominated advisor, including the rights and obligations of the company and the nominated advisor’s towards EFSA and the EGX.

- Decision no. 83 on the regulation of the registry of accredited sponsors for

SMEs. The registry of accredited sponsors, and all listing requests and documents shall be transferred from EFSA to the Egyptian Exchange. The Egyptian Exchange shall set the rules that regulate the activity of accredited sponsors.

- Decisions no 106 and 107 of 2011 amending some provisions of decisions

no. 21 of 2009 and no. 24 of 2008, related to intra-day trading.

- Decision no. 100 of 2011 amending the regulatory and supervisory controls of factoring.

In addition, the EFSA approved in Dec. 2011 the rules and criteria for the

stocks eligible for margin trading, short selling and intra-day trading in accordance with Article 293 of the executive regulations of Capital Market Law no. 95 of 1992, in the light of the Egyptian Exchange’s proposal in this regard. One of the most important of those criteria was that the issuer shall publish its financial statements for at least one fiscal year, if not listed at the Egyptian Exchange according to the listing rules; and market capitalization of free-float shall not be less than 2/10000 (two in ten thousand) of the total free-float market capitalization. Out of its keenness to develop the indicators and instruments of the market, the EGX launched a new price index, namely EGX 20 Capped in Oct. 2011, which includes the top 20 companies in terms of liquidity and activity. The constituents are weighted according to free floated market capitalization. The index inception date is 1st February 2003 with a basic value of 1000 points. The index constituents are rebalanced twice a year (first business day of February for the period 1 July to 31 December, and first business day of August for the period 1 January to 30 June). These comprehensive rebalances exclude the ineligible companies and add eligible ones. Index weights are rebalanced twice a year (first business day of May, and first business day of November). Such partial rebalances adjust only capping weight factor of the constituents without any modification to the constituents themselves.

- 71 -

The expected advantages of this index include the following: limiting the control of a few companies on the movement of the index as a whole, by capping the weight of each constituent to a maximum limit; excluding companies that have a lower rate of free floating and those repeatedly violating disclosure rules; besides satisfying the needs of market participants, especially fund managers who need a benchmark index that meets the criteria of investment in funds; and raising the ETFs activity rates that are expected to start work shortly. Finally, because this index is characterized by the relative stability of its components, it helps reduce the expenses of replacing the companies excluded from the index with new companies. 3/1- Stock Market

Over the first half of 2011/2012, the benchmark EGX 30 index retreated

32.6 percent, standing at 3622.4 points at end of Dec. 2011. The same downtrend came over EGX 20 Capped, which recorded a drop of 33.3 percent to 3925.5 points. EGX 70 also went down 34.0 percent to 415.6 points, together with EGX 100 (33.9 percent to 643.1 points). Similarly, capital market general index lost 63.3 percent, registering 312.3 points.

Capital Market General Index & EGX 30 Index

50750

1450215028503550425049505650635070507750

Jun.

2010 Ju

l.Aug

.Sep

t. Oct.

Nov

. Dec

.

Jan.

2011 Fe

b.Mar. Apr. May

.Ju

n . Jul.

Aug.

Sept.

Oct.

Nov.

Dec.

Point

End of

Capital Market General Index EGX 30

The Egyptian Exchange was closed in the wake

of the January, 25 Revolution

- 72 - Sectoral Indicators

Overall, sectoral indicators declined in July/Dec. 2011/2012, but the sharpest decline was in that of basic resources, which plunged 58.6 percent, followed by travel and leisure (45.5 percent), real estates (44.4 percent), and finally, household and personal products that showed the lowest decline (16.2 percent).

The primary market: During July/Dec. 2011/2012, EFSA approved

1491 new issues, at a total value of LE 20.3 billion (against 1565 issues, valuing LE 25.9 billion in the corresponding period of the previous FY). Issues for establishing business reached 915 in number (61.4 percent of total issues), at a value of LE 3.0 billion. The number of issues for capital increases of existing companies reached 576, totaling LE 17.3 billion (85.4 percent of total issues).

Change in the Sectoral Indicators during July/Dec. of FY 2011/2012

-19.8

-16.2

-17.6

-25.5

-26.1

-30.5

-35.7

-36.3

-37.9

-44.4

-45.5

-58.6

-70.0-60.0-50.0-40.0-30.0-20.0-10.00.0

Basic Resources

Travel & Leisure

Real Estates

Industrial Goods & Services andAutomobiles

Financial Services (Excl. Banks)

Banks

Food & Beverages

Construction & Building Materials

Communications

Chemicals

Healthcare and Pharmaceuticals

Personal & Household prod.

(%)

- 73 -

The listing activity on the EGX showed that the number of listed

companies mounted to 213 at end of Dec. 2011, from 211 at end of June. The nominal capital of these companies also rose 3.9 percent to LE 150.4 billion, while their market capitalization decreased 26.6 percent to LE 293.6 billion, because of the fall in the prices of most traded shares on the EGX.

The value of issued and listed bonds surged by LE 24.1 billion or 10.7

percent in the period under review, posting LE 248.9 billion at end of Dec. 2011, against LE 224.8 billion at end of June. This came on the back of the LE 24.8 billion rise in the value of Egyptian treasury bonds (primary dealers or PD bonds), to register LE 231.6 billion or 93.0 percent of the total value of listed bonds at end of Dec. 2011.

The secondary market: the relevant three indicators (number of

transactions, and number and value of traded securities) pointed to a decline in the reporting period. The number of transactions dropped by 1781 thousand or 41.6 percent, and so did the number of traded securities (shares and bonds) by 5704 million or 40.0 percent, compared with the period of comparison, posting 8556 million papers. Likewise, their value decreased by LE 67.4 billion or 52.9 percent, to LE 60.1 billion.

Trading in Securities July/Dec. 2010/2011 2011/2012

No. of Transactions (000s) 4279 2498 - Shares, bonds and mutual funds’ certificates (listed) 4220 2460 Shares, bonds and mutual funds’ certificates (unlisted) 54 32 Small and Medium Enterprises Market (NILEX)* 5 6 No. of Traded Securities (mn) 14260 8556

- Shares, bonds and mutual funds’ certificates (listed) 12901 7920 Shares, bonds and mutual funds’ certificates (unlisted) 1349 617 Small and Medium Enterprises Market (NILEX)* 10 19 Value of Transactions (LE mn) 127447 60090

- Shares, bonds and mutual funds’ certificates (listed) 117501 50476 Shares, bonds and mutual funds’ certificates (unlisted) 9832 9537 Small and Medium Enterprises Market (NILEX)* 114 77

Source: EFSA- monthly reports of the EGX. *Trading on NILEX started on June 3, 2010.

- 74 -

Share transactions accounted for the bulk of trading on the EGX during the period under review (80.6 percent of total transactions, against 73.7 percent in the corresponding period of the preceding FY). In the meantime, trading in bonds represented 19.4 percent of the total (against 26.3 percent).

Turning to the market of small and medium enterprises (NILEX), the

number of listed companies reached 19 and the market capitalization of listed shares on NILEX amounted to some LE one billion at end of Dec. 2011. Traded securities reached 19 million papers, conducted through 6457 transactions, with a value of LE 77.4 million in the period under review.

Investors' Transactions Foreigners' transactions on the EGX plunged 49.9 percent in the period

under review, relative to the corresponding period of the previous FY, registering LE 25.2 billion (against LE 50.3 billion). Their transactions unfolded net purchases of LE 1.0 billion against LE 3.1 billion.

Egyptians' trading on the EGX accounted for 67 percent of total

transactions in July/Dec. 2011/2012. On the other hand, dealings of foreigners (non-Arabs) represented 27 percent, while those of Arab investors made up merely 6 percent.

Foreign Investors' Transactions During July/Dec.

0369

12151821242730

2010/2011 2011/2012

PurchasesSalesNet

LE bn

- 75 - -

3/2- Mutual Funds

The number of mutual funds reached 81 at end of Dec. 2011 (78 were

open-end and 3 close-end), against 73 funds at end of Dec. 2010 (70 were open-end and 3 close-end).

Egyptian, Foreign & Arab Investors’ Transactions on the Egyptian Exchange during July/Dec. 2011/2012

Foreigners (Excl. Arabs)

27%

Arabs 6%

Egyptians 67%

- 76 -

4- Public Finance and Domestic Public Debt

4/1- Consolidated Fiscal Operations of the General Government

Preliminary actual data on the fiscal operations of the state budget (administrative system, local administration and service authorities) for July/Dec. 2011/2012 revealed that total revenues went up 16.9 percent, and total expenditures 17.7 percent above the level of the corresponding period of the previous FY. Accordingly, the overall deficit posted LE 73.8 billion during the period, up by 22.0 percent over the period of comparison.

Hereunder is a follow up of the execution of the fiscal operations in the first half of FY 2011/2012, as compared with the actual figures of the previous corresponding period, according to the data of the Ministry of Finance:

4/1/1- Budget Sector

According to the data of the Ministry of Finance on the budget execution

in July/Dec. 2011/2012, collected revenues totaled some LE 116.6 billion (7.4 percent of GDP), with an increase of LE 16.9 billion or 16.9 percent, relative to the previous corresponding period. Total expenditures reached about LE 189.7 billion (12.1 percent of GDP), up by LE 28.5 billion or 17.7 percent. Consequently, the overall budget deficit widened by 0.3 percentage point to some LE 73.8 billion (4.7 percent of GDP) during the period, against LE 60.4 billion (4.4 percent of GDP) in the period of comparison.

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

2007/2008 2008/2009 2009/2010 2010/2011 2011/2012

Revenues Expenditures Overall Deficit

Ratios of Expenditures, Revenues & Overall Deficit/GDP% (July/Dec.)

- 77 -

Public revenues rose by LE 16.9 billion or 16.9 percent during the

reporting period, to register LE 116.6 billion, constituting 7.4 percent of GDP. Around 54.9 percent of such an increase came mainly from property income (up by LE 9.3 billion or 64.8 percent) of EGPC, SCA, CBE, and some other entities, companies and units.

Tax revenues scaled up by LE 4.3 billion or 5.7 percent, due to higher

receipts of the taxes on income and profits from EGPC, and SCA and taxes payable by individuals. Taxes on property rose by LE 1.3 billion, spurred by increased tax earnings from treasury bills and bonds. Taxes on goods and services edged up by LE 0.9 billion, owing to the increase in the proceeds of sale taxes.

External grants accelerated by LE 3.8 billion. However, customs receipts declined by LE 0.6 billion, or 8.0 percent, along with some other revenue items.

Expenditures posted LE 189.7 billion, up by LE 28.5 billion, or 17.7 percent (12.1 percent of GDP).

68.456.2 75.669.3

20.214.4

24.320.3

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

2008/2009 2009/2010 2010/2011 2011/2012

Tax Revenues Property Income

( July / Dec.)%Ratio of Tax Revenues & Property Income / Total Public Revenues

- 78 -

Almost 63.8 percent of the increase in expenditures went to oil subsidies

that went up by LE 18.2 billion or 107.1 percent, as compared with the period of comparison, thus reaching LE 35.2 billion, or 18.5 percent of total expenditures. Wages and compensations of employees rose by LE 11.6 billion or 27.3 percent to LE 54.1 billion, absorbing 46.3 percent of total revenues and constituting 30.3 percent of current government spending. Likewise, domestic and external interest payments went up by LE 8.3 billion or 23.3 percent, to reach a total of LE 44.0 billion.

Executed government investments declined during the period by LE 4.8 billion or 29.3 percent. Subsidies for GASC and some other items decreased as well, by LE 3.5 billion or 19.8 percent, and so did purchases of goods and services by LE 1.0 billion or 11.0 percent, below the period of comparison.

Against this background, the budgetary cash deficit in July/Dec. 2011/2012 hit LE 73.1 billion or 51.8 percent of the cash deficit estimated for the whole FY. Net acquisition of financial assets reached some LE 0.7 billion, bringing the overall deficit in the reporting period to LE 73.8 billion or 4.7 percent of GDP (against a deficit of LE 60.4 billion and 4.4 percent of GDP in the period of comparison), up by LE 13.3 billion.

14.5

21.823.2

34.2

26.120.4

24.926.3

28.5

22.222.8

21.7

10.0

15.0

20.0

25.0

30.0

35.0

40.0

2008/2009 2009/2010 2010/2011 2011/2012

Interest Subsidies Wages ( including Compensations of Employees)

% Ratio of Subsidies , Interest Payments & Wages / Total Expenditures( July / Dec.)

- 79 -

Local financing sources were chiefly used to finance the budget deficit, along with some various external and local repayments. 4/1/2- Budget Sector, NIB and SIFs

Adding the fiscal operations of the NIB and SIFs to those of the budget

sector, revenues would increase to LE 136.0 billion (18.5 percent above the period of comparison), making up 8.7 percent of GDP.

Consolidated Fiscal Operations of the General Government (Budget Sector, NIB and SIFs)

(Total Revenues) (LE bn)

July/Dec. 2011/2012

Budget Sector

Relative Structure

Execution Ratio/Total Estimates

for the Year

Budget Sector, NIB & SIFs

Relative Structure

Execution Ratio /Total

Estimates for the

Year

Total Revenues 116.6 100.0 33.4 136.0 100.0 34.8 Tax Revenues 79.7 68.4 34.3 79.7 58.6 34.3 • Taxes on Income

and Profits 32.6 27.9 29.5 32.6 23.9 29.5 From EGPC 11.3 9.7 22.4 11.3 8.3 22.4 From SCA 5.9 5.0 46.1 5.9 4.3 46.1 From CBE 0.0 0.0 0.0 0.0 Other entities 6.7 5.7 32.3 6.7 4.9 32.3 Payable by

Individuals 8.7 7.5 33.0 8.7 6.4 33.0 • Taxes on

Property 5.9 5.1 39.4 5.9 4.4 39.4 • Taxes on Goods

and Services 34.7 29.8 40.7 34.7 25.5 40.7 • Taxes on

International Trade (Customs) 6.3 5.4 35.0 6.3 4.6 35.0

• Other Taxes 0.2 0.2 6.6 0.2 0.2 6.6 Grants 6.0 5.1 59.8 6.0 4.4 59.8 Other Revenues 30.9 26.5 28.8 50.3 37.0 33.8 Property Income 23.6 20.2 33.3 26.6 19.5 34.6 Selling Proceeds of Goods and Services 5.4 4.6 32.7 5.4 3.9 32.7 Financing Investments 1.0 0.9 7.4 1.0 0.8 7.4 Others 0.9 0.8 14.9 17.3 12.8 41.7 Source: Ministry of Finance Percentages are calculated in terms of LE million.

- 80 -

Expenditures would also rose to LE 213.8 billion (22.5 percent above the period of comparison), thereby constituting 13.6 percent of GDP.

Consolidated Fiscal Operations of the General Government (Budget Sector, NIB and SIFs)

(Total Expenditures) (LE bn)

July/Dec. 2011/2012

Budget Sector

Relative Structure


for the Year


Relative Structure


for the Year

Total Expenditures 189.7 100.0 38.7 213.8 100.0 40.5 Wages & Compensations of Employees 54.1 28.5 46.0 54.8 25.6 46.0 Purchases of Goods and Services 8.3 4.3 27.3 8.4 3.9 27.4 Interest 44.0 23.2 41.4 38.3 17.9 39.6 Subsidies, Grants and Social Benefits 56.9 30.0 36.1 85.8 40.1 42.5 Subsidies 49.5 26.1 37.3 49.5 23.2 37.3 Grants 2.7 1.4 42.1 2.7 1.2 42.1 Social Benefits 4.4 2.4 32.3 33.3 15.6 57.5 Others 0.3 0.1 5.4 0.3 0.1 5.4 Other Expenditures 14.9 7.9 47.2 15.0 7.1 47.4

Purchases of Non Financial Assets (Investments)

11.5

6.1

24.4

11.5

5.4

24.3 Source: Ministry of Finance Percentages are calculated in terms of LE million.

The cash deficit of the consolidated fiscal operations of the general

government in the relevant period reached LE 77.8 billion. By adding the net acquisition of financial assets (negative LE 3.1 billion) to the cash deficit, the overall deficit would post LE 74.7 billion (4.8 percent of GDP), constituting 57.8 percent of the overall deficit estimated for the whole year. The deficit was financed by local sources (banking and non-banking). Also, some various external and local repayments were made.

- 81 -

Consolidated Fiscal Operations of the General Government

(Budget Sector, NIB and SIFs) (Cash and Overall Deficit/Surplus & Finance Sources

(LE bn)

July/Dec. 2011/2012

Budget Sector

Relative Structure


for the Year


Relative Structure


for the Year

Total Revenues 116.6 33.4 136.0 34.8 Total Expenditures 189.7 38.7 213.8 40.5 Cash Deficit 73.1 51.8 77.8 57.0 Net Acquisition of Financial Assets 0.7 -10.5 -3.1 43.8 Overall Deficit 73.8 54.9 74.7 57.8 Financing Sources 73.8 100.0 54.9 74.7 100.0 57.8 Domestic Financing 86.1 116.7 56.6 84.5 113.1 54.5 Banking Financing 64.5 87.5 55.1 63.7 85.2 54.2 Non-Banking Financing 21.6 29.2 61.9 20.8 27.9 55.4 Blocked Account Used in Amortizing Part of CBE Bonds 0.0 0.0 0.0 0.0 External Borrowing -2.1 -2.8 12.6 -2.1 -2.8 12.6 Arrears 0.0 0.0 0.0 0.0 Others 5.8 7.9 -419.6 8.3 11.2 -90.0 Revaluation Differences 0.1 0.1 0.1 0.1 Difference between Treasury Bills Face Value & Present Value -2.9 -4.0 0.0 -2.9 -3.9 0.0 Discrepancy -13.2 -17.9 -13.2 -17.7 Source: Ministry of Finance

Percentages are calculated in terms of LE million.

- 82 -

4/2- Domestic Public Debt

4/2- Domestic Public Debt

At end of December 2011, domestic public debt amounted to LE 1133.0 billion or 72.2 percent of GDP at current market prices, up by LE 88.1 billion or 8.4 percent in the first half of FY 2011/2012. Its balance equals the sum of net debt of the government, public economic authorities' debt and that of National Investment Bank (NIB), less the intra-debt of public economic authorities and the government to NIB.

4/2/1- Debt of the Government (Net)

Government domestic debt (net basis) registered some LE 894.6 billion

or 57.0 percent of GDP at end of Dec. 2011, expanding by LE 86.5 billion or 10.7 percent during July/December of FY 2011/2012. The rise was a confluence of the LE 34.8 billion increase in the balances of treasury bonds and bills, and the LE 45.8 billion decline in the net credit position of the government at the banking system (as government loans and deposits grew by LE 50.4 billion and LE 4.6 billion, respectively). Add to this the increase in the borrowing from other entities by LE 6.1 billion. However, credit facilities to the government from the Social Insurance Fund decreased by roughly LE 0.2 billion.

894.6

66.5

239.8

-67.9

1133.0

-200 0 200 400 600 800 1000 1200

Net Domestic Debtof Government

Net debt of EconomicAuthorities

NIB Debt (Net)

Intra-Debt

Gross DomesticDebt

Domestic Public Debt at End of Dec. 2010 (LE bn)

- 83 -

Net Domestic Debt of the Government (LE bn)

June 2011 Dec. 2011

Balances at End of Value % Value % Change

+ (-) July/Dec. 2011/2012

Net Domestic Debt 808.1 100.0 894.6 100.0 86.5 - Balances of Bonds & Bills* 916.9 113.5 951.7 106.4 34.8

Notes and bonds, of which, 560.8 69.4 580.4 64.9 19.6 Tradable on the exchanges 218.4 27.0 239.5 26.8 21.1

Treasury bills 356.1 44.1 371.3 41.5 15.2 - Borrowing from Other Entities 2.0 0.2 8.1 0.9 6.1 - Credit Facilities from SIFs 2.4 0.3 2.2 0.2 -0.2

- Net Balances at the Banking System -113.2 -14.0 -67.4 -7.5 45.8 Credit facilities 46.0 5.7 96.4 10.8 50.4 Deposits (-) 159.2 19.7 163.8 18.3 4.6

Net Domestic Debt/GDP (%) 58.9 57.0 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 for 1983 for the purchase of government bonds; holdings of resident financial institutions in Egypt (the banking system and insurance sector) of bonds floated abroad; and the SIFs’ bonds against the transfer of NIB debt to the Public Treasury.

