CENTRAL BANK OF EGYPT

ECONOMIC REVIEW

Vol. 48 No. 4

2007/2008

Research, Development and Publishing Sector

The Economic Review is issued by the Research, Development and Publishing 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 country's economy during the reporting period. The CBE posts the Review on its website: www.cbe.org.eg.

Contents Main Macroeconomic Indicators of the Egyptian Economy 2007-2008 Page

1- Leading Article – Seasonality in Tourism: The Case of Egypt 1 2- Development and Growth 1/1 - Gross Domestic Product (GDP) ……………………………………………. 35 1/2 - GDP by Expenditure………………………………………………………... 38 1/3 - Cotton………………………………………………………………………. 41 1/4 - Suez Canal…………………………………………………………………… 46 1/5 - Tourism …………………………………………………………………….. 48 1/6 - Labor Force and Unemployment …………………………………………... 53 1/7 - Inflation ……………………………………………………………………… 55 3- Monetary and Banking Developments 2/1 - Monetary and Banking Policy and Monetary Aggregates…………………… 62 2/1/1- Monetary Policy……………………………………………………………… 62 2/1/2- Reserve Money……………………………………………………………... 65 2/1/3- Banknote Issue ……………………………………………………………… 66 2/1/4- SWIFT Local Services and Clearing Houses Activity………………………. 68 2/1/5- Domestic Liquidity and Affecting Factors ………………………………….. 69 2/2 - Banking Developments ……………………………………………………… 76 2/2/1- Banks’ Aggregate Financial Position ………………………………………. 76 2/2/2- Interbank Money Market in Egypt …………………………………………. 79 2/2/3- Deposits …………………………………………………………………….. 80 2/2/4- Lending Activity ……………………………………………………………. 81 4- Non-Banking Financial Sector 3/1 - Stock Exchange …………………………………………………………….. 84 3/1/1- Shares Market ………………………………………………………………. 88 3/1/2- Bonds Market ………………………………………………………………. 91 3/1/3- Mutual Funds ……………………………………………………………….. 93 3/2 - Investments of the Insurance Sector ………………………………………… 93 5- Public Finance and Domestic Public Debt 4/1 - Consolidated Fiscal Operations of the General Government ……………….. 95 4/1/1- Budget Sector ……………………………………………………………….. 97 4/1/2- Budget Sector, NIB and SIFs ……………………………………………….. 1054/2 - Domestic Public Debt ……………………………………………………….. 1084/2/1- Debt of the Government ……………………………………………………. 1084/2/2- Debt of Public Economic Authorities ……………………………………… 1114/2/3- National Investment Bank (NIB) …………………………………………... 112

Page6 – External Transactions

5/1 - Foreign Exchange Market…………………………………………………... 1155/2 - Balance of Payments………………………………………………………... 1175/2/1- Trade Balance………………………………………………………………. 1175/2/2- Services Balance and Transfers…………………………………………….. 1235/2/3- Capital and Financial Account……………………………………………… 1265/3 - International Finance ………………………………………………………... 1295/3/1- Foreign Direct Investment in Egypt ………………………………………... 1315/3/2- Official Grants ……………………………………..………………….…… 1345/3/3- External Debt……………………………………………………………….. 137 Annex

- Statistical Section………………………………………………………………. 143

Main Macroeconomic Indicators of the Egyptian Economy

2007/2008 1) Area

Total 1002.0 (Thousand km2)Populated

79.0 (Thousand km2)

2) Population and Employment Population on 1st July, (excl. expatriates) 73.6 (million persons)Annual Growth Rate (%) 3.2 Number of Employees 21.7 (million employees)Annual Growth Rate (%)

6.4

3) GDP (2006/2007 Prices) LE bn GDP at Market Price 798.1 Annual Growth Rate (%) 7.2 GDP at Factor Cost 761.4 Annual Growth Rate (%) 7.2

GDP by Sector (percentage point) 7.2 A) Productive Sectors Of which: Manufacturing (Oil Refining & Others) Construction and Building Extractions (Oil, Natural Gas & Others) Agriculture, Irrigation and Fishing