The LE 34.8 billion rise in the balance of government bonds and bills was

an outcome of: A- The pickup in the balance of government bonds by LE 19.6 billion, to LE

580.4 billion at end of December 2011, as a result of the following:

1- The LE 24.8 billion rise in the balance of Egyptian treasury bonds in the period under review, due to:

- The issuance of the 61st tranche of three-year bonds on 18 October 2011,

at a value of LE 1.5 billion and an annual interest rate of 14.0 percent. Afterwards, the value of this tranche was increased by LE 6.0 billion (LE 2.5 billion in November and LE 3.5 billion in December) on the same conditions of issuance, bringing its total value to LE 7.5 billion.

- 84 - - The issuance of the 62nd tranche of seven-year bonds on 25 October 2011,

at a value of LE 1.0 billion, and an annual interest rate of 14.5 percent.

- The issuance of the 63rd tranche of five-year bonds on 25 October 2011, at a value of LE 1.5 billion, and an annual interest rate of 14.25 percent. Subsequently, this tranche was increased by LE 5.3 billion (LE 2.5 billion in November and LE 2.8 billion in December) on the same conditions of issuance, thus raising the total value of these bonds to LE 6.8 billion.

- The issuance of treasury bonds at a value of LE 14.5 billion in

July/September of FY 2011/2012. - The redemption of the 11th tranche of treasury bonds on 26 October 2011,

at a value of LE 5.0 billion. 2- The equivalent of LE 0.1 billion increase in those bonds floated abroad

(denominated in Egyptian pound). 3- The cut of LE 1.5 billion in the value of public treasury bonds (non-

interest bearing) issued on the 1st of July 2009, to be LE 7.6 billion in August 2011.

4- The decrease in the balance of bonds tradable abroad in US dollar by the

equivalent of LE 3.8 billion, as the second tranche thereof reached maturity in July 2011.

B- The rise of LE 15.2 billion in the outstanding balance of public treasury

bills, to stand at LE 371.3 billion at end of December 2011, on the back of:

- The issuance of 362-day TBs in US dollar on 30 November 2011, at a value of LE 9.2 billion worth, along with 363-day TBs on 21 December, at a value of LE 6.1 billion worth, bringing the total value of these bills to LE 15.3 billion worth.

- 85 - - The decline of LE 0.1 billion in the outstanding balance of public treasury

bills, issued in Egyptian pound. Thus, the total balance of these bills reached LE 356.0 billion at end of December 2011, compared with LE 356.1 billion at end of June.

4/2/2- Debt of Public Economic Authorities (Net)

The debt of public economic authorities (net basis) scaled up by LE 0.2 billion, reaching LE 66.5 billion at end of December 2011. The increase was a dual effect of the LE 0.9 billion rise in their borrowing from NIB, and the LE 0.7 billion decline in their net borrowing from the banking system (owing to lower bank claims on these authorities by LE 7.4 billion and lower deposits of the authorities at the banking system by LE 6.7 billion).

Net Domestic Debt of Government

-200.0

0.0

200.0

400.0

600.0

800.0

1000.0

1200.0

Dec. 2010 June 2011 Dec. 20110.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

Treasury BillsBonds & Other Credit FacilitiesNet Government Balances with the Banking SystemRatio of Government Debt /GDP

%LE bn

- 86 - 4/2/3- Debt of the National Investment Bank (Net)

At end of December 2011, net debt of NIB (including the intra-debt)

reached some LE 239.8 billion, growing by LE 1.6 billion in the period under study. The rise in NIB's debt was attributable both to the expansion in its total invested resources by LE 0.4 billion, to reach some LE 241.3 billion at end of December 2011, and to the retreat in its deposits with the banking system by LE 1.2 billion. 4/2/4- Intra- Debt

The intra-debt of the public economic authorities and the government to

NIB amounted to LE 67.9 billion at end of December 2011 (against LE 67.7 billion at end of June). Loans granted by NIB to these authorities accounted for LE 53.1 billion, with an increase of LE 0.9 billion during the period under review. NIB's investments in government securities (bills and bonds) registered LE 14.8 billion, down by LE 0.7 billion below the end of June's level.

Social Insurance Funds 61.3

Dollar Dev elopment

Bonds &Others 3.6

Post Office Sav ing Account

72.0

Proceeds of Investment

Certificates & Accumulated

Interest 104.4

Resources of the NIB at End of Dec. 2011 (LE bn)

Loans to Economic

Authorities 53.1

Loans to Holding

Companies & Affiliate Units, Concessional

Lending & Others 171.9

Deposits with the Banking

System 1.5

Investment in Treasury Bills &

Bonds 14.8

Uses of the NIB at End of Dec. 2011(LE bn)

- 87 - 4/2/5- Domestic Public Debt Service

Over the first half of 2011/2012, domestic public debt service in the state

budget amounted to LE 50.9 billion, up by LE 10.7 billion, relative to the previous corresponding period. The increase mostly came from the rise in interest payments by some LE 8.2 billion, to LE 42.2 billion, and in principal repayments by LE 2.5 billion, to LE 8.7 billion. The ratios of debt service to GDP and to total revenues climbed to 3.2 percent and 43.7 percent, in order (from 2.9 percent and 40.3 percent in the previous corresponding period).

- 88 -

5- External Transactions 5/1- Foreign Exchange Market

The Central Bank of Egypt (CBE) continued its successful management of the foreign exchange market through the dollar interbank system, which proved highly effective in cushioning the market against any drastic volatility, especially after large investments had abandoned the country and the decline of tourism revenues, amid the exceptional circumstances experienced by Egypt. The dollar interbank system helped soothe investors’ fears against any imminent fluctuations in the foreign exchange rates. The volume of trade in the foreign exchange market scaled down by US$ 5.6 billion or 21.1 percent, posting US$ 20.8 billion. Public banks’ sales and purchases represented 13.8 percent and 4.8 percent, in order, of the total volume of transactions. On the other hand, sales of private sector banks constituted 86.2 percent and their purchases 95.2 percent. The volume of trade in the interbank market – since its initiation at the end of 2004 up to the end of December 2011 – grew 17.7 percent, standing at US$ 321.9 billion (against US$ 273.6 billion at the end of December 2010).

The developments in the Egyptian pound exchange rate reveals that the

US dollar weighted average in the interbank market posted LE 6.0319 at end of December 2011 (against LE 5.9690 at end of June). Thus, the value of the Egyptian pound depreciated by about 1.0 percent versus the US dollar during the reporting period. While the present Economic Review was under publication, the US dollar posted LE 6.0404 at end of March 2012. It is worthy to note that in January/December 2011, the value of the pound decreased 3.8 percent.

Volume of Dealing and Weighted Average of US Dollar Exchange Rate in the Interbank Market

0.0

5.0

10.0

15.0

20.0

Q2_09/10 Q3_09/10 Q4_09/10 Q1_10/11 Q2_10/11 Q3_10/11 Q4_10/11 Q1_11/12 Q2_11/125.205.405.605.806.006.20

Volume of dealing (during Q) Exchange rate (end of Q)

LEUS$ bn

- 89 -

Net International Reserves & Months of Merchandise Imports

05

10152025303540

Jun-08 Dec-08 Jun-09 Dec-09 Jun-10 Dec-10 Jun-11 Dec-11

US$ bn

0246810

NIR NIR/Months of Merchandise Imports

month

NIR at the CBE fell by about US$ 8.4 billion or 31.8 percent during the reporting period, to stand at US$ 18.1 billion at end of December 2011 (against US$ 26.6 billion at end of June). NIR nearly halved (down by US$ 17.9 billion or 49.7 percent) in 2011, compared to the end of December 2010. The decline can be explained by the reliance on NIR at this particular juncture to make up for the substantial contraction in foreign investments on the Egyptian Exchange, in addition to the drop of tourism revenues and FDI. NIR covered 3.7 months of merchandise imports till the end of December 2011. At the time of preparing the Review at hand, NIR continued to decline, standing at US$ 15.1 billion at end of March 2012, which covers 3.1 months of merchandise imports.

- 90 -

5/2- Balance of Payments∗

In the first half of FY 2011/2012, Egypt's transactions with the external world recorded an overall BOP deficit of US$ 8.0 billion (against an overall surplus of US$ 571.7 million in the corresponding period a year earlier). As a result, net international reserves (NIR) at the CBE decreased. This came on the back of the events in Egypt and the Arab region, which continued to weigh heavily on tourism revenues and foreign investments flows, as indicated below:

• Tourism revenues dropped 27.1 percent to US$ 5.1 billion (from US$ 6.9

billion), on the back of the decline in tourist nights by 12.7 percent to 71.3 million (from 81.7 million), and the fall in the average tourist spending per night to US$ 72.2 in July/Sept. 2011, and then to US$ 69.6 in Oct./Dec. (from US$ 85 in July/Dec. 2010). The weak tourism revenues were a key factor behind the rise in the BOP current account deficit from US$ 2.6 billion to US$ 4.1 billion.

• Portfolio investment in Egypt reversed to a net outflow of US$ 3.3 billion

(from a net inflow of US$ 4.6 billion in the corresponding period), leading, in turn, to the reversal of the capital and financial account to a net outflow of US$ 2.4 billion (from a net inflow of US$ 2.8 billion).

∗ Compiled in accordance with the IMF's BOP Manual, Fifth Edition, Sept. 1993.

‐10000‐8000‐6000‐4000‐2000

02000400060008000

Q1 Q2 Q3 Q4 Q1 Q2

2010/2011 2011/2012Trade Balance Services BalanceTransfers Capital & Financial AccountOverall Balance Current Account

US$ mn BOP Main Components

- 91 -

5/2/1- Current Account

The current account deficit accelerated by 58.3 percent to US$ 4.1 billion (from US$ 2.6 billion). The deficit reflected the rise in current payments by 6.0 percent to US$ 36.7 billion (from US$ 34.6 billion), exceeding as such the rise in current receipts (1.8 percent) which registered, all in all US$ 32.6 billion (against US$ 32.0 billion). This was attributed to the following developments:

5/2/1/1- Trade Balance

Rising 7.7 percent, the trade deficit registered US$ 15.6 billion

(constituting 5.9 percent of GDP), as an outcome of the following factors:

- Import payments mounted by 7.5 percent to some US$ 29.2 billion, fueled by higher oil and non-oil imports (up by 31.5 percent and 3.2 percent, in order).

- Export proceeds scaled up by 7.3 percent to US$ 13.6 billion, supported by

the increase in oil exports (24.1 percent). Non-oil exports declined 5.4 percent.

- Compared with the period of comparison, the coverage ratio of exports to

imports remained almost stable at 46.6 percent (against 46.7 percent).

Coverage Ratio of Merchandise Exports / Merchandise Imports

46.1

49.5

55.1

60.1

46.4 46.6

0

10

20

30

40

50

60

70

Q1 Q2 Q3 Q4 Q1 Q2

2010/2011 2011/2012

%

- 92 -

5/2/1/2- Balance of Services and Transfers A. Balance of Services

The services surplus shrank 44.1 percent to US$ 3.1 billion (from US$ 5.6 billion) due to the fall in services receipts by 18.5 percent and the slight increase in services payments by 0.6 percent, as shown below:

Services receipts decreased 18.5 percent, to US$ 10.6 billion (from US$ 13.0 billion), due to the following developments:-

- Tourism revenues fell 27.1 percent to US$ 5.1 billion (from US$ 6.9

billion), owing to the 12.7 percent retreat in tourist nights, and the drop in the average tourist spending per night to US$ 72.2 and US$ 69.6 in July/Sept., and Oct./Dec. 2011, respectively (against US$ 85 in July/Dec. 2010).

Service Receipts Items as a Percentage of Total Service Receipts July/Dec.

0.5

12.7

53.2

32.0

1.6 0.6

10.3

40.447.6

1.00.0

10.0

20.0

30.0

40.0

50.0

60.0

Transportation Travel InvestmentIncome

Governmentreceipts

Others

%

2010/2011

2011/2012

- 93 -

- Other services receipts declined 33.5 percent to US$ 1.1 billion (from

US$ 1.7 billion) on the back of lower receipts of construction and contracting services, communication services, legal and consultation fees, and agencies' commissions and fees.

- Investment income receipts rolled back 47.8 percent, registering only

US$ 110.1 million (against US$ 211.1 million), because of the drop in all of its items namely: direct investment income, portfolio investment income and interest collected on banking and non-banking deposits.

- Government receipts declined 12.4 percent to US$ 60.8 million (from

US$ 69.4 million) primarily due to the fall in the expenses of both foreign embassies and international and regional institutions in Egypt.

- Transportation receipts, on the other hand, went up 3.1 percent to US$

4.3 billion, due to the rise in Suez Canal receipts by 7.0 percent to US$ 2.7 billion (from US$ 2.5 billion), and the increase in the receipts of Egyptian navigation companies.

Travel & Suez Canal Receipts (Growth Rate)

13.3 11.48.514.3

8.5 5.513.1

18.5

-34.0 -35.4-26.0 -28.3

-40

-30

-20

-10

0

10

20

30

Q1 Q2 Q3 Q4 Q1 Q2

2010/2011 2011/2012

Suez Canal dues Tourism revenues

%

- 94 -

Services payments inched up 0.6 percent, to stand at roughly US$ 7.5 billion, reflecting the following factors:

- Other services payments rose 12.5 percent to US$ 1.8 billion (from US$

1.6 billion) due mainly to the increase in the amounts transferred abroad by foreign oil companies, and communication service payments.

- Travel payments edged up 7.3 percent to US$ 1.3 billion (from US$ 1.2

billion) because of the rise in lottery pilgrims’ fees, visa card payments, tuition fees of students abroad, and the expenses of tourism and medical treatment abroad.

- Investment income payments augmented 5.5 percent to US$ 3.2 billion

(from US$ 3.0 billion) due to the rise in both profit transfers of foreign oil companies and the transfers of interest payments and dividends of bonds and securities.

Services Payments as a Percentage of Total Services Payments July/Dec.

10.78.4

23.420.9

16.5

11.2

40.7

8.0

17.5

42.7

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

45.0

Transportation Travel InvestmentIncome

Governmentreceipts

Others

%

2010/2011

2011/2012

- 95 -

On the other hand, there was a decline in:

- Transportation payments by 28.7 percent to US$ 598.4 million (from US$ 838.9 million) due to the fall in all items, mainly transfers by foreign navigation and aviation companies, and Egyptian navigation companies.

- Government expenditures by 20.8 percent to US$ 630.8 million (from

US$ 796.3 million) owing to the decline in other government expenditures and the expenses of Egyptian embassies abroad.

B- Net Unrequited Transfers

• Current unrequited transfers (net basis) rose 32.9 percent to US$ 8.4 billion in the period under review (from US$ 6.3 billion in the period of comparison), driven by the following increases in:

- Net private transfers by 28.0 percent to US$ 7.9 billion (from US$

6.2 billion) mainly remittances of Egyptians working abroad that accelerated 27.6 percent, to score US$ 8.0 billion (3.0 percent of GDP).

Investment Income Balance

‐2500

‐2000

‐1500

‐1000

‐500

0

500

Q1 Q2 Q3 Q4 Q1 Q2

2010/2011 2011/2012Investment Income receipts Investment Income payments Investment Income balance

(US$ mn)

- 96 -

- Net official transfers increased from US$ 167.3 million to US$ 522.7 million, following the rise in cash grants to the Egyptian government.

Net Current Transfers (Unrequited)

(US$ mn) .Dec/July Change

2010/2011

2011/2012 Value % )Unrequited(Net Current Transfers 6337.5 8421.8 2084.3 32.9

)c-b+a) (Net( Official Transfers -1 167.3 522.7 355.4 212.4- a- Inward cash grants 6.1 510.1 504.0 8262.3 b- Other inward grants 170.6 35.9 -134.7 -79.0 c- Official outward transfers 9.4 23.3 13.9 147.9

)c-b+a) (Net( Private Transfers -2 6170.2 7899.1 1728.9 28.0 a- Workers' remittances 6279.6 8011.3 1731.7 27.6 b- Other transfers 46.8 50.7 3.9 8.3 c- Private transfers abroad 156.2 162.9 6.7 4.3

The following chart illustrates current account receipts and payments

during the period under review and the period of comparison:

Remittances of Egyptians Working Abroad as a Percentage of GDP

1.3

1.5

1.2

1.5

1.5

1.3

0.60.70.80.9

11.11.21.31.41.51.6

Q1 Q2 Q3 Q4 Q1 Q2

2010/2011 2011/2012

%

- 97 -

5/2/2– Capital and Financial Account

The capital and financial account recorded in the first half of

2011/2012 a net outflow of US$ 2.4 billion (against a net inflow of US$ 2.8 billion) due to the following confluences:

1- Portfolio investment in Egypt∗ shifted from a net inflow of US$ 4.6

billion to a net outflow of US$ 3.3 billion, fuelled by foreigners' sales of their holdings of securities, especially Egyptian TBs, which brought about net sales of US$ 2.8 billion (against net purchases of US$ 3.1 billion).

2- Foreign direct investment in Egypt ∗∗ unfolded a net outflow of US$ 418.1

million (against a net inflow of US$ 2.3 billion) as an outcome of the following:

• Net direct investments of the oil sector switched from a net inflow of US$

607.2 million, to a net outflow of US$ 2.1 billion.

Representing foreigners' dealings in securities and Egyptian bonds and notes ∗ ∗∗ FDI represents the foreign investor that owns 10 percent or more of the capital of any resident economic

entity, or has an effective voice in its management. In Egypt, a foreign investor's equity participation is at least 10 percent or more of the capital of any enterprise.

Current Account Receipts and PaymentsJuly/Dec.

-20-18-16-14-12-10-8-6-4-202468

1012141618

Q1 Q2 Q3 Q4 Q1 Q2

2010/2011 2011/2012

US$ bn

Exports Services Receipts Net Unrequited TransfersImports Services Payments Current Account

- 98 -

• Net greenfield investments declined to US$ 1.4 billion (from US$ 1.6 billion).

• Privatization proceeds (selling of companies and local productive assets to

non-residents) went up to US$ 293.9 million (from US$ 19.2 million).

The following table illustrates the sectoral distribution of the total FDI flows in Egypt both in the reporting and comparison periods. Data analysis reveals that the sectoral distribution pattern in Egypt underwent no change; the oil sector ranked first (55.3 percent of the total), followed by the manufacturing sector (13.5 percent), services sector (9.7 percent), and the agricultural sector (1.8 percent).

Net Foreign Investment as a Percentage of GDP

-2.4

0.2

-0.30.04-0.1

0.30.7

-0.7-0.7-0.6

-0.6

2.5

-3.0

-2.0

-1.0

0.0

1.0

2.0

3.0

Q1 Q2 Q3 Q4 Q1 Q2

2010/2011 2011/2012

%

Direct Inv estment in Egy pt (Net) Portf olio Inv estment in Egy pt (Net)

- 99 -

(US$ mn) July/Dec. Economic Activity Sectors 2010/2011 Share 2011/2012 Share (%) (%) Total FDI Flows to Egypt 5463.0 100 3991.3 100.0 Oil 3760.2 68.8 2205.6 55.3 Manufacturing 681.4 12.5 540.8 13.5 Agriculture 21.4 0.4 72.7 1.8 Construction 34.8 0.6 95.7 2.4 Services 331.8 6.1 385.8 9.7

Real Estate 72.1 1.3 54.0 1.4 Finance 103.9 1.9 111.6 2.8 Tourism 7.4 0.2 14.3 0.4 Communications & IT 1.9 0.0 1.2 0.0 Other Services 146.5 2.7 204.7 5.1

Undistributed 633.4 11.6 690.7 17.3 3- Other assets and liabilities (the change in banks’ foreign assets and liabilities,

the CBE’s non-reserve foreign assets and liabilities and the counterpart to some items included in the current account) posted a net inflow of US$ 1.0 billion (against a net outflow of US$ 4.0 billion).

4- Medium- and long-term loans and facilities showed a net repayment of US$

141.9 million (against US$ 770.4 million), as an outcome of the increase in total disbursements to US$ 880.2 million (from US$ 290.2 million), and the decline in total repayments to US$ 1022.1 million (from US$ 1060.6 million).

- 100 -

5/3- External Trade

In the first half of FY 2011/2012, Egypt’s volume of trade enlarged by 7.4 percent, posting some US$ 42.8 billion (16.3 percent of GDP), compared with the corresponding period of the previous FY. Merchandise exports went up by 7.3 percent to US$ 13.6 billion, and so did imports by 7.5 percent to some US$ 29.2 billion. As a consequence, the trade deficit widened by 7.7 percent to US$ 15.6 billion (5.9 percent of GDP).

5/3/1- Distribution of Export Proceeds and Import Payments

A- Merchandise Exports

Export proceeds increased 7.3 percent to US$ 13.6 billion (from US$ 12.7 billion), supported primarily by the 24.1 percent rise in oil exports to US$ 6.7 billion (49.6 percent of total exports), as non-oil exports dropped 5.4 percent to US$ 6.8 billion (50.4 percent of total exports).

Egyptian Trade Growth Rates

0.02.04.06.08.0

10.012.0

Q3 Q4 Q1 Q2

2010/2011 2011/2012

%

Oil & Non-Oil Exports July/December

0.0

5.0

10.0

15.0

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Oil Non-Oil

US$ bn

- 101 -

Distribution of export proceeds• by degree of processing revealed an increase in the exports of fuel, mineral oils and products by 22.2 percent to some US$ 6.9 billion (from US$ 5.7 billion). Likewise, exports of semi-finished goods edged up 1.5 percent to US$ 988.8 million (from US$ 974.1 million). By contrast, exports of raw materials decreased 11.4 percent to US$ 470.4 million (from US$ 530.7 million). Similarly, finished goods dropped 4.7 percent to US$ 5.2 billion, from US$ 5.5 billion.

B- Merchandise Imports

Imports scaled up 7.5 percent, scoring some US$ 29.2 billion in the period under review (against US$ 27.2 billion in the period of comparison), due to the pickup in oil imports by 31.5 percent to US$ 5.4 billion (18.5 percent of total imports), and non-oil imports by 3.2 percent to US$ 23.8 billion (81.5 percent of the total).

• A classification of exports is illustrated in table (5/2) in the Statistical Annex.

Merchandise Exports by Degree of ProcessingJuly/December 2011/2012

Fuel, Mineral Oils and Products

50.8%

Raw Materials3.5%

Semi-Finished Goods7.3%

Finished Goods38.4%

Oil & Non- Oil ImportsJuly/December

-35.0-30.0-25.0-20.0-15.0-10.0-5.00.0

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Oil Non-Oil

US$ bn

- 102 -

Breakdown of merchandise imports by degree of use∗ reveals that the imports of fuel, mineral oils and products increased 28.7 percent to some US$ 4.3 billion (of which, oil products made up 97.6 percent, as they rose by 43.8 percent), against US$ 3.4 billion. Imports of raw materials moved up as well by 15.1 percent, registering US$ 4.1 billion (against US$ 3.6 billion), owing to the pickup in the imports of maize by US$ 0.5 billion and iron ore by US$ 0.2 billion. Imports of intermediate goods scaled up by 4.4 percent to US$ 8.4 billion (from US$ 8.0 billion) and consumer goods by 5.5 percent to US$ 6.9 billion (from US$ 6.5 billion), owing to the increase of non-durable goods by 10.2 percent to US$ 5.4 billion, and the retreat in durable goods by 8.5 percent to US$ 1.5 billion. On the other hand, imports of investment goods fell 6.9 percent, to US$ 5.0 billion (from US$ 5.4 billion).

5/3/2- Sectoral Distribution of Merchandise Transactions

In the first half of the FY, the sectoral distribution of exports and imports showed that the private sector contributed 43.9 percent of total export proceeds and 68.8 percent of total import payments. The public sector came second (47.5 percent and 22.6 percent, in order), followed by the investment sector (8.5 percent and 8.6 percent), as shown below:

∗ A classification of merchandise imports is illustrated in table (5/3) of the Statistical Annex.

Merchandise Imports by Degree of Use July/December 2011/2012

Undistributed Imports1.2%

Consumer Goods23.7%

Investment Goods17.3%

Intermediate Goods28.7%

Raw Materials14.2%

Fuel, Mineral Oils14.9%

- 103 - A- Private Sector:

The volume of exports of the private sector inched down 1.5 percent; recording some US$ 6.0 billion (43.9 percent of total exports) against US$ 6.1 billion. Finished goods made up roughly 77.4 percent of the total exports of this sector. The private sector’s main exports were fertilizers; ready-made clothes; chemicals; cotton textiles; miscellaneous edible preparations; soap, detergents and artificial waxes; pharmaceuticals; cast iron and semi-finished products; iron and steel products; plastics and articles thereof; and copper and products.

On the other hand, import payments mounted by 3.8 percent to some US$ 20.1 billion in the period under review, compared with US$ 19.3 billion (intermediate goods constituted 35.8 percent of the sector’s total imports). Its key imports were iron and steel products; organic and inorganic chemicals; dairy products; and petroleum products. B- Public Sector: The sector’s volume of exports edged up 25.7 percent to about US$ 6.5 billion (47.5 percent of total export proceeds) against US$ 5.1 billion. The chief exports were fuel, mineral oils and products (95.7 percent of the sector’s total exports); aluminum articles; cast iron, semi-finished products and rolled iron; unalloyed aluminum; cotton yarn; plastics and articles thereof; cotton textiles; and cotton. Likewise, the sector’s import payments stepped up 17.2 percent to US$ 6.6 billion, against US$ 5.6 billion, noting that fuel, mineral oils and products constituted 52.8 percent of the sector's total imports. The key imports were crude oil and products; motors, generators, transformers and parts thereof; wheat; and animal and vegetable fats, greases and oils and products. C- Investment Sector:

Exports of the investment sector shrank 21.0 percent, amounting to US$ 1.2 billion, against US$ 1.5 billion (8.5 percent of total export proceeds), of which fuel, mineral oils and products made up 49.1 percent of the total exports of this sector. The investment sector mainly exported petroleum products; cotton textiles; ready-made clothes; cast iron, semi-finished products; carpets and other floor coverings; pharmaceuticals; organic and inorganic chemicals; ceramic products; iron and steel products; fertilizers; and articles of base metals.

- 104 -

The sector’s imports rose 15.3 percent to US$ 2.5 billion, against US$ 2.2 billion. Imports of raw materials accounted for 32.0 percent of the total, and the key imports were petroleum and products; maize; meat; and car spare parts and accessories.

5/3/3- Geographical Distribution∗ of Merchandise Transactions

Trade exchange between Egypt and most economic groupings accelerated. The EU came first, accounting for 37.3 percent, followed by the Asian countries (19.2 percent), and the Arab countries (16.8 percent). Conversely, the volume of trade between Egypt and the USA, African countries, Australia and other regions shrank in the period under review. As for the relative importance of Egypt’s trade partners, the USA came first with a share of 10.9 percent, followed by Italy (9.0 percent), Germany (5.8 percent), UK (6.0 percent), China (5.3 percent) and Kuwait (3.7 percent).

1. Merchandise Exports:

According to the geographical distribution of export proceeds by economic groupings, the EU countries were the main market for Egyptian exports (absorbing 41.9 percent of the total). The Arab countries came next with 18.9 percent, followed by the Asian countries with 16.6 percent. Turning to main trade partners, Italy came first, followed by the USA, India, UK and UAE, with a combined share of 51.9 percent of total export proceeds.

∗ Geographical distribution of imports and exports is shown in table (5/4) of the Statistical Annex.

- 105 -

2. Merchandise Imports:

According to the geographical distribution of import payments by

economic groupings, the EU was also the main exporter, accounting for 35.1 percent of the total Egyptian imports. Ranking second, the Asian countries contributed 20.5 percent, followed by the Arab countries (15.8 percent). Turning to main trade partners, the USA came first, followed by China, Kuwait, Germany, UK and Switzerland (a combined share of 32.5 percent of the total imports). 5/3/4- Breakdown of Trade by Main Commodities

The volume of trade of all merchandise groups stepped up, with the exception of vehicles, cars and other means of transportation. The contribution of crude oil and its products accounted for 28.3 percent of the total volume of trade, followed by chemicals (9.6 percent), and foodstuffs (8.8 percent).

Imports by Geographical Distribution July/December

(12.0)

(10.0)

(8.0)

(6.0)

(4.0)

(2.0)

0.0

EU Other EuropeanCountries

RussianFederation &

C.I.S

USA Asian Countries(Non-Arab)

Arab Countries African Countries (Non-

Arab)

Australia andOther Regions

2010/2011

2011/2012

US$ bn

Exports by Geographical Distribution July/December

0.01.02.03.04.05.06.0

EU OtherEuropeanCountries

RussianFederation &

C.I.S

USA ArabCountries

AsianCountries

(Non-Arab)

African Countries

(Non-Arab)

Australia andOther Regions

2010/2011 2011/2012

`

US$ bn

- 106 -

1. Merchandise Exports:

Export proceeds of all merchandise groups fell, except for crude oil and its products (up by 24.1 percent) and base metals and their products (up by 1.4 percent). Crude oil and its products constituted 49.6 percent of the total export proceeds in the period under review, followed by chemicals with 9.7 percent, and cotton and products and other textile materials with 7.4 percent.

2. Merchandise Imports:

Import payments of all merchandise groups rose, except for vehicles, cars and other means of transportation. Crude oil and its products accounted for 18.5 percent of total imports, followed by foodstuffs (excluding cereals) with a share of 11.4 percent, and machinery, electrical appliances and parts thereof with 10.4 percent.

Exports by Main Commodities July/December

0.01.02.03.04.05.06.07.08.0

Oil

Food

stuf

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trans

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2010/2011 2011/2012

US$ bn

Imports by Main CommoditiesJuly/December

-6.0-5.0-4.0-3.0-2.0-1.00.0

Oil

Food

stuf

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Cot

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2010/2011 2011/2012

US$ bn

Net International Finance from AbroadJuly/December

(6058.8)

4483.16356.7

-8000-6000-4000-2000

020004000

60008000

10000

2011/20122010/20112009/2010

(US$ mn)

Net Interest Pay ments and Prof it Transf ersTotal Net Resources f rom Abroad Net International Finance f rom Abroad

- 107 -

5/4- International Finance

International finance data revealed a drop of US$ 10.6 billion in July/December 2011/2012, resulting in a net outflow of about US$ 6.1 billion, compared to a net inflow of US$ 4.5 billion during the corresponding period of the previous FY. It was mainly the result of the US$ 10.3 billion decline of the total net inflows of resources, to register a net outflow of US$ 2.9 billion (against a net inflow of US$ 7.4 billion). In addition, a rise of US$ 0.3 billion was noticed in the outflows of interest payments and profit transfers that registered US$ 3.2 billion (against US$ 2.9 billion). That was ascribable to the following main factors: (A) Total net inflows of external resources: - Total net foreign investment in Egypt (direct and portfolio) [Inflows Chart

(A)] decreased by about US$ 10.6 billion, recording net outflows of US$ 3.7 billion. It was partly traced to the decrease of US$ 7.9 billion in portfolio investment∗ in Egypt, which reversed into net outflows of US$ 3.3 billion in the period under review (against net inflows of US$ 4.6 billion in the period of comparison), as a result of the political transformation in Egypt and foreigners’ inclination to liquidate their portfolio investments in the Egyptian market. Another contributing factor was the US$ 2.7 billion drop in net FDI in Egypt, turning into a net outflow of US$ 418.1 million (against a net inflow of US$ 2.3 billion).

∗ Includes net foreign investments in Egyptian Treasury bills in the amount of US$ 4.7 billion (inflows), of which sovereign bonds issued abroad represented US$ 3.1 billion (held by non-residents).

- 108 -

- Total net foreign investments abroad (direct and portfolio) [Outflows chart

(B)] decreased by about US$ 229.8 million, unfolding net outflows of US$ 257.6 million, as a result of the decline of FDI abroad by US$ 332.5 million to only US$ 101.8 million. Meanwhile, portfolio investment abroad mounted by US$ 102.7 million, posting US$ 155.8 million.

The following chart illustrates the developments in net foreign investment

(direct and portfolio) in Egypt and abroad during the first half of 2011/2012, compared with the corresponding periods of the past three years.

- External borrowing (medium-, long- and short-term loans and facilities)

revealed a decline in net disbursements to US$ 569.6 million in the period under review (from US$ 892.0 million in the period of comparison) due to the retreat of the disbursements of loans and facilities.

Net Resources AbroadJuly/December

(101.8)

(434.3)

(1004.7)

(235.4)

(155.8)

(53.1)

(273.9)

(130.5)

(1100)

(900)

(700)

(500)

(300)

(100)

100

300

500

2008/2009 2009/2010 2010/2011 2011/2012

US$ mn

Direct Investment AbroadNet Portfolio Investment Abroad

Chart (B)

Net Resources in EgyptJuly/December

(418.1)

2253.2

2625.8

4027.6

(3309.2)

4571.1

1563.7

(7387.3)

(11000)

(9000)

(7000)

(5000)

(3000)

(1000)

1000

3000

5000

2008/2009 2009/2010 2010/2011 2011/2012

US$ mn

Net Direct Investment in Egypt Net Portfolio Investment in Egypt

Chart (A)

Net Flows of Official Grants and External Borrowing July/December

522.7505.3

167.3

233.5

892.0569.6

(500)(200)100400700

1000130016001900220025002800310034003700

2008/2009 2009/2010 2010/2011 2011/2012

US$ mn

Official grants Net external borrowing

- 109 - - Net official grants picked up by US$ 355.4 million to US$ 522.7 million,

thanks to the Qatari grant of US$ 500.0 million. (B) Net interest payments and profit transfers abroad: they accelerated by US$

253.1 million to US$ 3.2 billion (against US$ 2.9 billion during the period of comparison), essentially due to higher net profits of FDI which registered net outflows of US$ 2.5 billion (against US$ 2.4 billion). In addition to this, net interest payments of portfolio investment stepped up, leading to an outflow of US$ 348.0 million (against US$ 260.8 million).

International Finance from Abroad (Net)

(US$ mn) July/December

2010/11 2011/12* Change (-)

Net International Finance from Abroad (A-B) 4483.1 (6058.8) (10541.9) A- Total Net Resources from Abroad 7396.2 (2892.6) (10288.8) 1- Official grants (net) 167.3 522.7 355.4 2- External borrowing (net) 892.0 569.6 (322.4) 3- Direct investment in Egypt (net) 2253.2 (418.1) (2671.3) 4- Portfolio investment in Egypt (net) 4571.1 (3309.2) (7880.3) 5- Direct investment abroad (434.3) (101.8) 332.5 6- Portfolio investment abroad (net) (53.1) (155.8) (102.7) B- Net Interest Payments and Profit Transfers (2913.1) (3166.2) (253.1) 1- Interest on external loans and facilities (267.0) (258.0) 9.0

-Net interest on bank deposits abroad (12.6) (10.9) 1.7 3-Net profit transfers of FDI (2372.7) (2549.3) (176.6) 4-Net profit transfers of portfolio investment (260.8) (348.0) (87.2) *Provisional 5/4/1- Foreign Direct Investment (FDI) in Egypt∗

Net FDI in Egypt substantially contracted during the period, turning into a net outflow of US$ 418.1 million, in contrast to a net inflow of US$ 2.3 billion during the period of comparison. The main reasons were the acceleration of

∗ FDI is a category of international investment that implies the existence of a long-term relationship

between a resident in a given economy and an enterprise resident in another economy), in which a direct investor owns 10 percent or more of the ordinary shares or voting power in an incorporated enterprise, or its equivalent in an unincorporated enterprise. (Source: IMF's BOP Manual, Fifth Edition)

- 110 - capital repatriation by 37.4 percent to US$ 4.4 billion, along with the decline of total investment inflows by 26.9 percent to only US$ 4.0 billion (against US$ 5.5 billion) due to the political events.

The decline of investment inflows was chiefly caused by the fall in inflows from the USA by about US$ 1.0 billion to as low as US$ 220.7 million (against US$ 1.2 billion), being directed in the first place to oil investments that accounted for 72.7 percent. The European Union came next with a share of US$ 2.8 billion, unfolding a decline of US$ 511.8 million. Investment inflows from the rest of the world also scaled down by US$ 95.3 million to US$ 272.5 million. Meanwhile, inflows from the Arab countries increased by US$ 164.4 million, posting US$ 676.7 million (mostly for greenfield investments that made up 77.8 percent).

The sectoral distribution of total FDI inflows during the period under

study showed that the petroleum sector received 55.3 percent of the total, of which the European Union provided the bulk of 82.3 percent (55.4 percent from UK and 16.0 percent from Belgium), compared with 7.4 percent from the USA, 5.1 percent from the Arab countries (3.1 percent from the UAE, 0.5 percent from Saudi Arabia and 0.4 percent from Qatar), and 5.2 percent from the rest of the world (Switzerland 1.8 percent, Ukraine 1.0 percent and India 0.9 percent).

Total FDI in Egypt by Economic Sector July/December 2011/2012

US$ millionOther 204.7

Tourism 14.3

Finance 111.6

Real Estate 54.0

Communications & IT 1.2

Undistributed 690.7

Serv ices 385.8

Manuf acturing 540.8

Agriculture 72.7

Petroleum 2205.6

Construction 95.7

- 111 -

Breakdown of FDI inflows by investment purpose reveals that petroleum

investments ranked first as stated above, amounting to US$ 2.2 billion or 55.3 percent of the total. Greenfield investments came next with a share of US$ 1.4 billion (35.9 percent), followed by real estate investments of about US$ 54.0 million (1.4 percent).

(418.1)

2253.22625.84027.6

(5000.0)(4000.0)(3000.0)(2000.0)(1000.0)

0.01000.02000.03000.04000.05000.06000.0

2008/2009 2009/2010 2010/2011 2011/2012Outf lows Proceeds f rom selling local enitities to non-residents Petroleum sector inv estments Transf ers f or buy ing real estates in Egy pt by non-residents Greenf ield Inv estmentNet Foreign Direct Inv estment in Egy pt

Net FDI in Egypt July / DecemberUS$ mn

- 112 -

Geographical Distribution of FDI in Egypt (US$ mn)

July/December

2010/2011 2011/2012* Change + (-)

Flows of FDI in Egypt (Net) 2253.2 (418.1) (2671.3) Inflows 5463 3991.3 (1471.7) USA 1249.7 220.7 (1029.0) EU Countries 3333.2 2821.4 (511.8) Germany 137.5 109.4 (28.1) France 106.6 154.2 47.6 UK 2333.9 1634.5 (699.4) Italy 124.5 93.4 (31.1) Greece 25.8 54.8 29.0 Spain 28.0 34.0 6.0 The Netherlands 105.4 59.8 (45.6) Belgium 438.5 374.7 (63.8) Luxemburg 0.1 1.0 0.9 Denmark 14.8 0.4 (14.4) Sweden 1.0 294.4 293.4 Austria 1.2 2.2 1.0 Cyprus 6.8 0.7 (6.1) Romania 0.3 0.2 (0.1) Latvia 0.2 0.0 (0.2) Ireland 4.9 0.4 (4.5) Poland 1.8 2.0 0.2 Czech Republic 0.1 5.0 4.9 Malta 0.0 0.3 0.3 Estonia 0.2 0 (0.2) Hungary 1.6 0.0 (1.6) Arab Countries 512.3 676.7 164.4 Saudi Arabia 131.5 129.4 (2.1) UAE 228.5 326.1 97.6 Tunisia 0.3 3.6 3.3 Algeria 0.0 10.8 10.8 Kuwait 19.0 24.4 5.4 Lebanon 6.0 30.0 24.0 Libya 6.8 0.9 (5.9) Jordan 1.5 3.6 2.1 Bahrain 39.3 118.1 78.8 Qatar 40.3 20.7 (19.6) Oman 6.6 4.1 (2.5) Yemen 14.3 1.4 (12.9) Sudan 0.2 0.1 (0.1) Others 18.0 3.5 (14.5) Other Countries 367.8 272.5 (95.3) Switzerland 104.7 82.3 (22.4) Japan 13.7 20.8 7.1 Canada 5.3 7.7 2.4 China 33.3 33.1 (0.2) Australia 3.2 0.2 (3.0) India 13.4 20.3 6.9 Turkey 12.6 6.9 (5.7) Norway 1.1 2.8 1.7 Other countries 180.5 98.4 (82.1) Capital Repatriation** (3209.8) (4409.4) (1199.6) * Provisional ** Capital repatriation (outflows) means that a direct investor recovers his share in the capital of an investment enterprise - in case of partial or full disposal - and transfers part or all of it abroad.