3.1

1.3 .0.6 0.6 0.5

B) Services Sectors Of which: Restaurants and Hotels Wholesale and Retail Trade Suez Canal Communications Transportation and Storage

4.1

0.8 0.8 0.6 0.5 0.3

4) Annual Inflation Rate (%) (Month/ Corresponding Month of the Previous FY)

June 2008

CPI (urban) (January 2007 = 100) 20.2 PPI by Economic Activity (2004/2005 = 100) 33.7

6) US Dollar Exchange Rate Announced by the CBE (PT/Dollar)

June 2008

- Buy and Sell Exchange Rates (Average of the Year) 551.3 - End of the Year (Average Market Buy Rate) 532.4 7) Consolidated Fiscal Operations of the

General Government (Actual) (LE bn) 2007/2008

- Total Revenues 248.8 - Total Expenditures 305.8 Cash Deficit 57.0 Net Acquisition of Financial Assets 10.6 Overall Fiscal Balance Finance 67.6 Total Finance 67.6 - Domestic Finance 6.6 Banking -4.7 Non-Banking 11.3 - Blocked Account Used in Amortizing CBE Bonds 39.0 - Foreign Borrowing 11.4 - Arrears -0.1 - Others 15.2 - Revaluation Differences -4.3 - Net Privatization Proceeds 0.7 - Difference between TBs Face and Present Value -1.1 - Discrepancy 0.2 - Cash Deficit as a Percentage of GDP 6.4 - Overall Fiscal Balance as a Percentage of GDP 7.5 - Expenditures as a Percentage of GDP 34.1 - Revenues as a Percentage of GDP 27.8

5) Annual Discount and Interest Rates (%) June 2008 - CBE Lending and Discount Rate 10.0 - CBE Overnight Deposit and Lending Rates Deposit 10.5 Lending 12.5 - Interest Rate on Less than 3- Month Deposits 6.5 - Interest Rate on One Year or Less Loans 12.0

End of June 8) Domestic Public Debt (LE bn) 2007 2008

Gross, due on: 637.2 666.1- Government 478.2 478.7- Public Economic Authorities 44.5 50.1- NIB 114.5 137.3

End of June 9) Monetary Survey (LE bn) 2007 2008

Domestic Liquidity (M2) Growth Rate (%)

662.7 18.3

766.7 15.7

Reserve Money 134.1 169.9 Growth Rate (%) 15.6 26.7 Money Supply (M1) 131.3 170.6 Growth Rate (%) 20.1 29.9 Currency in Circulation/Money Supply (%) 66.2 61.4 Banking System Foreign Assets, of which: 305.0 330.8 CBE Foreign Assets 160.2 182.0 Banking System Foreign Liabilities, of which: 86.3 27.1 CBE Foreign Liabilities 64.8 1.7 Total Deposits with Banks (Excl. CBE) 650.0 747.2 In Local Currency 463.4 552.1 In Foreign Currencies 186.6 195.1 Foreign Currency Deposits/Total Deposits (%) 28.7 26.1 Total Lending and Discount Balances Extended by Banks (Excl. CBE), of which:

353.7

401.4

To Government and Public Economic Authorities 26.7 31.2 To Business Sectors (Public and Private) 263.5 284.7 Portfolio and TBs with Banks (Excl. CBE), of which: 176.1 201.9 TBs and Government Bonds 111.0 148.4 Loans/Deposits with Banks (%) 54.4 53.7 Investment in Securities, TBs and Equity Participation/Deposits (%) 27.1 27.0

10) Balance of Payments (US$ bn) 2007/2008 Current Account & Transfers 0.9 Trade Balance (23.4) Merchandise Exports 29.4

Oil and its Products % 49.3 Others % 50.7 Merchandise Imports 52.8 Intermediate Goods % 29.2 Investment Goods % 22.5