- 113 -

5/4/2- External Official Grants

The following chart clarifies the rise of the net transfers of official grants (cash and in-kind) to US$ 522.7 million during July/December 2011/2012 (against US$ 167.3 million). The pickup is attributed to the increase of inward grants, as cash grants highly increased by some US$ 504.0 million to US$ 510.0 million, because of the grant from Qatar (US$ 500.0 million). Meanwhile, inward in-kind grants retreated by US$ 134.7 million (79.0 percent), standing at US$ 35.9 million. On the other hand, official grants transferred abroad surged by about US$ 13.9 million, reaching US$ 23.3 million (against US$ 9.4 million).

New grant commitments: According to the data of the Ministry of International Cooperation, new grant commitments during the reporting period declined by about US$ 175.5 million or 78.1 percent to US$ 49.1 million, due basically to lower commitments with the USA, the European Commission, and the World Bank.

366.0466.9 510.1

161.9

454.7

6.1

35.9

170.6

(23.3)(9.4)(19.4)(22.6)-150.0

-50.050.0

150.0250.0350.0450.0550.0650.0750.0850.0950.0

2008/2009 2009/2010 2010/2011 2011/2012

Cash inw ard grants In-Kind inw ard grants Outw ard grants

Transfers of Official Grants during July/DecemberUS$ mn

- 114 -

Official Grants: New Commitments and Net Actual Flows (US$ mn)

July/December 2010/11 2011/12* 2010/11 2011/12*

Actual Flows Commitments Net Inflows 167.3 522.7 Inflows: 176.7 546.0 224.6 49.1 USA 143.2 32.6 161.6 15.5 Japan 13.3 0.5 6.5 Germany 11.2 10.6 17.8 20.5 Norway 6.2 China 6.7 0.3 Canada 0.3 0.2 Austria 0.4 Qatar 500.0 Belgium 1.5 Switzerland 0.1 0.1 UAE 0.1 Kuwait 0.4 World Bank 12.2 3.0 European Commission 25.8 2.0 Other Countries & Organizations 1.1 0.1 1.0 1.6 Outflows (9.4) (23.3) *Provisional

The sectoral distribution of grant commitments demonstrates that most of the grants to the services sector (79.3 percent) were directed to educational and health services, and financial intermediation services. Meanwhile, productive sectors accounted for 20.7 percent of grant commitments, as shown in the following table.

Breakdown of Official Grant Commitments by Beneficiary

(US$ mn) July/December

2010/2011 % 2011/2012* % Change Total 224.6 100.0 49.1 100.0 (175.5) Productive Sectors 59.1 26.3 10.2 20.7 (48.9) Agriculture and irrigation 33.0 14.7 2.8 5.7 (30.2) Energy & electricity 26.1 11.6 4.7 9.5 (21.4) Water & sanitation 0.0 0.0 2.7 5.5 2.7 Services Sectors 165.5 73.7 38.9 79.3 (126.6) Financial intermediaries & supporting services 24.6 10.9 1.2 2.4 (23.4) Insurance and social solidarity 0.0 0.0 10.9 22.3 10.9 General government 62.6 27.9 0.7 1.4 (61.9) Education and health 78.3 34.9 4.5 9.2 (73.8) Others 0.0 0.0 21.6 44.0 21.6 *Provisional

- 115 - 5/4/3- External Debt

Total external debt (public and private - all maturities) retreated 3.5 percent

or US$ 1.2 billion to US$ 33.7 billion at end of December 2011, compared to US$ 34.9 billion at end of June. The drop was an outcome of the following developments:

• The depreciation of the value of borrowing currencies versus the US dollar by the equivalent of US$ 1184.9 million;

• The net disbursements of loans and facilities in the amount of US$ 348.0 million; and

• The decrease of the balance of Egyptian bonds and notes in international markets by US$ 376.1 million (partly due to purchases of about US$ 189.2 million by resident entities, in addition to the repayment of US$ 186.9 million for the redemption of the second tranche of euro sovereign bonds held with non-residents that reached maturity in July 2011).

The public sector was the main obligor, with a share of 94.5 percent of the total external debt (US$ 31.8 billion) at end of December 2011. The remainder of 5.5 percent (US$ 1.9 billion) was owed by the private sector. External Debt Structure∗

The breakdown of external debt by maturity indicates that medium- and

long-term loans and facilities (guaranteed and non-guaranteed) represented about 91.0 percent of the total debt (US$ 30.7 billion) at end of December 2011.

Long-term debt posted US$ 29.9 billion, while medium-term debt

amounted to US$ 820.1 million (mostly bonds issued in LE abroad). The remaining 9.0 percent (US$ 3.0 billion) represented short-term debt, as shown in the following chart:

* The structure of Egypt’s external debt by currency of borrowing is one of the key indicators used by the CBE

to determine the structure of international reserves by currency.

- 116 -

- About US$ 16.1 billion∗ of long-term debt (47.9 percent) was owed to Paris Club creditors, while debt to non-member countries of the Paris Club reached US$ 1.1 billion (3.1 percent).

- Debt to international and regional organizations amounted to US$ 11.0

billion (32.6 percent) of the total debt at end of December 2011, down by US$ 200.4 million compared with the end of June.

*Representing bilateral loans (rescheduled and non-rescheduled) and suppliers ’ and buyers’ credits.

Total External Debt (US$ 33692.7 mn)

Short-Term Debt 3025.6

Medium-Term Debt 820.1

Long-Term Debt 29847.0

International Organizations

10524.1

Paris Club Debt 16122.0

Guaranteed Bonds 1250.0

Other Bilateral Loans 1051.5

Sovereign Bonds 876.5

Suppliers’ Credit 22.9

Rescheduled Debts 11758.4

Non-Rescheduled Debts 4363.6, of which 353.2 are buyers' credit

LE denominated Bonds 318.4

International Organizations

484.9

Private Sector Non-Guaranteed Debt 16.3

Suppliers’ Credit

0.5

Trade Facilities

2123.3

Deposits of Non-Residents

902.3

US$ mn

- 117 - - The stock of Egyptian bonds and notes floated abroad (holdings of

non-residents) posted US$ 2.4 billion or 7.3 percent of the total debt, specifically:

• US$ 1.3 billion of guaranteed government securities issued in

September 2005 and falling due in September 2015. • US$ 318.4 million of LE government bonds issued abroad in July

2007 and falling due in July 2012.

• US$ 876.5 million worth of TBs issued abroad in April 2010, and reaching maturity over two tranches in 2020 and 2040.

- Non-guaranteed debt of the private sector posted US$ 16.3 million. - Short-term debt mounted by US$ 268.1 million, standing at US$ 3.0

billion (58.2 percent of which was owed by the private sector). The rise was largely brought about by the increase of short-term trade facilities by 19.0 percent to US$ 2.1 billion. Nonetheless, it was offset by the retreat of short-term deposits of non-residents by 7.2 percent to only US$ 902.3 million.

External Debt by Debtor Breakdown of external debt by debtor at end of December 2011 indicates: - a decline of the debts of the central and local government by US$ 1.4 billion to

US$ 25.7 billion (76.4 percent of the total debt), of banks by the equivalent of US$ 154.5 million to only US$ 1.6 billion; and

- a rise of the debt owed by the monetary authority by US$ 139.0 million to US$

1.6 billion and by other sectors by US$ 176.5 million to US$ 4.8 billion.

- 118 - -

The above developments were reflected in the sectoral distribution of the

debt. The share of the other sectors picked up to 14.1 percent and the monetary authority’s to 4.8 percent. Meanwhile, banks' share and the central government’s dropped to 4.7 percent and 76.4 percent of the total, respectively. Hence, the Egyptian government is the major obligor in terms of external debt.

Total External Debt by Debtor

)US$ bn(

June 2011 December 2011

External Debt by DebtorShare in Total Increase/Decrease

during July /December

(1374.0)

585.3

65.1203.9

139.0

1121.6

(154.5)

20.8127.0

442.5488.3

176.5

-2000.0-1500.0-1000.0-500.0

0.0500.0

1000.01500.02000.0

2009/2010 2010/2011 2011/2012

(US$ mn)

Central & Local Gov ernmentMonetary Authority BanksOther Sectors

Central & Local

Gov ernment 27.1

Other Sectors

4.6

Banks 1.7

Monetary Authority

1.5Central &

Local Government

25.7

Other Sectors

4.8

Banks 1.6

Monetary Authority

1.6

External Debt by Creditor

Egyptian bonds and

notes7.3%

France9.6%

USA9.0%

Japan12.8%

Arab countries4.8%

United Kingdom

3.6%

Germany10.4%

International organizations

32.6%

Other countries

9.9%

December2011

External Debt by Major CurrenciesEnd of December 2011

Euro26.2%

Kuw aiti dinar6.4%

Sw iss franc1.5%

Egyptian pound1.7%

Japanese yen

13.4%

US dollar 40.6%

Other currencies

1.9%

SDRs8.3%

- 119 -

External Debt by Main Creditor

The breakdown of external debt by creditor shows that 41.8 percent was owed to the four major member countries of Paris Club, namely Japan (12.8 percent), Germany (10.4 percent), France (9.6 percent) and USA (9.0 percent). Debt to the Arab countries represented 4.8 percent, mainly owed to Kuwait (2.6 percent), Saudi Arabia (0.8 percent) and UAE (0.3 percent). In the meantime, debt to international organizations made up 32.6 percent. External Debt by Currency of Borrowing

The distribution of external debt by currency of borrowing illustrates that the US dollar was the main currency of borrowing, with a relative importance of 40.6 percent, due to outstanding obligations in US dollar to countries other than the USA. The euro came second with a relative importance of 26.2 percent, the Japanese yen (13.4 percent), SDRs (8.3 percent), and the Kuwaiti dinar (6.4 percent). These currencies combined represented 54.3 percent of the total, whereas the other currencies represented 5.1 percent, of which the Egyptian pound accounted for 1.7 percent.

- 120-

Debt Service

As for external debt service (medium- and long-term), total payments increased by US$ 165.7 million during July/December 2011/2012, to score US$ 1.5 billion. The increase was ascribed to the rise of principal repayments by about US$ 148.4 million to US$ 1.2 billion, and of interest payments by about US$ 17.3 million to US$ 338.9 million. Main Debt Indicators

The main debt indicators show a slight increase in the period under review, due to the pickup of the debt service payments, on the one hand, and the fall of the exports of goods and services, on the other. Consequently, the respective ratios of debt service to the exports of goods and services and to current receipts went up to 6.4 percent and 4.7 percent, in order, during the first half of 2011/2012 (against 5.4 percent and 4.3 percent in the respective half a year earlier).

The ratio of short-term debt to NIR rose to 16.7 percent at end of

December 2011 (from 8.7 percent at end of December 2010), as a result of the plunge of NIR by 49.7 percent. Meanwhile, the ratio of short-term debt to total debt maintained the same level of the period of comparison (9.0 percent).

External Debt IndicatorsJuly/December

139.1118.3

12.917.0

386.8426.5

0.050.0

100.0150.0200.0250.0300.0350.0400.0450.0500.0

2008/09 2009/10 2010/11 2011/12

%

340.0

360.0

380.0

400.0

420.0

440.0

460.0

(US$)

External Debt / Exports of Goods and Services External Debt /GDP External Debt per capita (US$) (right axis)

- 121 -

In contrast, the ratio of external debt to GDP improved, declining to 12.9

percent (from 14.8 percent). Moreover, external debt per capita decreased to US$ 386.8 in the period under review, from US$ 414.6 in the period of comparison.

The following table draws a comparison between external debt indicators in Egypt and the other economic regions. The table indicates that the level of external debt in Egypt remains within safety limits according to the IMF classification. External debt/GDP ratio (15.2 percent) is considered one of the best levels worldwide. In figures, external debt levels ranged between 15.3 percent for developing Asian countries and 66.0 percent for the group of East and Central Europe. The ratio of debt service to the exports of goods and services recorded 5.7 percent, lower than the forecasted world levels that ranged between 11.0 percent for the group of sub-Saharan Africa, and 55.8 percent for East and Central Europe in 2011, according to the World Economic Outlook released by the IMF in September 2011.

External Debt Indicators July/December

4.75.6

16.7

8.3 9.08.8

6.46.6

0.02.04.06.08.0

10.012.014.016.018.0

2008/09 2009/10 2010/11 2011/12

%

Debt Service / Current Receipts (including transfers)Short-term Debt / Net International ReservesShort-term Debt / Total External DebtDebt Service / Exports of Goods and Services

- 122 -

Main External Debt Indicators in Egypt versus a Group of Economic Regions

External Debt/

GDP External Debt/

Exports of Goods & Services

Debt Service/ Exports of Goods

& Services Region

2010 2011 2010 2011 2010 2011 East & Central Europe 65.5 66.0 179.2 164.2 59.7 55.8 Asia 15.3 15.3 48.8 47.5 18.5 20.0 Latin America & the Caribbean 21.2 20.1 102.5 93.1 31.2 29.2 Sub-Saharan Africa 22.8 21.5 65.5 57.6 15.8 11.0 Middle East & North Africa 31.9 27.1 65.9 52.4 17.2 15.3 Egypt* 15.9 15.2 71.0 71.4 5.5 5.7 Source: World Economic Outlook, Statistical Annex, September 2011. *According to the CBE - BOP data, New Commitments on Loans and Facilities New loan and facility commitments during July/December 2011/2012, reached US$ 1.3 billion (mostly with international and regional organizations (US$ 1.2 billion or 93.1 percent of the total), while new commitments on bilateral loans reached about US$ 91.9 million or 6.9 percent). Thus, total commitments increased by about US$ 818.0 million above the figure of the period of comparison, because of new commitments with the African Development Bank and the World Bank.

- 123 -

Statistical Section

(1) Indicators of Development and Economic Growth

(1/1) GDP at Factor Cost by Economic Sector (at 2006/2007 Prices) (1/2) GDP by Expenditure (at 2006/2007 Prices) (1/3) Consumer Price Index (Urban) (January 2010=100) (1/4) Producer Price Index (2004/2005=100) (2) Monetary Aggregates (2/1/1) CBE Financial Position: Reserve Money and Counterpart Assets (2/1/2) Banking Survey: Domestic Liquidity and Counterpart Assets (2/1/3) Banking Survey: Deposits in Local Currency (2/1/4) Banking Survey: Deposits in Foreign Currencies (2/1/5) Banking Survey: Foreign Assets and Liabilities (2/1/6) Banking Survey: Domestic Credit and Other Items (Net) (2/1/7) Total Saving Vessels (2/1/8) Bank Lending and Discount Balances to Business Sector

Financial Sector (2/2/1) Structure of Egyptian Banking System (2/2/2) Local Mutual Funds Authorized and Operating as at 31/12/2011 Activity of the Banking System

Central Bank of Egypt

(2/3/1) Note Issued by Denomination (2/3/2) Currency in Circulation outside CBE by Denomination (2/3/3) CBE: Transactions via RTGS and SWIFT

- 124 -

Banks

(2/4/1) Aggregate Financial Position (2/4/2) Deposits by Maturity (2/4/3) Deposits by Sector (2/4/4) Deposits by Economic Activity (2/4/5) Portfolio Investments by Sector (2/4/6) Lending and Discount Balances by Sector (2/4/7) Credit by Sector (2/4/8) Lending and Discount Balances by Economic Activity

Interest Rates

(2/5/1) Discount and Interest Rates on Deposits and Loans in Egyptian Pound (2/5/2) Domestic Interest Rates on 3- Month Deposits in Major Currencies (2/5/3) Interest Rates on Treasury Bills (Weekly Weighted Averages) (3) Non-Banking Financial Sector (3/1) Companies Listed on the Egyptian Exchange (3/2) Trading in Shares on the Egyptian Exchange (3/3) Trading in Bonds on the Egyptian Exchange (3/4) Foreigners' Transactions on the Egyptian Exchange (3/5) Global Depository Receipts (GDRs) (3/6) Outstanding Balance of Treasury Bills (Quarterly) (3/7) Outstanding Balance of Treasury Bills (Weekly) (3/8) Outstanding Balance of Treasury Bonds (End of Dec. 2011)

- 125 - (4) Public Finance & Domestic Public Debt (4/1) Consolidated Fiscal Operations of the General Government (Expenditures) (4/2) Consolidated Fiscal Operations of the General Government (Revenues) (4/3) Summary of the Consolidated Fiscal Operations of the General

Government (4/4) Gross Domestic Debt (4/5) National Investment Bank (Resources & Uses) (5) External Transactions

(5/1) Balance of Payments (5/2) Exports by Degree of Processing (5/3) Imports by Degree of Use (5/4) Regional Distribution of Exports and Imports (5/5) Average LE Exchange Rates (In piasters per foreign currency unit) (5/6) External Debt by Type (5/7) Distribution of External Debt by Main Currencies

(LE mn)

Public Private Total Public Private Total Public Private Total

Total GDP 159621.9 279496.0 439117.9 161542.4 279111.4 440653.8 1.2 -0.1 0.3Agriculture, irrigation & Fishing 9.3 60884.0 60893.3 9.6 62724.0 62733.6 3.2 3.0 3.0 Extractions 46358.0 10618.0 56976.0 45950.0 10566.0 56516.0 -0.9 -0.5 -0.8

Oil 20703.0 3549.0 24252.0 20543.0 3531.0 24074.0 -0.8 -0.5 -0.7Natural gas 25460.0 5548.0 31008.0 25207.0 5493.0 30700.0 -1.0 -1.0 -1.0Others 195.0 1521.0 1716.0 200.0 1542.0 1742.0 2.6 1.4 1.5

Manufacturing Industries 10888.0 57467.0 68355.0 10473.0 55790.0 66263.0 -3.8 -2.9 -3.1Oil refining 1790.0 1521.0 3311.0 1631.0 1434.0 3065.0 -8.9 -5.7 -7.4Others 9098.0 55946.0 65044.0 8842.0 54356.0 63198.0 -2.8 -2.8 -2.8

Electricity 5654.0 691.0 6345.0 5926.0 679.0 6605.0 4.8 -1.7 4.1Water 1511.0 0.0 1511.0 1574.0 0.0 1574.0 4.2 0.0 4.2Sewerage 356.0 0.0 356.0 370.0 0.0 370.0 3.9 0.0 3.9Construction & Building 2470.0 20927.0 23397.0 2419.0 20602.0 23021.0 -2.1 -1.6 -1.6Transportation & Storage 4120.0 15054.0 19174.0 4150.0 15129.0 19279.0 0.7 0.5 0.5Communications 5846.0 12201.0 18047.0 5684.8 13032.3 18717.1 -2.8 6.8 3.7Information 328.0 631.0 959.0 338.0 655.0 993.0 3.0 3.8 3.5Suez Canal 14280.0 0.0 14280.0 15310.0 0.0 15310.0 7.2 0.0 7.2Wholesale & Retail Trade 1665.0 45006.0 46671.0 1701.0 44949.0 46650.0 2.2 -0.1 0.0Finance 11076.0 6224.0 17300.0 11162.0 6275.0 17437.0 0.8 0.8 0.8Insurance 1082.0 326.0 1408.0 1089.0 328.0 1417.0 0.6 0.6 0.6Social Solidarity 15084.0 0.0 15084.0 15398.0 0.0 15398.0 2.1 0.0 2.1Tourism 173.0 20555.0 20728.0 176.0 18775.1 18951.1 1.7 -8.7 -8.6Real Estate 301.0 11138.0 11439.0 306.0 11421.0 11727.0 1.7 2.5 2.5

Real Estate Ownership 196.0 5835.0 6031.0 200.0 6040.0 6240.0 2.0 3.5 3.5Business Services 105.0 5303.0 5408.0 106.0 5381.0 5487.0 1.0 1.5 1.5

General Government 38032.0 0.0 38032.0 39107.0 0.0 39107.0 2.8 0.0 2.8Sٍocial Services 388.6 17774.0 18162.6 399.0 18186.0 18585.0 2.7 2.3 2.3

Education 0.0 4891.0 4891.0 0.0 4992.0 4992.0 0.0 2.1 2.1Health 371.0 5521.0 5892.0 380.0 5665.0 6045.0 2.4 2.6 2.6Others 17.6 7362.0 7379.6 19.0 7529.0 7548.0 8.0 2.3 2.3

Source : Ministry of Planning

- 126 -

(1/1) GDP at Factor Cost by Economic SectorAt 2006/2007 prices

SectorsJuly / Dec. Growth Rate %

2010/2011 2011/2012 2011/2012

2010/2011 2011/2012 2010/2011 2011/2012 2010/2011 2011/2012

1-GDP at Market Price(2+5-6) 458.6 460.1 100.0 100.0 5.5 0.3

2- Total Domestic Expenditure (3+4) 475.0 491.8 103.5 106.9 5.7 3.5

3- Final Consumption 392.1 411.8 85.5 89.5 5.0 5.0

Private 343.5 361.8 74.9 78.6 5.2 5.3

Government 48.6 50.0 10.6 10.9 3.6 2.9

4- Gross Capital Formation 82.9 80.0 18.0 17.4 9.4 -3.5

Investments 82.9 71.0 18.0 15.4 14.7 -14.4

Change in stock 0.0 9.0 0.0 2.0 .. ..

5- Exports of Goods & Services 132.8 126.5 29.0 27.5 10.9 -4.7

6- Imports of Goods & Services 149.2 158.2 32.5 34.4 10.9 6.0

Source : Ministry of planning..Not available

- 127 - (1/2) GDP by Expenditure

( At 2006/ 2007 prices )

Value at LE bn Structure % Growth Rate %

July/ Dec.

Relative Weights

June Dec. June Dec.

General Index 100.00 102.4 109.7 114.5 120.1 7.1 4.9

Food & Non-Alcoholic Beverages 39.92 105.9 116.1 126.0 131.4 9.6 4.3

Alcoholic Beverages, Tobacco and Narcotics 2.19 100.0 146.9 169.9 201.8 46.9 18.8

Clothing & Footwear 5.41 100.0 103.1 102.2 106.8 3.1 4.5

Housing , Water, Electricity, Gas & Fuel 18.37 99.3 99.5 100.4 109.0 0.2 8.6

Furnishings, Household Equipment & Routine Maintenance of the House 3.77 102.6 103.7 105.2 109.6 1.1 4.2

Health Care 6.33 100.0 101.3 101.9 102.0 1.3 0.1

Transportation 5.68 100.6 101.2 101.7 102.4 0.6 0.7

Communications 3.12 99.9 99.9 100.0 94.9 0.0 -5.1

Recreation & Culture 2.43 102.4 105.7 108.4 116.7 3.2 7.7

Education 4.63 100.0 124.3 124.3 136.6 24.3 9.9

Restaurants & Hotels 4.43 100.2 111.8 112.4 114.0 11.6 1.4

Miscellaneous Goods & Services 3.72 100.7 101.8 103.2 104.3 1.1 1.1

Source: Central Agency for Public Mobilization and Statistics (CAPMAS) (Monthly CPI Bulletin).

* The 9th series of CPI was introduced in August 2010. The weights involved in the formation of the Index were taken from the results of the 2008/2009

survey of income, expenditure and consumption using January 2010 as a base period.

- 128 -

July/Dec. 2010/2011 2011/2012

Groups

(1/3) Consumer Price Index (Urban) (Jan. 2010 = 100) *

2010 2011Inflation Rate (%)

Relative Weights

June Dec. June Dec.

All Items 100.0 160.9 174.9 192.1 191.0 8.7 -0.6

Agriculture and Fishing 25.1 210.9 225.4 261.4 254.4 6.9 -2.7

Mining and Quarrying 21.8 147.8 174.3 201.5 198.5 17.9 -1.5

Manufacturing Industries 38.9 149.6 158.9 165.0 167.2 6.2 1.3

Electricity, Gas, Steam and Air Conditioning Supply 2.3 140.3 140.3 140.3 140.3 0.0 0.0

Water Supply, Sewerage, Waste Management and Remediation Activities 2.0 146.5 146.5 146.5 157.3 0.0 7.4

Transportation and Storage 2.8 124.8 127.3 127.3 131.1 2.0 3.0

Accommodation and Food Service Activities 5.0 110.6 129.4 125.1 127.3 17.0 1.8

Information and Communication Activities 2.1 112.5 112.5 112.5 112.5 0.0 0.0

Source: Central Agency for Public Mobilization and Statistics (CAPMAS) ( Monthly PPI Bulletin issued every two months ).

(1/4) Producer Price Index (2004/2005 = 100)

Groups2010 2011 Inflation Rate (%)

July/Dec. 2010/2011 2011/2012

-129 -

2008

Dec. June Dec. June Dec. June Dec.Reserve Money 167906 175104 193063 203071 218393 250992 257346

Currency in circulation outside CBE * 121280 126268 134039 144253 153209 179096 187292Banks' deposits in local currency 46626 48836 59024 58818 65184 71896 70054

Counterpart Assets 167906 175104 193063 203071 218393 250992 257346Net Foreign Assets 184397 171732 177126 190234 198207 147197 96828Foreign Assets 185787 173055 185621 198605 206313 156331 107201

Gold 8695 9385 9385 12393 12393 16343 16343Foreign securities 149271 150556 153613 162247 176192 114608 66373Foreign currencies 27821 13114 22623 23965 17728 25380 24485

Foreign Liabilities + 1390 1323 8495 8371 8106 9134 10373Net Domestic Assets -16491 3372 15937 12837 20186 103795 160518Net Claims on Government 86147 68613 103989 80611 100252 102562 153250

Claims; of which: 158886 146899 176961 150288 176458 189621 233811 Government securities 123123 121708 127474 121533 130597 130597 129097

Deposits 72739 78286 72972 69677 76206 87059 80561Net Claims on Banks 4169 334 7048 29010 39847 147 -1665

Claims 24509 21786 27445 49863 60877 23496 21688Deposits in foreign currencies 20340 21452 20397 20853 21030 23349 23353

Other Items (Net) + -106807 -65575 -95100 -96784 -119913 1086 8933Source : Central Bank of Egypt.* Including subsidiary coins & notes issued by the Ministry of Finance.

- 130 -

End of2009 2010 2011

(2/1/1) CBE Financial Position: Reserve Money and Counterpart Assets

(LE mn)

+ According to the updated statistical treatment adopted by the IMF, SDR allocations are to be classified as foreign liabilities rather than capital accounts, as of August 2009.

2008End of Dec. June Dec. June Dec. June Dec.

1- Domestic Liquidity 791378 831211 866354 917459 973962 1009411 1038871

A- Money Supply 174460 182991 196973 214040 223456 248707 255581

Currency in circulation outside the banking system 114036 118146 126666 135209 143633 167887 176578

Demand deposits in local currency 60424 64845 70307 78831 79823 80820 79003

B- Quasi-Money 616918 648220 669381 703419 750506 760704 783290

Time & saving deposits in local currency 453733 481054 514528 545303 592451 583732 602253

Demand and time & saving deposits in foreign currencies 163185 167166 154853 158116 158055 176972 181037

2- Counterpart Assets

Net foreign assets + 248471 254134 255857 282408 305252 253500 190179

Domestic credit 661796 695326 746813 775268 805057 892766 987400

Other items (net) + -118889 -118249 -136316 -140217 -136347 -136855 -138708

2011(LE mn)

- 131 -

+ According to the new classification of SDR allocations referred to in table (2/1/1).

2009

Source : Central Bank of Egypt.

2010

(2/1/2) Banking Survey: Domestic Liquidity and Counterpart Assets

2008

End of Dec. June Dec. June Dec. June Dec.

Total Deposits in Local Currency 514157 545899 584835 624134 672274 664552 681256

1- Demand Deposits 60424 64845 70307 78831 79823 80820 79003

Public business sector * 6176 7145 6671 8938 7296 6670 5834

Private business sector 31098 33240 36380 41246 41884 43324 40763

Household sector 23758 25235 27790 29510 31294 31645 33341

Minus: Purchased cheques & drafts 608 775 534 863 651 819 935

2- Time and Saving Deposits 453733 481054 514528 545303 592451 583732 602253




- 132 -

2009


2010

* Including all public sector companies subject or not to Law No. 203 for 1991.

2011

(LE mn)

(2/1/3) Banking Survey: Deposits in Local Currency


Total Deposits in Foreign Currencies 163185 167166 154853 158116 158055 176972 181037

1- Demand Deposits 25889 32050 29124 33901 34072 41298 40850




Minus: Purchased cheques & drafts 191 100 112 140 76 66 154

2- Time and Saving Deposits 137296 135116 125729 124215 123983 135674 140187




Source: Central Bank of Egypt.

- 133 -

2009

* including all public sector companies subject or not to Law No. 203 for 1991.

2010 2011(LE mn)

(2/1/4) Banking Survey: Deposits in Foreign Currencies


Net Foreign Assets 248471 254134 255857 282408 305252 253500 190179

1- Foreign Assets 278781 282914 291067 322209 354417 295480 230942

Central Bank of Egypt 185787 173055 185621 198605 206313 156331 107201

Banks 92994 109859 105446 123604 148104 139149 123741

2- Foreign Liabilities 30310 28780 35210 39801 49165 41980 40763

Central Bank of Egypt + 1390 1323 8495 8371 8106 9134 10373

Banks 28920 27457 26715 31430 41059 32846 30390

(LE mn)

- 134 -


2009


2010 2011

(2/1/5) Banking Survey: Foreign Assets and Liabilities


1- Domestic Credit 661796 695326 746813 775268 805057 892766 987400

Net claims on the government (A+B-C) 244418 273122 328752 326141 364674 437337 515774

A-Securities 343408 397804 432442 440410 472343 542792 574917

B-Credit facilities 67443 55939 83678 68139 84034 98826 141941

C-Government deposits 166433 180621 187368 182408 191703 204281 201084

Claims on public business sector * 28839 33146 35633 29985 32478 32981 38838

Claims on private business sector 302159 304470 293504 326350 312216 323241 326888

Claims on household sector 86380 84588 88924 92792 95689 99207 105900

2- Other Items (Net) -118889 -118249 -136316 -140217 -136347 -136855 -138708

Capital accounts+ -143394 -148332 -151012 -170877 -151125 -146543 -157233

Net unclassified assets and liabilities 24505 30083 14696 30660 14778 9688 18525

* Including all public sector companies subject or not to law No. 203 for 1991.

2011

(2/1/6) Banking Survey: Domestic Credit and Other Items (Net)

- 135 -


2009


2010(LE mn)


Total Saving Vessels 760522 803063 756363 794350 843948 855132 879209

Savings at the Banking System 616918 648220 669381 703419 750506 760704 783290

Time & saving deposits in local currency 453733 481054 514528 545303 592451 583732 602253

Demand and time & saving deposits in foreign currencies 163185 167166 154853 158116 158055 176972 181037

Net Sales of Investment Certificates 78586 81262 86982 90931 93442 94428 95919

Post Office Saving Deposits 65018 73581 Not Available

Not Available

Not Available

Not Available

Not Available


- 136 -

2009 2010

(LE mn)

(2/1/7) Total Saving Vessels

2011


Total 28667 32880 35375 29812 32225 32688 38641

In Local Currency 20690 23725 27684 21050 23778 24560 29761

Agriculture 4 3 15 2 104 105 151

Manufacturing 10810 13167 12444 9258 10127 10167 13766

Trade 3272 4098 5369 1737 1094 918 1429

Services 6604 6457 9856 10053 12453 13370 14415

In Foreign Currencies 7977 9155 7691 8762 8447 8128 8880

Agriculture - - - - - - -

Manufacturing 3768 4176 2609 3294 2919 2237 2074

Trade 810 1281 1514 1567 971 934 975

Services 3399 3698 3568 3901 4557 4957 5831


(2/1/8) Bank Lending and Discount Balances to Business Sector

Public Business Sector *

-137 -

2010

* including all public sector companies subject or not to Law No. 203 for 1991.

2011(LE mn)

2009


Total 272681 267885 256675 287148 271414 284755 291379


Agriculture 5392 4718 4195 4461 4396 6294 5654

Manufacturing 70083 74053 68531 76229 68308 78448 83212

Trade 40899 39881 38085 49486 37300 36265 36475

Services 60905 58455 54850 55518 60242 66803 69154


Agriculture 1733 2145 1635 1534 2053 2314 2229

Manufacturing 43872 41240 45035 53355 51711 48551 49297

Trade 17197 13356 12741 13563 11390 9508 8346

Services 32600 34037 31603 33002 36014 36572 37012


- 138 -

2010 2011

(LE mn)

(2/1/8) Bank Lending and Discount Balances to Business Sector (Contd.)

Private Business Sector

2009

Number of Branches Number of Banks Operating in EgyptEnd of

338239 December 2008

344339 June 2009


350239 June 2010


357339 June 2011


(2/2/1) Structure of Egyptian Banking System


- 139 -

Fund Name Fund Manager Par Value (LE) Net Asset Value (LE) at End of June 2011 Net Asset Value (LE) at End of Dec. 2011

Open-end Balance FundsNational Bank of Egypt I + Al Ahly Fund Management 10 37.22 31.30Banque Misr I Concord International Investments 100 97.10 84.67National Bank of Egypt II Al Ahly Fund Management 100 77.99 66.08El Watany Bank of Egypt Hermes Fund Management 100 120.12 109.83National Bank of Egypt V Al Ahly Fund Management 10 9.25 7.82Al-Massi Hermes Fund Management 100 95.35 82.40Credit Agricole Egypt IV (Al Theqa) HC Securities 100 - 102.01Kheir Fund Beltone Asset Management 10 9.08 8.17NSGB (Tawazon) Beltone Asset Management 100 94.46 82.93

Open-end Equity FundsCredit Agricole Egypt I Hermes Fund Management 100 180.04 130.61Bank of Alexandria I Hermes Fund Management 100 171.46 122.49Arab Misr Insurance Group ++ Prime Investments Fund Management 100 137.54 116.10Banque Misr II Concord International Investment 66.67 43.79 36.21Banque de Caire Hermes Fund Management 10 42.83 30.66Export Development Bank I ( El-Khabeer) HC Securities 33.33 63.44 44.13Suez Canal Bank I HC Securities 500 252.00 176.50Credit Agricole Egypt II Hermes Fund Management 100 87.67 61.93Egyptian Gulf Bank Hermes Fund Management 100 118.55 82.49Banque Misr III HC Securities 100 358.27 248.84Shield Fund +++ Arab African Investment Management 50 102.88 84.48Misr Iran Development Bank I HC Securities 100 299.08 218.31National Bank of Egypt III++++ HC Securities 100 66.40 49.10Commercial International Bank II (Istethmar) CI Capital Asset Management 100 59.99 46.29Piraeus Bank-Egypt I Phoneix Kato Asset Management 100 92.68 79.41Housing & Development Bank (Al-Taameer) Prime Investments Fund Management 100 89.57 74.87ABC Bank Delta Rasmala 100 77.71 58.66Suez Canal Bank II (Al-Agyal) Beltone Asset Management 10 8.54 6.31Blom Bank Prime Investments Fund Management 100 88.98 74.15Pharos Fund I Pharos Asset Management 100 88.91 70.56Pioneers Fund I Amual for Financial Investments 100 88.84 70.13Misr Al Mostakbal HC Securities 10 - 9.62Belton Traded Equity Fund (Insight) Beltone Asset Management 10 7.99 6.10NSGB (Tadawol) HC Securities 100 - 94.36

Open-end Fixed Income FundsCredit Agricole Egypt III Egyptian Fund Management Group 1000 1037.44 1000.00Misr Money Mareket Beltone Asset Management 10 17.46 18.26Commercial International Bank I (Osoul) CI Capital Asset Management 100 166.74 174.37Misr Iran Development Bank II HC Securities 1000 1000.46 1000.00Bank of Alexandria II EFG-Hermes 10 15.17 15.86National Bank of Egypt IV Al Ahly Fund Management 100 148.04 154.43National Societe Generale Bank (Themar) EFG-Hermes 100 145.41 152.01Export Development Bank II Delta Rasmala 100 144.14 150.71ABC Bank ( Mazaya ) Beltone Asset Management 10 11.76 12.28HSBC Egypt Bank Fund (Kol Youm) Beltone Asset Management 100 117.65 123.04AAIB( Juman) Arab African Investement Management 100 117.26 122.48Piraeus bank- Egypt II Phoneix Kato Asset Management 10 11.67 12.17Audi Bank Fund EFG-Hermes 10 11.65 12.17Banque du Caire II ( El Kahera El Youmy) Beltone Asset Management 10 11.39 11.90Blom Bank Fund II CI Capital Asset Management 100 113.89 119.60Al Watany Bank of Egypt Fund (Eshrak) NBK Capital Asset Management Egypt 10 11.10 11.59Arab Bank Fund (Youmati) Beltone Asset Management 10 11.08 11.59Housing & Development Bank (Mawared) Prime Investments Fund Management 10 11.00 11.43Bank of Alexandria III EFG-Hermes 10 10.77 11.21Prinicipal Bank for Development & Agricultural Credit (Hasad) HC Securities 10 10.88 11.37Arab Investment Bank Fund I EFG-Hermes 10 10.80 11.31Egyptian Gulf Bank Fund (Tharaa) Prime Investments Fund Management 10 10.21 10.39CIB (El Thabet) CI Capital Asset Management 100 - 102.77Al Watany Bank of Egypt Fund (Namaa) NBK Capital Asset Management Egypt 10 - 10.16National Bank of Egypt VIII Ahly Funds Managements 1000 - 1009.75Arab Investment Bank Fund III (Sanady) HC Securities 10 - 10.09

Open-end Islamic FundsFaisal Islamic Bank EFG-Hermes 100 87.41 60.09Al Baraka Bank Egypt EFG-Hermes 100 63.89 46.59Faisal Islamic Bank - CIB (Al Amman) CI Capital Asset Management 100 44.59 34.95Banque Misr IV HC Securities 100 68.59 52.95Sanabel Fund+++++ Prime Investments Fund Management 100 73.08 60.91Egyptian Saudi Finance -National Bank of Egypt (Bashayer) Al Ahly Fund Management 100 69.87 58.38El Watany Bank of Egypt(Alhayah) El Watany Capital Asset Management 10 9.49 7.68Arab Investment Bank Fund II (Helal) Cairo Funds Management 100 100.30 100.71Naeem Misr Fund Naeem for Financial Investments 100 - 98.41

Mixed Income FundsAl Rabeh Fund Prime Investments Fund Management 100 100.98 100.65

Open-end Islamic Balanced FundsAl Baraka Bank - Egypt (Al Motawazen) AT. Asset Management 100 96.33 81.99

Closed-end FundsOrient Trust Egyptian Investment & Finance Co. 1000 1223.14 1165.13Misr Direct Investment Fund Al Ahly Development & Investment 1000 1035.00 1035.00Arab Land Direct Prime Investments Fund Management 1000 695.78 652.78

Capital Guaranteed FundsMisr Bank (El Omr Fund) Cairo Funds Management 100 233.51 244.16

Capital Protected FundsCIB Fund (Hamaya) CI Capital Asset Management 100 102.84 98.41

Asset Allocator FundsSociete Arab Int'l Banque I ++++++ Prime Investments Fund Management 100 390.84 326.06Societe Arab Int'l Banque II Prime Investments Fund Management 100 270.22 223.03

Foreign Currency FundsMisr Money Market ($) Beltone Asset Management 10$ 10.70$ 10.72$Misr Money Market (Euro) Beltone Asset Management 10 € 10.75 € 10.78 €

Fund of FundsMisr Iran Development Bank III (Wafi) El Rashad Asset Management 10 8.92 7.71National Bank of Egypt VII El Rashad Asset Management 100 84.30 72.81

Source: Monthly Bulletin of Egyptian Stock Exchange. + The fund's document has been split into ratio of 1: 50 as of 29/11/2007. The fund has also changed its structure from Balanced to Equity during the period (12 March 2009 - 4 February 2010).++ The document has been split into ratio of 1:5 as of 10/11/2009. +++ The name of Misr International Bank fund has changed to Shield Fund starting from 2/4/2006 and the document has been split into a ratio of 1:2 on the same date. The par value has also changed from LE 100 to LE 50.++++ The fund has changed its type effective from 18/8/2011 to become an open-end equity fund instead of an open-end balanced fund. +++++ The Management Contract for Sanabel Fund Matured on 22 December 2011. ++++++ The fund's document has been split into ratio of 1: 5 and the par value has also changed from LE 500 to LE 100 as of 29/3/2007.