Consumer Goods % 16.1 Fuel, Raw Materials and Others % 32.2

Services Balance 15.0 Receipts, of which: 27.2

Transportation % 27.8 Travel % 39.8

Investment Income % 12.1 Payments, of which: 12.2

Transportation % 13.2 Travel % 23.6 Investment Income % 15.8

Transfers 9.3 Official % 10.3 Private % 89.7 Capital and Financial Account 7.1 Overall Surplus/(Deficit) 5.4

End of June

2008 2007 11) Outstanding External Debt (US$ bn)

33.9 29.9 Total 32.1 28.6 Due on the Government and Public Sector 1.8 1.3 Due on the Private Sector

Leading Article

- 1 -

Seasonality in Tourism: The Case of Egypt

Introduction

Tourism in Egypt has become a major player in stimulating economic growth and providing more jobs. Of the country's total foreign receipts in FY 2006/2007, travel revenues accounted for 16.2 percent. Through its interrelationships with other economic sectors, tourism also helps promote economic development. In fact, the importance of such sector is likely to increase on account of the unique tourist attractions of Egypt, especially those related to cultural and historical heritage, as well as the favorable climatic and beautiful natural conditions. Moreover, Egypt is renowned for its different kinds of tourism, such as religious, therapeutic, recreational and conferences tourism. However, Egypt has not yet occupied the position it deserves on the global tourism map, as its share was limited to a meager 1.0 percent of total international tourism revenues in 2005∗.

Egypt's modest share of international tourism is attributed to a number

of factors, such as the effects of the events of the Middle East on tourism activity. This is also helped by the seasonality which is a major concern to the tourism industry not only in Egypt but also in many host countries. Actually, several negative effects may emerge out of seasonality such as the poor performance of tourism activity and misallocation of human and financial resources. This, in turn, may contribute to reducing the absorptive capacity of the economy as a whole. Added to this are the low returns and profits which may have a negative impact on foreign currency receipts and GDP. Finally, seasonality may restrict the ability of the decision-maker to precisely forecast tourism variables (i.e. number of visitors, number of tourist nights, average spending per tourist a night, and tourism revenues).

Several economists have had the conviction that the issue of seasonality deserves due attention as it remains one of the least understood issues.

Source: World Tourism Organization∗

- 2 - With this background in mind, the paper aims mainly at:

• Analyzing the seasonality of tourism activity in terms of the number of tourists and tourist nights in Egypt by using monthly data series covering the period from January 1997 to December 2007.

• Studying how far tourism seasonality affects some economic variables. • Reviewing the approaches used for mitigating the effects of seasonality,

drawing on international experiences. • Reviewing the statistical methods used for eliminating seasonal changes

from the time series of the number of tourists and tourist nights, to determine the series behavior through the general trend and cyclical changes, and to eventually forecast their future trends.

The paper is divided into five main sections: Section One: Deals briefly with the definitions, causes, forms and impacts of

tourism seasonality, according to economic literature. Section Two: Focuses on the developments of tourism indicators in Egypt, i.e.

the number of tourists, tourist nights, and tourism revenues; during the period 2002/2003 – 2006/2007, compared with the period 1998/1999 – 2001/2002. It also presents an analysis of seasonal demand on monthly and quarterly basis to specify the peak and off-peak seasons.

Section Three: Analyzes the impacts of seasonal demand on a number of

macroeconomic variables such as foreign currency receipts, GDP, and employment, to estimate the would-be ones, had there been no seasonality.

Section Four: Reviews the lessons drawn on from other country experiences

in mitigating the negative effects of seasonality, in order to provide guidance for improving the tourism sector in Egypt.

- 3 - Section Five: Deals with the statistical measures of tourism seasonality and

the use of the Seasonal Index (SI) to forecast the number of tourists and tourist nights.