(2/2/2) Local Mutual Funds Authorized and Operating as at 31/12/2011

- 140 -

2008Dec. June Dec. June Dec. June Dec.

Currency By Denomination + 122442 127625 135633 145914 155598 179794 190111

PT 25 185 160 214 184 176 161 152

PT 50 372 309 298 294 312 303 295

LE 1 929 772 759 845 928 909 892

LE 5 1475 1309 1832 1619 2650 2738 2788

LE 10 3320 2991 3296 2930 3437 2983 3499

LE 20 7403 6419 6334 5619 6763 9950 9442

LE 50 24886 23045 20542 18836 18563 22350 20678

LE 100 57063 61561 65849 69299 69214 73444 73063

LE 200 * 26809 31059 36509 46288 53555 66956 79302


+ Including coin denominations of 25, 50 and 100 piasters.

* The LE 200 note has been in circulation as of May 2007.

End of

- 141 -

2009 2010 2011(LE mn)

(2/3/1) Note Issued by Denomination

2008Dec. June Dec. June Dec. June Dec.

Total 121282 126268 134039 144253 153209 179096 187292

Subsidiary Coins & Notes * 282 287 297 306 314 324 339

PT 25 183 158 214 184 176 161 152

PT 50 365 308 297 292 311 302 295

LE 1 919 770 757 843 925 907 889

LE 5 1432 1257 1757 1495 2554 2654 2732

LE 10 3217 2911 3180 2844 3346 2886 3329

LE 20 7221 6297 6055 5480 6482 9672 9050

LE 50 24638 22898 20276 18704 18190 22246 20269

LE 100 56636 60867 65173 68641 68183 73269 72152

LE 200+ 26389 30515 36033 45464 52728 66675 78085


* Issued by the Ministry of Finance.+ The LE 200 note has been in circulation as of May 2007.

- 142 -

2009 End of

2010 2011(LE mn)

(2/3/2) Currency in Circulation Outside CBE by Denomination

During

2006/2007 2007/2008 2008/2009 2009/2010 2010/2011 2010/2011 2011/2012

Local Currency Transactions via RTGS*

1- Automated Clearing House (ACH)

Number of transactions (thousand) 10481 11724 12062 12994 13012 6441 6220

Value of transactions (LE mn) 356900 483113 548038 584546 626757 308849 319475

2- Other Transactions via RTGS** 525236 700668 897205 1191374 1248692 637156 633463

Number of transactions (in unit) 2280198 3092401 5294357 13274676 15879701 8147509 4606479

Value of transactions (LE mn)

Foreign Currency Transfers (Dollar Interbank Transactions) via the Fin-Copy System***

Number of transactions (in unit) 12070 13925 12365 12204 15066 6838 7357

Value of transactions (US$ mn) 78997 105587 83019 70008 88051.843 41478 35229


* The RTGS was launched on 15 /3/ 2009. ** Including corridor operations and deposits for monetary policy purposes as of 15/3/2009.*** This service was introduced on 19/ 9/ 2004.

(2/3/3) CBE: Transactions via RTGS and SWIFT

July/December Fiscal Year

- 143 -


A- Assets

Cash 10363 11128 10582 12448 13353 14830 14408

Securities & investments in TBs 268658 332597 361245 405895 441179 474176 503302

Balances with banks in Egypt, of which: 204857 173482 204371 200719 218120 117010 119277

Loans and discounts 814 775 683 729 1085 885 902

Balances with banks abroad, of which: 64918 77120 69150 57371 67217 96080 82853

Loans and discounts 1122 1869 1654 2004 1605 1398 2809

Loan and discount balances 429188 429957 432597 465990 458081 474139 489729

Other assets 67630 67709 73750 78232 84960 93455 98457

Assets =Liabilities 1045614 1091993 1151695 1220655 1282910 1269690 1308026

B- Liabilities

Capital 40392 41550 43540 46598 51238 59049 60059

Reserves 17877 21371 20007 28486 28822 22056 21593

Provisions 71378 69748 70744 70418 54026 55106 52915

Bonds & Long-term loans 20197 22045 21731 21697 25321 26180 26462

Obligations to banks in Egypt 24367 31004 34521 53881 61224 28171 27480

Obligations to banks abroad 19368 18195 17111 20305 24295 15168 13539

Total deposits 767668 809694 848699 892492 943972 957037 981258

Other liabilities, of which: 84367 78386 95342 86778 94012 106923 124720

Cheques payable 4148 3576 4210 4764 6242 5143 5266


- 144 -2009 2010 2011

(2/4/1) Banks: Aggregate Financial Position

( LE mn )


Total Deposits 767668 809694 848699 892492 943972 957037 981258

Demand deposits 94413 102852 110183 119518 122407 130087 127814Time & saving deposits and saving accounts 642134 673048 703859 738650 786785 789407 816206Blocked or retained deposits 31121 33794 34657 34324 34780 37543 37238

Local Currency Deposits 565374 598586 649451 686052 735314 724878 747254

Demand deposits 66615 69261 79608 84152 86946 86967 85087Time & saving deposits and saving accounts 480452 509156 547992 580020 626393 615839 639019Blocked or retained deposits 18307 20169 21851 21880 21975 22072 23148

Foreign Currency Deposits 202294 211108 199248 206440 208658 232159 234004

Demand deposits 27798 33591 30575 35366 35461 43120 42727Time & saving deposits and saving accounts 161682 163892 155867 158630 160392 173568 177187Blocked or retained deposits 12814 13625 12806 12444 12805 15471 14090Source : Central Bank of Egypt.

- 145 -

2009 2010 2011( LE mn )

(2/4/2) Banks: Deposits by Maturity


Total Deposits 767668 809694 848699 892492 943972 957037 981258


Government sector 47659 49564 61450 58496 59432 56728 62097Public business sector * 30176 28800 29932 32726 32112 29278 24444Private business sector 102175 104250 115160 114372 127039 103965 99261Household sector 382345 413558 440215 477842 513722 532032 558396External sector ** 3019 2415 2694 2616 3009 2875 3056


Government sector 37016 41481 41839 45618 47229 51403 49261Public business sector * 10032 8735 7355 6474 7060 7549 8652Private business sector 59405 58321 52820 54907 54895 60241 63818Household sector 93938 100210 94790 96875 96176 109248 108719External sector** 1903 2360 2444 2566 3298 3718 3554Source : Central Bank of Egypt.

*Including all public sector companies subject or not to Law No. 203 for 1991 .

**Including counterpart deposits of USAID .

- 146 -

2009 2010 2011( LE mn )

(2/4/3) Banks: Deposits by Sector


Total Deposits 767668 809694 848699 892492 943972 957037 981258


Agriculture 5303 6323 5848 5072 4263 3792 3416Manufacturing 36798 37537 37531 38302 44416 38119 35520Trade 22023 20850 23444 27829 24285 24304 20528Services 52512 53846 59630 64895 72342 62311 57431Unclassified sectors 448738 480030 522998 549954 590008 596352 630359


Agriculture 997 904 726 930 589 771 909Manufacturing 30744 27757 24606 23772 23260 24876 28799Trade 9860 12046 11332 11065 11448 14182 14643Services 28207 25848 22921 25767 26281 28529 26301Unclassified sectors 132486 144553 139663 144906 147080 163801 163352Source : Central Bank of Egypt.

- 147 -

2009 2010 2011

(2/4/4) Banks: Deposits by Economic Activity

( LE mn )


Total 268658 332597 361245 405895 441179 474176 503302


Government sector 206425 262044 291154 303297 325989 407814 428950Public business sector * 1331 1338 1284 1052 1087 980 854Private business sector 27217 33755 33488 34394 36434 33764 31330Household sector - - - - - - -Foreign sector 57 57 89 91 90 90 88


Government sector 13861 14051 13809 15579 15758 4382 16871Public business sector * - - - - - - -Private business sector 4648 5532 5856 5597 5382 5475 4687Household sector - - - - - - -Foreign sector 15119 15820 15565 45885 56439 21671 20522Source : Central Bank of Egypt.*Including all public sector companies subject or not to Law No. 203 for 1991.

- 148 -

2009 2010 2011

(2/4/5) Banks: Portfolio Investments by Sector

( LE mn )

2008

End of Dec. June Dec. June Dec. June Dec.Total 429188 429957 432597 465990 458081 474139 489729


Government sector 8034 12946 13082 15389 19457 18191 16844Public business sector * 20690 23725 27685 21051 23778 24560 29761Private business sector 177279 177107 165662 185694 170246 187810 194495Household sector 77950 78827 85787 90266 92821 96112 103540Foreign sector 1029 2587 2009 1254 1249 1091 741


Government sector 23645 17802 21109 23995 18715 21611 20383Public business sector * 7978 9155 7691 8761 8447 8127 8880Private business sector 95401 90778 91013 101454 101168 96945 96884Household sector 8430 5762 3135 2526 2868 3095 2359Foreign sector 8752 11268 15424 15600 19332 16597 15842Source : Central Bank of Egypt.

*Including all public sector companies subject or not to Law No. 203 for 1991.

- 149 -

2009 2010 2011

(2/4/6) Banks: Lending and Discount Balances by Sector

( LE mn )


Total 697846 762554 793842 871885 899260 948315 993031


Government sector 214459 274990 304236 318686 345446 426005 445794Public business sector * 22021 25063 28969 22103 24865 25540 30615Private business sector 204496 210862 199150 220088 206680 221574 225825Household sector 77950 78827 85787 90266 92821 96112 103540Foreign sector 1086 2644 2098 1345 1339 1181 829


Government sector 37506 31853 34918 39574 34473 25993 37254Public business sector * 7978 9155 7691 8761 8447 8127 8880Private business sector 100049 96310 96869 107051 106550 102420 101571Household sector 8430 5762 3135 2526 2868 3095 2359Foreign sector 23871 27088 30989 61485 75771 38268 36364Source : Central Bank of Egypt.* Including all public sector companies subject or not to Law No. 203 for 1991.

2009 2010 2011( LE mn )

(2/4/7) Banks: Credit by Sector - 150 -

2008

End of Dec. June Dec. June Dec. June Dec.Total 429188 429957 432597 465990 458081 474139 489729


Agriculture 5829 5137 4571 4856 4536 6800 5839Manufacturing 84558 94674 89042 94810 91888 100646 108341Trade 44171 44079 43459 51241 38397 37186 37904Services 71233 69790 69230 70931 78362 85578 88658Unclassified sectors 79191 81512 87923 91816 94368 97554 104639


Agriculture 1753 2165 1655 1554 2053 2314 2229Manufacturing 70637 61808 67045 79423 71590 70744 70222Trade 18015 14646 14263 15134 12365 10445 9321Services 36619 39117 36850 38084 42317 43180 44374Unclassified sectors 17182 17029 18559 18141 22205 19692 18202Source : Central Bank of Egypt.

(2/4/8) Banks: Lending and Discount Balances by Economic Activity - 151 -

2009 2010 2011

( LE mn )

More than one-month and less than or equal to

three-month deposits

More than three-month and less than or equal to

six-month deposits

More than six-month and less than or equal to

one year deposits

Less than or equal to one

year loans

SimpleReturn

Of increasingcertificate value

January 2009 11.50 7.30 7.60 8.30 12.60 10.00 9.50 9.50February 10.50 7.30 7.60 8.30 12.60 ,, ,, ,,March 10.00 7.10 7.50 8.30 12.40 ,, ,, ,,April 10.00 7.00 7.30 8.20 12.30 ,, ,, ,,May 9.50 6.70 7.10 7.90 12.30 ,, ,, ,,June 9.00 6.50 7.00 7.80 12.10 ,, ,, ,,July 9.00 6.20 6.90 7.50 12.10 ,, ,, 9.00August 8.50 6.10 6.60 7.30 12.00 ,, ,, ,,September ,, 6.00 6.50 7.10 11.60 9.50 9.00 ,,October ,, 5.90 6.40 6.90 11.40 ,, ,, ,,November ,, 5.90 6.30 6.80 11.30 ,, ,, ,,December ,, 5.90 6.30 6.70 11.00 ,, ,, ,,

January 2010 ,, 5.90 6.40 6.70 11.10 ,, ,, ,,February ,, 5.90 6.40 6.70 11.00 ,, ,, ,,March ,, 6.00 6.40 6.70 11.10 ,, ,, ,,April ,, 6.00 6.40 6.70 11.10 ,, ,, ,,May ,, 5.90 6.50 6.80 11.20 ,, ,, ,,June ,, 6.30 6.90 7.30 11.10 ,, ,, ,,July ,, 6.30 6.90 7.20 11.10 ,, ,, ,,August ,, 6.30 6.90 7.20 10.90 ,, ,, ,,September ,, 6.40 7.00 7.20 10.90 ,, ,, ,,October ,, 6.60 6.90 7.30 11.00 ,, ,, ,,November ,, 6.60 6.90 7.30 10.90 ,, ,, ,,December ,, 6.60 6.90 7.20 10.70 ,, ,, ,,

January 2011 ,, 6.50 6.90 7.30 10.70 ,, ,, ,,February ,, 6.50 6.90 7.20 10.60 ,, ,, ,,March ,, 6.50 6.90 7.30 10.70 ,, ,, ,,April ,, 6.60 6.90 7.30 10.80 ,, ,, ,,May ,, 6.70 6.90 7.40 10.80 ,, ,, ,,June ,, 6.60 6.90 7.40 11.00 ,, ,, ,,July ,, 6.70 6.90 7.60 11.00 ,, ,, ,,August ,, 6.70 6.90 7.60 11.10 ,, ,, ,,September ,, 6.80 6.90 7.60 11.20 ,, ,, ,,October ,, 7.00 7.00 7.70 11.30 10.00 9.50 ,,November 9.50 7.10 7.00 7.70 11.40 11.50 11.00 ,,December ,, 7.20 7.10 7.80 11.80 ,, ,, ,,

Source: Central Bank of Egypt and the Egyptian National Post Authority.* As of June 2010, maturities have been changed and the data on interest rates (on deposits and loans) have been compiled according to

the Domestic Money Monitoring System (DMMS).** Up till June 2008, the deposits remaining for more than one year earned an additional 0.25% interest rate, but this was abolished as of July 2008.

- 152 -

(2/5/1) Discount and Interest Rates on Deposits and Loans in Egyptian Pound

( Annually % )

End of

Average Interest Rates in Banks* Interest Rate on Investment Certificates

Interest Rate on Post Office Saving

Deposits**

Discount Rate

US Dollar Sterling Pound Euro

Min. Max. Min. Max. Min. Max.

January 2009 0.83 1.03 0.92 1.17 1.13 1.38February 0.90 1.10 0.82 1.07 0.86 1.11March 0.88 1.08 0.47 0.72 0.55 0.80April 0.69 0.89 0.62 0.87 0.63 1.13May 0.31 0.51 0.43 0.68 0.52 1.02June 0.41 0.61 0.62 0.87 0.66 1.16July 0.29 0.49 0.31 0.56 0.33 0.83August 0.18 0.38 0.15 0.35 0.26 0.76September 0.12 0.29 0.15 0.22 0.16 0.66October 0.13 0.28 0.15 0.41 0.20 0.54November 0.12 0.26 0.15 0.43 0.20 0.54December 0.11 0.25 0.15 0.42 0.20 0.53



Source: National Bank of Egypt.

End of

- 153 -

(2/5/2) Domestic Interest Rates on 3-Month Depositsin Major Currencies

( Annually % )

(%)

91 days 182 days 252 days 259 days 266 days 273 days 343 days 350 days 357 days 364 days 371 days

Oct. 2011First week (4/10) 12.794 13.329 0.000 0.000 0.000 13.759 0.000 0.000 0.000 13.863 0.000Second week (11/10) 12.609 13.144 0.000 0.000 13.636 0.000 0.000 0.000 13.722 0.000 0.000Third week (18/10) 12.431 13.096 0.000 0.000 0.000 13.625 0.000 0.000 0.000 13.720 0.000Fourth week (25/10) 12.242 13.071 0.000 0.000 13.725 0.000 0.000 0.000 13.777 0.000 0.000

Monthly Average 12.519 13.160 0.000 0.000 13.681 13.692 0.000 0.000 13.750 13.792 0.000

Nov. 2011

First week (1/11) 12.298 13.131 0.000 0.000 0.000 13.840 0.000 0.000 0.000 13.854 0.000Second week (8/11) 12.385 13.247 0.000 0.000 13.931 0.000 0.000 0.000 13.961 0.000 0.000Third week (15/11) 12.781 13.447 0.000 0.000 0.000 14.251 0.000 0.000 0.000 14.071 0.000Fourth week (22/11) 13.491 13.978 0.000 0.000 14.705 0.000 0.000 0.000 14.725 0.000 0.000

(29/11) 14.258 14.648 0.000 14.949 0.000 0.000 0.000 14.932 0.000 0.000 0.000

Monthly Average 13.043 13.690 0.000 14.949 14.318 14.046 0.000 14.932 14.343 13.963 0.000

Dec. 2011

First week (6/12) 14.348 0.000 0.000 0.000 0.000 15.084 0.000 0.000 0.000 0.000 0.000Second week (13/12) 14.057 14.704 0.000 0.000 15.144 0.000 0.000 0.000 0.000 15.193 0.000

Third week (20/12) 13.950 14.619 0.000 0.000 0.000 15.209 0.000 0.000 15.226 0.000 0.000

Fourth week (27/12) 13.950 14.694 0.000 0.000 15.260 0.000 0.000 15.292 0.000 0.000 0.000

Monthly Average 14.076 14.672 0.000 0.000 15.202 15.147 0.000 15.292 15.226 15.193 0.000Source: Central Bank of Egypt.

(2/5/3) Interest Rates on Treasury Bills (Weekly Weighted Averages)

- 154 -

2008

End of Dec. June Dec. June Dec.+ June + Dec.+

Number of Companies (in Unit) 373 333 306 215 212 211 213On the Official Schedules 120 119 121 115 0 0 0On the Unofficial Schedules 252 213 184 100 0 0 0On the Temporary Schedule* 1 1 1 0 0 0 0

Number of Shares (mn) 21962 22430 23757 29002 31749 32364 34714Nominal Value of Capital (LE mn) 150399 149587 149944 134748 142419 144699 150380Market Value of Capital (LE mn) 473636 463644 499613 410144 488209 399756 293593

The Market of Medium and Small Enterprises (Nilex)**

Number of Companies (in Unit) 10 17 18 19Number of Listed Shares (mn) 49 109 152 161Total Value of Traded Shares (LE mn) 83 26 14 10Market Value of Capital (LE mn) 407 1018 1007 1010

The Egyptian Exchange Indices***

EGX 20 Capped 5291.3 6590.8 7252.0 6925.6 8024.3 5888.1 3925.5EGX 30 4596.5 5702.9 6208.8 6033.1 7142.1 5373.0 3622.4EGX 70 623.1 642.9 527.7 721.5 629.6 415.6EGX 100 1059.3 908.7 1166.2 972.9 643.1

Source: Monthly Bulletin of Egyptian Exchange.

* Companies which have not adjusted their statuses according to the new listing rules.

** Trading in the Nilex Started on 3/6/2010.

*** The Egyptian Exchange CASE 30 Index was renamed EGX 30, while the EGX 70 index was introduced as of March 2009 to cover

70 companies other than the 30 constituent companies of EGX 30. EGX 100 was also introduced, encompassing those companies

constituting EGX 30 and EGX 70, as of August 2009.EGX 20 Capped was also introduced in October 2011, which includes the most

active 20 companies listed on the Egyptian Exchange . The index was computed as of the 1st of February 2003.

+ The scheduling of the number of companies has been amended according to the EFSA's BOD decision no. 50 for 2009

regarding the listing and de-listing rules of securities on the Egyptian Exchange . A time was given for companies to readjust their status.

(3/1) Companies Listed on the Egyptian Exchange

- 155 -

2009 2010 2011

Number of Transactions

(Unit)

Amount (Thousand)

Market Value (mn)

Number of Transactions

(Unit)

Amount (Thousand)

Market Value (mn)

In Egyptian Pound 4189115 13902982 89113 2437440 8270196 46469

Floor Transactions 4136720 12566782 81277 2406599 7682511 37689

Over the Counter Trading 52395 1336200 7836 30841 587685 8780

In Foreign Currencies (US Dollar) 83451 313709 778 53978 252372 312



In Foreign Currencies (Euro) 9 265 36 5 17 0.3


Over the Counter Trading 9 265 36 5 17 0.3

Source : Egyptian Financial Supervisory Authority (EFSA) - Monthly Report of the Capital Market.

(3/2) Trading in Shares on the Egyptian Exchange

- 156 -

During July/December

2010/2011 2011/2012

Number of Transactions Amount Market Value Number of

Transactions Amount Market Value

(Thousand) (Thousand)

In Egyptian Pound 764 33214046 33474401 542 14258639 11672062



In US Dollar 0 0 0 0 0 0



(3/3) Trading in Bonds on the Egyptian Exchange

- 157 -

During July/December

2010/2011 2011/2012

(Unit) (Unit)


Egyptian Pound US Dollar Egyptian Pound US Dollar

Net Number of Transactions (Unit) 87580 5609 -38862 -5096Purchases 500960 19592 292347 8430Sales 413380 13983 331209 13526

Net Volume of Securities (mn) 176 11 -14 -10Purchases 2259 71 1327 39Sales 2083 60 1341 49

Net Value of Securities (mn) 3184 -13 1146 -16Purchases 25950 127 12825 47Sales 22766 140 11679 63

- 158 -

2011/2012During July/December

2010/2011

(3/4) Foreigners' Transactions on the Egyptian Exchange


June-11 Dec.-11 June-11 Dec.-11

Comercial International Bank / Egypt (CIB) July-96 Bank of New York CIB / HSBC 1.00 9999 5.06 3.01 29.76 18.70

Suez Cement July-96 Bank of New York CIB / HSBC 1.00 7310 7.50 7.50 39.25 22.58

Paints & Chemicals Industries (Pachin) Oct.-97 Bank of New York CIB / HSBC 3.00 6297 2.80 1.51 38.42 33.03

EFG-Hermes Aug.-98 Bank of New York HSBC / CIB 0.50 4324 6.84 3.20 20.10 10.01

Ezz Steel June-99 Bank of New York CIB / HSBC 0.33 573 32.50 32.50 10.61 3.73

Holding Company for Financial Investments (Lakah Group)* July-99 Bank of New York CIB / HSBC 0.33 35000 0.44 0.44 - -

Orascom Telecom Holding (OT)** July-00 Bank of New York CIB / HSBC 0.20 11713 3.46 2.89 4.08 2.98

Orascom Construction Industries (OCI)*** Aug.-02 Bank of New York CIB / HSBC 1.00 50 45.95 33.90 269.64 201.15

Egypt Lebanon Ceramics (Lecico) Nov.-04 Bank of New York CIB / HSBC 1.00 8796 4.10 3.50 15.08 5.80

Telecom Egypt Dec.-05 Bank of New York CIB / HSBC 0.20 8522 12.69 11.25 14.93 13.21

Naeem Holding Feb.-08 Bank of New York CIB / HSBC 0.25 5625 1.44 0.96 0.36 0.24

Palm Hills Development May-08 Bank of New York CIB / HSBC 0.20 5435 5.30 4.80 2.33 1.09

G B Auto May-09 Bank of New York CIB 0.20 100 25.52 17.39 30.46 20.97

Remco for Touristic Villages Construction May-10 JPMorgan HSBC 0.20 1000 - - 3.35 1.59Source: Monthly Bulletin of the Egyptian Exchange.* Last closing price was on 3 March 2005 as no trading has occurred after this date.** The conversion ratio has changed to be 5 shares: 1 GDR, as of 12 April 2007. *** The conversion ratio has changed to be 1 share: 1 GDR, as of 7 May 2009.

Conversion Ratio

(3/5) Global Depository Receipts (GDRs)

- 159 -

GDRs Listed on Global Exchanges Corporate Stocks

Issued on EgyptianExchange

Company Order & Date of Offering

Price ($) at end of Price (LE) at end ofVolume on Offering Date

(000s)Depository Bank

Sub Custodian

Bank

(LE mn)

End of 91 days 182 days 252 days 259 days 266 days 273 days 280 days 343 days 350 days 357 days 364 days 371 days Total

2005

March 0 34550 - - - - - - - - 82358 - 116908

June 2750 23900 - - - - - - - - 98257 - 124907Sept. 8900 22350 - - - - - - - - 71726 - 102976Dec. 5500 22600 - - - - - - - - 67816 - 95916

2006

March 6000 24100 - - - - - - - - 69016 - 99116June 7100 26500 - - - - - - - - 69544 - 103144Sept. 9900 27500 - - - - - - - - 69957 - 107357Dec. 8200 27000 - - - - - - - - 71157 - 106357

2007

March 11000 26000 - - - - - - - - 73657 - 110657June 9000 27500 - - - - - - - - 82157 - 118657Sept. 8500 31500 - - - - - - - - 90657 - 130657Dec. 12000 33000 - - - - - - - - 100957 - 145957

2008

March 10500 32500 - - - - - - - - 106457 - 149457June 6800 33000 - - - - - - - - 106639 - 146439Sept. 17000 42500 - - - - - - - - 105940 - 165440Dec. 14500 48500 - - - 28000 - - - - 114940 - 205940

2009

March 9500 51500 - - - 55500 - - 6000 - 97940 - 220440June 6021 43119 - 6000 - 77500 - - 15000 3000 88440 - 239080Sept. 11000 28990 - 6000 - 88500 - - 18000 15000 82890 - 250380Dec. 8480 32767 - 6000 10025 79442 - - 18000 32419 64618 - 251751

2010

March 20000 47264 6000 - 16025 69442 - - 19000 39419 68118 - 285268

June 13000 46867 6000 3000 27025 45442 - - 15000 45169 64618 - 266121

Sept. 19000 45000 15000 3000 26000 39000 - - 21000 42169 58618 - 268787

Dec. 9975 54250 12000 3000 27500 42500 3500 - 31500 38250 59390 - 281865

2011

March 22500 71250 15000 7000 28500 39000 3500 - 31500 41750 56890 3500 320390

June 33000 78000 7325 16500 30250 41866 3500 2785 36840 43552 58985 3500 356103

Sept. 22000 78000 4325 23250 35250 36366 0 2785 40665 43202 60585 3500 349928

Dec. 26500 73850 1325 18250 40250 44312 0 2785 33435 47709 64085 3500 356001

- 160 -


(3/6) Outstanding Balance of Treasury Bills (Quarterly)

(LE mn)

91 days 182 days 252 days 259 days 266 days 273 days 343 days 350 days 357 days 364 days 371 days Total

Oct. 2011First week (4/10) 24000 78500 1325 23250 32250 36866 2785 40665 43202 64085 3500 350428Second week (11/10) 25000 79000 1325 23250 35750 36866 2785 37165 43202 60585 3500 348428Third week (18/10) 24500 79000 1325 23250 35750 40366 2785 37165 43202 64085 3500 354928Fourth week (25/10) 23500 80500 1325 23250 39250 40366 2785 37165 46702 64085 3500 362428

End of month 23500 80500 1325 23250 39250 40366 2785 37165 46702 64085 3500 362428

Nov. 2011

First week (1/11) 23500 80000 1325 23250 39250 43866 2785 37165 46702 67585 3500 368928Second week (8/11) 23500 80000 1325 19750 39250 41866 2785 33665 46702 64085 3500 356428Third week (15/11) 24500 79500 1325 19750 39250 45366 2785 33665 46702 67585 3500 363928Fourth week (22/11) 24500 78850 1325 19750 41250 45366 2785 33665 47827 67585 3500 366403End of month 24500 77350 1325 18250 39250 42366 2785 34835 47827 67585 3500 359573

Dec. 2011

First week (6/12) 25000 74850 1325 18250 39250 45501 2785 31335 44327 64085 3500 350208Second week (13/12) 26500 73850 1325 18250 42750 45501 2785 31335 44327 67585 3500 357708Third week (20/12) 26500 73350 1325 18250 39250 44312 2785 31335 47709 67585 3500 355901Fourth week (27/12) 26500 73850 1325 18250 40250 44312 2785 33435 47709 64085 3500 356001

End of month 26500 73850 1325 18250 40250 44312 2785 33435 47709 64085 3500 356001


(3/7) Outstanding Balance of Treasury Bills (Weekly)

- 161 -

Tranche Date of Value Interest Maturity &

Issue (LE bn) Rate% Due Date

Bonds under the Primary Dealers System **

Twelveth 16/11/2004 5.0 11.625 10 years 16/11/2014

Fourteenth 18/01/2005 1.0 11.400 20 years 18/01/2025

Eighteenth 20/09/2005 6.0 9.100 7 years 20/09/2012

Twenty First 15/11/2005 5.0 9.300 10 years 15/11/2015

Twenty Third 24/01/2006 6.0 8.850 7 years 24/01/2013

Twenty Seventh 29/05/2007 2.0 9.450 7 years 29/05/2014

Twenty Eighth 25/09/2007 2.0 8.450 7 years 25/09/2014

Twenty Ninth 23/10/2007 2.0 8.600 8 years 23/10/2015

Thirtieth 13/11/2007 5.0 8.550 6 years 13/11/2013

Thirty First 22/01/2008 3.0 8.700 8 years 22/01/2016

Thirty Second 12/02/2008 1.5 9.150 10 years 12/02/2018

Thirty Third 19/02/2008 3.0 9.200 6 years 19/02/2014

Thirty Fourth 27/05/2008 3.0 10.650 7 years 27/05/2015

Thirty Fifth 10/06/2008 2.0 10.950 8 years 10/06/2016

Thirty Sixth 13/01/2009 6.0 12.000 3 years 13/01/2012

Thirty Seventh 10/02/2009 6.0 12.000 5 years 10/02/2014

Thirty Eighth 14/04/2009 5.0 10.550 5 years 14/04/2014

Thirty Nineth 28/04/2009 6.0 10.350 3 years 28/04/2012

Fortieth 09/06/2009 6.0 11.000 7 years 09/06/2016

Fourty Second 28/07/2009 6.0 10.800 4 years 28/07/2013

Fourty Third 11/08/2009 6.0 10.450 3 years 11/08/2012

Fourty Fourth 15/09/2009 5.1 10.900 5 years 15/09/2014

Fourty Fifth 29/09/2009 6.0 10.900 4 years 29/09/2013

Fourty Sixth 24/11/2009 2.0 12.170 4 years 24/11/2013

Fourty Seventh 08/12/2009 6.5 12.500 5 years 08/12/2014

Fourty Eighth 15/12/2009 5.1 12.800 6 years 15/12/2015

Fourty Nineth 05/01/2010 8.0 12.350 3 years 05/01/2013

Fiftieth 16/02/2010 13.5 12.600 7 years 16/02/2017

Fifty First 02/03/2010 10.0 12.250 5 years 02/03/2015

Fifty Second 06/04/2010 9.5 11.350 3 years 06/04/2013

Fifty Third 06/07/2010 10.0 11.550 3 years 06/07/2013

Fifty Fourth 20/07/2010 7.5 12.550 5 years 20/07/2015

Fifty Fifth 03/08/2010 5.5 13.000 10 years 03/08/2020

Fifty Sixth 05/10/2010 11.5 11.600 3 years 05/10/2013

Fifty Seventh 19/10/2010 7.5 12.350 5 years 14/09/2015

Fifty Eighth 18/01/2011 3.0 11.630 3 years 18/01/2014

Fifty Nineth 26/07/2011 8.0 13.100 2 years 26/07/2013

Sixtieth 02/08/2011 10.0 13.350 3 years 02/08/2014

Sixty first 18/10/2011 7.5 14.000 3 years 18/10/2014

Sixty second 25/10/2011 1.0 14.500 7 years 25/10/2018

Sixty third 25/10/2011 6.8 14.250 5 years 25/10/2016

Total 231.5

* According to Law No. (4) for 1995.

** This system was put into force as of July 2004, in virtue of the Minister of Finance's Decree No. 480 for 2002 and the provisions governing

it, issued by the Minister of Finance's Decree No. 723 for 2002, in accordance with the provisions of Article ( 7) of Law No. 92 for 2004.

(3/8) Outstanding Balance of Treasury Bonds*End of Dec. 2011

Duration

- 162 -

( LE mn )

Total Expenditures 490590 527421 189673 213828Compensation of Employees 117497 119103 54051 54803

Salaries and wages 85229 86682 44629 45325Social contributions 10095 10222 5147 5197Other 22173 22199 4275 4281

Purchases of Goods and Services 30255 30553 8253 8365Goods 13005 13030 3329 3336Services 12611 12821 3898 3975Other 4639 4702 1026 1054

Interests 106299 96652 44027 38278Foreign interests 4664 4664 1800 1800Domestic interests 101635 91988 42227 36478

To NIB &SIFs 20167 0 10170 0To others 81468 91988 32057 36478

Subsidies, Grants and Social Benefits 157755 201944 56923 85813Subsidies 132928 132928 49539 49539

To GASC 18884 18884 10558 10558

To petroleum 95535 95535 35180 35180

To others 18509 18509 3801 3801

Grants 6375 6375 2684 2684Social Benefits 13766 57955 4448 33339

Contribution to SIFs 10700 0 1750 0

Other 3066 57955 2698 33339

Other 4686 4686 252 251

Other Expenditures 31623 31750 14920 15051Defense 25290 25290 13304 13304

Other 6333 6460 1616 1747

Purchases of Non-Financial Assets(Investments) 47161 47419 11499 11518

Fixed assets 42802 43060 10244 10262

Others 4359 4359 1255 1256

Source: The Ministry of Finance .

- 163 -

(4/1) Consolidated Fiscal Operations of the General Government ( The Budget Sector, NIB and SIFs )

(Total Expenditures)

2011/2012

Estimates 6 Months (Actual)

The Budget Sector

The Budget Sector, NIB

& SIFs

The Budget Sector


& SIFs

( LE mn )

Total Revenues 349647 390998 116623 136026Tax Revenues 232232 232232 79739 79739

Taxes on Income, Profits 110322 110322 32566 32566From EGPC 50569 50569 11326 11326From SCA 12805 12805 5900 5900From CBE 0 0 0 0From other units 20554 20554 6634 6634Payable by individuals 26394 26394 8706 8706

Taxes on Property 15030 15030 5917 5917Taxes on Goods and Services 85245 85245 34707 34707Taxes on International Trade 18002 18002 6308 6308Other Taxes 3633 3633 241 241

Grants 9974 9974 5960 5960Current 6463 6463 5885 5885

Capital 3511 3511 75 75Other Revenues 107441 148792 30924 50327

Property Income 70746 76674 23593 26554From EGPC 37770 37770 7000 7000From SCA 16951 16951 8302 8302From CBE 2570 2570 6012 6012From economic authorities 1919 1919 1126 1126From companies 5514 5514 390 390Other ( from EGPC & TML )* 264 264 0 0Other 5758 11686 763 3724

Sales of Goods and Services 16396 16396 5354 5354Financing Investment 14002 14002 1037 1037Other 6297 41720 940 17382

Source : The Ministry of Finance .

- 164 -

(4/2) Consolidated Fiscal Operations of the General Government ( The Budget Sector, NIB and SIFs )

(Total Revenues)

* third mobile license

2011/2012 Estimates 6 Months (Actual)

The Budget Sector


& SIFs

The Budget Sector


& SIFs

( LE mn )

Total Revenues 349647 390998 116623 136026Total Expenditures 490590 527421 189673 213828Cash Deficit 140943 136423 73050 77802Net Acquisition of Financial Assets -6663 -7033 700 -3077Overall Fiscal Balance 134280 129390 73750 74725

Financing Sources 134280 129390 73750 74725Domestic Financing 151946 154975 86066 84481

Banking Financing 117135 117366 64513 63663Central Bank -49471 -49471 50439 50439Other Banks 166606 166837 14074 13224

Non- Banking Financing 34811 37609 21553 20818NIB -1187 0 -517 0SIFs 2380 0 1070 0Other 33618 33618 23057 23057NIB Borrowing 0 3991 0 -182Special Accounts for Economic Authorities 0 0 -2057 -2057

Blocked Account Used in Amortizing Part of CBE Bonds 0 0 0 0Foreign Borrowing -16531 -16531 -2089 -2089Arrears 0 0 0 0Others -1385 -9304 5812 8372Financing Effects for Eliminations 0 0 0 0Exchange Rate Revaluation 0 0 100 100Net Privatization Proceeds 250 250 0 0

Privatization Proceeds 500 500 0 0Treasury Contribution to the Fund 250 250 0 0

Difference between Treasury Bills Face Value & Present Value 0 0 -2931 -2931

Foreign Debt Reclassification Diff. and Related FX Diff. 0 0 0 0Discrepancy 0 0 -13208 -13208

Cash deficit (surplus) as a percentage of GDP 9.0% 8.7% 4.7% 5.0% Overall fiscal balance as a percentage of GDP 8.6% 8.2% 4.7% 4.8% Revenues as a percentage of GDP 22.3% 24.9% 7.4% 8.7% Expenditures as a percentage of GDP 31.2% 33.6% 12.1% 13.6%Source : The Ministry of Finance .

- 165 -

(4/3) Summary of Consolidated Fiscal Operations of the General Government ( The Budget Sector , NIB and SIFs )

2011/2012

Estimates 6 Months (Actual)

The Budget Sector

The Budget Sector, NIB &

SIFs

The Budget Sector

The Budget Sector, NIB &

SIFs

(LE mn)June Dec. June Dec.2010 2010 2011 2011 2010/2011 2011/2012

Gross Domestic Debt (1+2+3-4) 888715 962277 1044898 1132990 73562 88092

1- Net Domestic Debt of Government (A+B+C+D) 663818 738869 808113 894620 75051 86507

A- Balances of Bonds & Bills 779232 847923 916976 951717 68691 34741 Treasury bonds with the CBE 121533 130596 130596 129096 9063 (1500) Local currency bonds with public sector banks 4000 4000 4000 4000 0 0 Bonds offered abroad *:

US$ 6005 6176 7583 3755 171 (3828)

LE 3808 3782 3954 4082 (26) 128

Egyptian treasury bonds 159767 203267 206767 231567 43500 24800

Government notes to compensate for the actuarial deficit in social insurance funds 2000 2000 2000 2000 0 0

Housing bonds 114 115 115 111 1 (4)

Foreign currency bonds with public sector commercial banks 11883 12112 0 0 229 0

The equivalent of the retained 5% of corporate profits to purchase government bonds 1764 1773 1830 1837 9 7

Bonds of the Insurance Funds (against the transfer of NIB debt to the Treasury) 202237 202237 204028 204028 0 0

Treasury Bills :

LE 266121 281865 356103 356001 15744 (102)

US$ 0 0 0 15240 0 15240

B- Borrowing from other entities 0 0 2000 8122 0 6122

C- Credit Facilities from the Social Insurance Funds 2343 2343 2343 2143 0 (200)

D- Net Government Balances with the Banking System -117757 -111397 -113206 -67362 6360 45844

2- Borrowing of Economic Authorities (Net) 67771 70115 66290 66529 2344 239

Net Balances of Economic Authorities with the Banking System 16302 17448 14149 13454 1146 (695)

Borrowing of Economic Authorities from NIB ** 51469 52667 52141 53075 1198 934

3- NIB Debt (Net) 222259 222292 238179 239729 33 1550NIB Debt 227769 228677 240851 241249 908 398

Deposits of the NIB with the banking system (-) 5510 6385 2672 1520 875 (1152)

4- NIB Intradebt 65133 68999 67684 67888 3866 204

Government debt to the NIB (investments in government securities) 13664 16332 15543 14813 2668 (730)

Loans of economic authorities to NIB 51469 52667 52141 53075 1198 934

Source: Central Bank of Egypt - Ministry of Finance - National Investment Bank.

* ( Holdings of resident financial institutions in Egypt represented in the banking system and the insurance sector ).

(4/4) Gross Domestic Debt

End of Change + (-) during July/Dec.

** Apart from the interest payments due on the NIB.

- 166 -

(LE mn)June Dec. June Dec.

End of June 2010 2010 2011 2011 2010/2011 2011/2012

Liabilities :of which 227769 228677 240851 241249 908 398

.Social Insurance Fund for Gov. Employees 31613 31613 32982 32982 0 0

.Social Insurance Fund for Pub. & Priv. Business Sectors Employees 27384 27384 29663 28295 0 (1368)

.Proceeds from investment certificates 91134 93480 94635 95939 2346 1304

. Accumulated interest on investment certificates (Category A) 8648 8640 8747 8498 (8) (249)

. Proceeds from US dollar development bonds 10 9 9 9 (1) 0

.Post office savings 64837 65837 71978 71978 1000 0

. Others* 4143 1714 2837 3548 (2429) 711

Assets :of which 227769 228677 240851 241249 908 398

. Loans to economic authorities 51469 52667 52141 53075 1198 934

. Investments in government securities (bills and bonds) 13664 16332 15543 14813 2668 (730)

.Deposits of the NIB with the banking system 5510 6385 2672 1520 875 (1152)

.Lending to holding companies and affiliate units, concessional loans, and others 157126 153293 170495 171841 (3833) 1346 (NIB debt minus its intradebt)* Including deposits of the private insurance funds, saving certificates, and loans & deposits of various entities.

(4/5) National Investment Bank ( Resources and Uses )

- 167 -

Change + (-) during July/Dec.

(US$ mn)

Change

Value % Value % (-)

Balance of Current Account (2561.0) (4054.0) (1493.0)

Balance of Current Account (Excluding Transfers) (8898.5) (12475.8) (3577.3)

Receipts 25715.5 100.0 24220.7 100.0 (1494.8)

Export proceeds** 12667.8 49.3 13588.7 56.1 920.9

Transportation, of which 4169.8 16.2 4300.1 17.7 130.3

Suez Canal dues 2507.8 9.8 2683.4 11.1 175.6

Travel 6942.9 27.0 5061.3 20.9 (1881.6)

Investment income 211.1 0.8 110.1 0.5 (101.0)

Government receipts 69.4 0.3 60.8 0.3 (8.6)

Other receipts 1654.5 6.4 1099.7 4.5 (554.8)

Payments 34614.0 100.0 36696.5 100.0 2082.5

Import payments** 27150.3 78.5 29186.6 79.6 2036.3

Transportation 838.9 2.4 598.4 1.6 (240.5)

Travel 1228.0 3.6 1317.9 3.6 89.9

Investment income, of which 3038.2 8.8 3204.6 8.8 166.4

Interest paid 279.6 0.8 268.9 0.7 (10.7)

Government expenditures 796.3 2.3 630.8 1.7 (165.5)

Other payments 1562.3 4.4 1758.2 4.7 195.9

Transfers 6337.5 100.0 8421.8 100.0 2084.3

Private (net) 6170.2 97.4 7899.1 93.8 1728.9

Official (net) 167.3 2.6 522.7 6.2 355.4

*Preliminary figures.

**Including the exports & imports of free zones.

- 168 -

(5/1) Balance of Payments

2010/2011*

July/Dec.

2011/2012*

(US$ mn)

2010/2011* 2011/2012*Value Value

Capital & Financial Account 2817.4 -2411.5

Capital Account -19.4 -32.3Financial Account 2836.8 -2379.2 Direct Investment Abroad -434.3 -101.8 Direct Investment in Egypt (Net) 2253.2 -418.1 Portfolio Investments Abroad (Net) -53.1 -155.8 Portfolio Investments in Egypt (Net), Of which : 4571.1 -3309.2 Bonds 623.1 -376.1 Other Investments (Net) -3500.1 1605.7 Net Borrowing 477.2 569.6

Medium -and Long -Term Loans -760.5 -145.7

Drawings 246.4 831.3 Repayments -1006.9 -977.0 Medium -Term Suppliers Credit -9.9 3.8

Drawings 43.8 48.9 Repayments -53.7 -45.1 Short -Term Suppliers Credit (Net) 1247.6 711.5 Other Assets -4795.8 1507.0 CBE -21.6 23.2 Banks -3810.4 2797.6 Other -963.8 -1313.8 Other Liabilities 818.5 -470.9

CBE 6.3 -6.3 Banks 812.2 -464.6Net Errors & Omissions 315.3 -1540.0Overall Balance 571.7 -8005.5Change in Reserve Assets, Increase (-) -571.7 8005.5Source: CBE.

* Preliminary figures.

** Includes foreign direct investment in petroleum sector and receipts from selling some local

companies to foreign investors.

- 169 -

(5/1) Balance of Payments (Contd.)

July/Dec.

**

(US$ mn)

Value % Value % Total *** 12667.8 100.0 13588.7 100.0 920.9Fuels , Mineral Oils & Products 5652.6 44.6 6909.7 50.8 1257.1

Crude oil 2244.0 17.7 3587.0 26.4 1343.0Petroleum products **** 3185.9 25.1 3152.2 23.2 (33.7)Coal & types thereof 35.4 0.3 19.6 0.1 (15.8)

Raw Materials 530.7 4.2 470.4 3.5 (60.3)Cotton 70.7 0.6 51.1 0.4 (19.6)Potatoes 11.5 0.1 20.8 0.2 9.3Edible fruits & nuts 50.8 0.4 30.8 0.2 (20.0)Oil seeds & oleaginous fruits, medicinal plants & plants for manufacturing 20.2 0.2 15.8 0.1 (4.4)

Spices&vanilla 3.2 0.0 3.0 0.0 (0.2)Medicinal plants 6.9 0.1 13.5 0.1 6.6Citrus fruits 6.5 0.1 11.6 0.1 5.1Raw hides & tanned leather 14.1 0.1 18.6 0.1 4.5Flax, raw 0.4 0.0 0.3 0.0 (0.1)Edible vegetables roots & tubers 76.1 0.6 86.0 0.6 9.9Milk Dairy products ,Eggs&Honey 83.7 0.7 86.0 0.6 2.3

Semi-finished Goods 974.1 7.7 988.8 7.3 14.7Carbon 61.3 0.5 85.9 0.6 24.6Essential oils & resins 20.5 0.2 21.5 0.2 1.0

- 170 -

Change(-)

(5/2) Exports by Degree of Processing *

July/December2010/2011 2011/2012**

(US$ mn)

Value % Value % Cotton yarn 103.7 0.8 47.1 0.3 (56.6)Aluminium, unalloyed 29.5 0.2 41.3 0.3 11.8Animal & vegetable fats, greases & oils & products 55.1 0.4 60.7 0.4 5.6Synthetic fibers 44.0 0.3 19.5 0.1 (24.5)Organic & inorganic chemicals 245.8 1.9 291.1 2.1 45.3Cast iron & semi-finished products & rolled iron 214.5 1.7 211.9 1.6 (2.6)Leather, tanned 22.8 0.2 13.4 0.1 (9.4)Tanning or dyeing extracts 55.5 0.4 36.4 0.3 (19.1)Plastic & articles thereof 102.9 0.8 148.8 1.1 45.9Finished Goods 5476.4 43.2 5217.3 38.4 (259.1)Milk & condensed cream 11.1 0.1 3.7 0.0 (7.4)Dried onion 6.2 0.0 7.5 0.1 1.3Rice 14.3 0.1 5.5 0.0 (8.8)Vegetable & fruit preparations 20.9 0.2 26.4 0.2 5.5Miscellaneous edible preparations 182.3 1.4 187.6 1.4 5.3Manufactured tobacco and tobacco substitutes 41.7 0.3 49.3 0.4 7.6Sugar and its products 86.3 0.7 41.0 0.3 (45.3)Pharmaceuticals 246.1 1.9 197.3 1.5 (48.8)Fertilizers 608.4 4.8 451.2 3.3 (157.2)Cement***** 78.7 0.6 44.3 0.3 (34.5)

- 171 -

(5/2) Exports by Degree of Processing * (Contd.)

July/DecemberChange(-) 2010/2011 2011/2012**

(US$ mn)

Value % Value % Extracts of essential oils & resins 39.2 0.3 53.7 0.4 14.5Leather products 16.9 0.1 11.7 0.1 (5.2)Rubber & articles 17.3 0.1 37.8 0.3 20.5Paper, cardboard paper & articles thereof 172.1 1.4 124.3 0.9 (47.8)Ceramic products 136.9 1.1 89.8 0.7 (47.1)Cars, bicycles & tractors 117.0 0.9 70.5 0.5 (46.5)Cotton textiles 291.2 2.3 313.2 2.3 22.0Carpets & other floor coverings 94.1 0.7 89.2 0.7 (4.9)Shoes & accessories 2.7 0.0 0.4 0.0 (2.3)Ready-made clothes 368.0 2.9 387.2 2.8 19.2Glass & glassware 136.1 1.1 121.5 0.9 (14.6)Copper & articles 79.6 0.6 123.6 0.9 44.0Aluminium articles 145.9 1.2 181.5 1.3 35.6Articles of iron and steel 289.5 2.3 180.7 1.3 (108.8)Wood & articles thereof and charcoal 7.6 0.1 11.8 0.1 4.2Marble & granite 48.9 0.4 51.0 0.4 2.1Articles of base metals 101.0 0.8 114.3 0.8 13.3Optical appliances 57.6 0.5 23.5 0.2 (34.1)Soap & Detergents, fabricated candles 165.1 1.3 183.7 1.4 18.6

Miscellaneous Goods (Undistributed) 34.0 0.3 2.5 0.0 (31.5)Source: Central Bank of Egypt.* Commodities are classified according to the Harmonized System.** Provisional.*** Include exports of free zones. **** Include natural gas, and bunker & jet fuel.

and Decree No. 604 for 2009 Regarding the Continual Ban of Cenmet Export till Oct. , 1 , 2010.

- 172 -

***** Taking into consideration the Ministerial Decree No. 340 for 2009 Banning Cement Export from April,13,to Sept. ,1 , 2009;

(5/2) Exports by Degree of Processing * (Contd.)


(US$ mn)

Value % Value % Total *** 27150.3 100.0 29186.6 100.0 2036.3Fuels, Mineral Oils & Products 3378.4 12.4 4347.3 14.9 968.9

Petroleum products **** 2952.0 10.9 4245.1 14.5 1293.1Coal & types thereof 130.5 0.5 16.4 0.1 (114.1)

Raw Materials 3599.4 13.3 4143.4 14.2 544.0Crude oil 1142.0 4.2 1139.9 26.2 (2.1)Wheat 1083.5 4.0 1004.7 3.4 (78.8)Maize 338.5 1.2 870.8 3.0 532.3Tobacco 282.0 1.0 302.4 1.0 20.4Metal ores 79.0 0.3 65.3 0.2 (13.7)Iron, ore 194.4 0.7 354.5 1.2 160.1Seeds & oleaginous seeds 250.7 0.9 211.8 0.7 (38.9)Cotton 46.8 0.2 38.8 0.1 (8.0)

Intermediate Goods 8028.9 29.6 8385.6 28.7 356.7Sugar, raw 189.8 0.7 471.8 1.6 282.0Animal and vegetable fats, greases & oils and products 583.0 2.1 859.7 2.9 276.7

Cement 252.5 0.9 71.7 0.2 (180.8)Organic & inorganic chemicals 769.5 2.8 1065.1 3.6 295.6Fertilizers 161.8 0.6 160.8 0.6 (1.0)Tanning & dyeing extracts 150.4 0.6 133.6 0.5 (16.8)Essential oils & resinoids 61.1 0.2 25.6 0.1 (35.5)Plastic & articles thereof 629.0 2.3 661.5 2.3 32.5

(5/3) Imports by Degree of Use * - 173 -


(US$ mn)

Value % Value % Wood & articles thereof 486.9 1.8 487.9 1.7 1.0Paper, cardboard paper & articles thereof 523.5 1.9 510.2 1.7 (13.3)Cotton textiles 78.1 0.3 87.7 0.3 9.6Synthetic fibers 295.8 1.1 330.1 1.1 34.3Ceramic products 168.1 0.6 166.2 0.6 (1.9)Glass & articles 66.3 0.2 70.9 0.2 4.6Iron & steel products 1488.2 5.5 1389.9 4.8 (98.3)Copper & articles 184.1 0.7 233.3 0.8 49.2Rubber & articles 235.8 0.9 257.4 0.9 21.6Aluminium & articles 137.7 0.5 115.0 0.4 (22.7)Articles of base metals 276.2 1.0 320.9 1.1 44.7Parts & accessories of motor vehicles 1091.3 4.0 807.5 2.8 (283.8)

Investment Goods 5420.4 20.0 5046.7 17.3 (373.7)Pumps, fans & parts thereof 331.5 1.2 359.0 1.2 27.5Machines and apparatus for ginning and spinning & parts thereof 62.0 0.2 32.6 0.1 (29.4)

Computers 431.1 1.6 415.3 1.4 (15.8)Motors, generators, transformers & parts thereof 361.4 1.3 557.7 1.9 196.3Parts of railway and tramway locomotives or rolling stock equipment 76.4 0.3 83.2 0.3 6.8

Tractors 14.1 0.1 16.3 0.1 2.2Vehicles for transport of passengers 29.8 0.1 6.4 0.0 (23.4)Vehicles for transport of goods 29.4 0.1 10.6 0.0 (18.8)

(5/3) Imports by Degree of Use* (Contd.)

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(US$ mn)

Value % Value % Tools, implements, cuttery & spoons 158.0 0.6 143.6 0.5 (14.4)Air conditioners 129.4 0.5 106.2 0.4 (23.2)Cranes and bulldozers & parts thereof 855.6 3.2 768.7 2.6 (86.9)Agricultural machinery 83.4 0.3 50.2 0.2 (33.2)Printing machinery & parts 29.2 0.1 49.1 0.2 19.9Electric appliances for telephones & telegraph 392.5 1.4 588.1 2.0 195.6Optical appliances 271.2 1.0 235.2 0.8 (36.0)

Consumer Goods 6551.1 24.2 6909.2 23.7 358.1A - Durable Goods 1655.4 6.1 1515.3 5.2 (140.1)

Household refrigerators & electric freezers 105.0 0.4 78.4 0.3 (26.6)Televisions & parts thereof 161.2 0.6 209.0 0.7 47.8Vehicles for transport of persons 616.3 2.3 359.6 1.2 (256.7)Household electric-motor appliances 295.9 1.1 375.1 1.3 79.2

B - Non-durable Goods 4895.7 18.0 5393.9 18.5 498.2Meat and edible offals 634.1 2.3 411.8 1.4 (222.3)Fish, crustaceans, molluscs and others 142.2 0.5 120.7 0.4 (21.5)Dairy products, eggs, poultry and honey 241.0 0.9 294.5 1.0 53.5Edible vegetables roots & tubers 250.9 0.9 476.7 1.6 225.8Tea 75.5 0.3 80.6 0.3 5.1


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(US$ mn)

Value % Value %Miscellaneous edible preparations 473.8 1.7 409.8 1.4 (64.0)Pharmaceuticals 958.9 3.5 1042.0 3.6 83.1Insecticides 10.9 0.0 11.1 0.0 0.2Residues of foodstuff industries & animal fodder 154.3 0.6 259.1 0.9 104.8Live animals 66.4 0.2 60.5 0.2 (5.9)Ready-made clothes 403.7 1.5 516.7 1.8 113.0Cotton textiles 265.5 1.0 349.8 1.2 84.3Sugar, refined and products 33.2 0.1 20.6 0.1 (12.6)Lentils 33.1 0.1 30.9 0.1 (2.2)Soap, detergents & artificial wax 64.7 0.2 240.5 0.8 175.8

Miscellaneous Goods (Undistributed) 172.1 0.5 354.4 1.2 182.3Source: Central Bank of Egypt.* Commodities are classified according to the Harmonized System.** Provisional.*** Including imports of free zones, and in-kind grants & loans.**** Including gas, and bunker & jet fuel.

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(US$ mn)

2010/2011 2011/2012** 2010/2011 2011/2012** 2010/2011 2011/2012**Total *** 12667.8 13588.7 27150.3 29186.6 (14482.5) (15597.9)

European Union 4980.7 5695.9 9532.6 10258.8 (4551.9) (4562.9)Other European countries 736.9 691.3 2253.2 2953.1 (1516.3) (2261.8)Russian Federation & C.I.S 65.9 27.8 564.2 958.4 (498.3) (930.6)United States of America 1971.5 1758.7 2808.3 2905.7 (836.8) (1147.0)Arab countries 2460.7 2565.1 3766.2 4604.3 (1305.5) (2039.2)Asian countries (Non Arab) 1747.7 2254.0 5902.7 5979.6 (4155.0) (3725.6)African countries (Non Arab) 292.5 240.5 295.8 299.6 (3.3) (59.1)Australia 7.5 9.8 216.7 160.4 (209.2) (150.5)Other countries & regions 404.4 345.6 1810.6 1066.7 (1406.2) (721.1)Source: Central Bank of Egypt* Including in-kind grants and loans.** Provisional.*** Including exports & imports of free zones.

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(5/4) Regional Distribution of Exports and Imports

July/DecemberProceeds of Exports Payments for Imports* Trade Balance

End of

Minimum

Maximum

Weighted average

Second: Market Rates Buy Sell Buy Sell

US Dollar 595.58 598.49 601.69 604.61

Euro 861.15 865.41 774.86 778.79

Pound Sterling 953.70 958.54 926.06 930.73

Swiss Franc 713.18 716.84 635.77 638.98

100 Japanese Yen 740.58 744.57 773.68 777.73

Saudi Riyal 158.81 159.60 160.43 161.23

Kuwaiti Dinar 2161.81 2176.32 2155.98 2170.32

UAE Dirham 162.12 162.96 163.79 164.63

Chinese Yuan 92.14 92.59 95.22 95.69

Source : CBE daily exchange rates

The interbank Rates started at 23/12/2004

597.10

596.90

June 2011 December 2011

596.70 602.90

603.50

603.19

First: Interbank Rates US$

(In piasters per foreign currency unit)

(5/5) Average LE Exchange Rates

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(5/6) External Debt by Type

(US$ mn)End of

%Value (-)%Value%Value(3.5)(1213.0)100.033692.7100.034905.7Total External Debt **(4.6)(1481.1)91.030667.192.132148.21- Medium & Long term debt :(8.6)(1102.2)34.911758.436.812860.6 Rescheduled bilateral debt +

(4.4)(321.7)20.66949.920.87271.6 ODA(14.0)(780.5)14.34808.516.05589.0 Non-ODA(2.9)(152.6)15.05061.915.05214.5 Other bilateral debt(4.8)(200.9)11.94010.412.14211.3 Paris club countries4.848.33.11051.52.91003.2 Other countries

(11.6)(49.4)1.1376.61.2426.0 Suppliers & buyers Credits1.9200.432.611009.030.910808.6 International & regional organizations

(13.3)(376.1)7.32444.98.12821.0 Egyptian bonds and notes(6.9)(1.2)0.116.30.117.5 Private sector (Non guaranteed)9.7268.19.03025.67.92757.52- Short term debt :(7.2)(70.4)2.7902.32.8972.7 Deposits19.0338.56.32123.35.11784.8 Other Facilities

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 25/5/1991++ As of December 2004, the deposit of the Arab International Bank was transferred from short-term debt to long-term deposits

June 2011 December 2011 * Change

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(US$ mn)

ChangeEnd of

(-)%Value%Value(1213.0)100.033692.7100.034905.7Total(45.0)40.613686.939.413731.9US dollar **(14.1)0.4131.00.4145.1Canadian dollar(15.5)0.3102.00.3117.5Australian dollar(106.8)1.5511.91.8618.7Swiss franc(27.1)0.5176.20.6203.3Sterling pound51.313.44531.712.84480.4Japanese yen(16.9)0.3104.80.3121.7Danish krone(0.6)0.04.40.05.0Norwegian krone(3.2)0.124.90.128.1Swedish krona47.06.42158.66.12111.6Kuwaiti dinar23.10.266.70.143.6Saudi riyal(5.9)0.124.50.130.4UAE dirham

(1242.2)26.28821.828.810064.0Euro(42.6)1.7563.11.7605.7Egyptain Pound185.58.32784.27.52598.7SDRs

Source: Loans & External Debt Department- CBE* Provisional.** Including other liabilities.

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December 2011*June 2011

(5/7) Distribution of External Debt by Main Currencies

Periodical Publications of the Central Bank of Egypt

Periodicity Language Name of Publication

Monthly Arabic and English 1 -Monthly Statistical Bulletin

Quarterly Arabic and English 2 -Economic Review

Every fiscal year Arabic and English 3 -Annual Report

Quarterly English 4 -External Position of the

Egyptian Economy

Note: - All publications of the Central Bank of Egypt are available on the CBE's

website: www.cbe.org.eg

central bank of egypt · banks (excluding the cbe), of which: 458.1 489.7 to government and public...

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