Section Six: Summary and Conclusion Section One: Tourism Seasonality: Definitions, Causes, Forms

and Impacts

1- Definitions of Seasonality:

There is no generally accepted definition of seasonality in tourism. However, most empirical studies describe the phenomenon in general terms or in relevance of its causes without providing quantifiable definitions of tourism seasonality. According to these studies, seasonal changes can be described as some sort of pattern in time series which reoccurs regularly in the same timing every year. It should be noted that the recurrence in short durations (e.g. a week, a month, or three months) distinguishes seasonal variations clearly from other changes in time series, such as trend, cyclical and random movements. Moreover, this predictable recurrence of seasonal changes can be used to forecast the phenomenon and form the basis for improving tourist industry in certain region.

Butler (1994) defines seasonality as "a temporal imbalance in the

phenomenon of tourism, and may be expressed in terms of dimensions of such elements as number of visitors, expenditure of visitors, traffic on highways and other forms of transportation, employments and admission to attractions". In Allock's (1994) view, the most significant aspect of seasonality is that it involves the concentration of tourist flows in relatively short periods of the year. This is likely to result in inefficiency within the tourism industry and is a great burden on the physical and social resources of the destination area and therefore an important contributor to the carrying capacity problem.

An example of a quantifiable definition of the appearance of tourist

seasons is given by Lim and McAleer (2001), who define tourist seasons as

- 4 - “months for which the corresponding average indices exceed 1.0, which means that the seasonal factors increase tourist numbers above the trend and cyclical components".

2- Causes of Seasonality:

Even though opinions vary - to some extent - about classifying the different causes of seasonality in tourism, it has been generally accepted that seasonality in tourism has two basic elements, one which may be called "natural", and one "institutionalized". The first relates to regular temporal variations in natural phenomena, particularly those associated with climate (such as temperature, rainfall, the hours of daylight and sunshine…etc). Seasonal variations can be observed from one country to another, and from one region within a country to another according to their geographical positions. In general, seasonal differences increase with distance from the equator, and thus are more marked in high latitudes than in equatorial locations, and consequently have varying impacts upon human activity. A tourism activity, as a part of human activity, is dependent on weather and climate. Many destinations of the world rely on natural "climate-dependent" attractions.

The second form of seasonality (institutionalized) refers to traditional

temporal variations caused by human actions and policies. These variations exist mainly due to summer vacations of educational institutions (e.g. schools, universities, institutes…etc.). They are also the result of religious holidays, fairs and festivals, official holidays and vacation, and tradition/inertia.

One of the most common forms of institutionalized seasonality which affects tourism is public holidays. These are found in almost all countries although the dates involved vary greatly around the world. Despite the fact that public holidays were most single days which had only minimal influence on tourism, however, over the years - particularly since the early nineteenth century - days have expanded into weekends and breaks of longer duration, and assumed increasing relevance for tourism and long distance travel.

- 5 -

The most significant elements of institutionalized seasonality are summer holidays of schools, institutes and universities. They dominate holiday patterns and hence the tourist industry. This is for three main reasons:

1. Summer months offer the best weather for the traditional holiday, whether this is by the beach, in tourist villages and resorts, natural parks and entertaining or rural sites.

2. The tradition of a family taking a holiday together means that if their children are in different levels of education, the summer holidays are the only time when holidays can be taken without missing their education.

3. In western countries, as the industrial revolution progressed, along with social reforms and related legislation, the idea of holidays with pay became accepted. In most countries such holidays became tied to the main summer season to allow families to holiday together.

3- Forms of Seasonality:

Seasonality takes a number of forms which display different patterns of visitation. Butler and Mao (1997) identify three basic patterns, single peak, two-peak and non-peak. Single peak seasonality occurs where the seasonal pattern of demand in a generating region matches the seasonal pattern of attractiveness of a destination, tending to produce extreme seasonality, for example, in some Mediterranean destinations where summer peak traffic may be more than ten times winter traffic. Two-peak seasonality occurs where there are two seasons, one of which is summer.

4- Impacts of Seasonality:

There are some positive impacts of seasonality. Maintenance work on buildings or attractions, for example, is typically scheduled for the off-peak periods. However, the majority of the academic literature dealing with the issue of seasonality identifies a number of negative effects of seasonal fluctuations on the environmental, socio-cultural, economic, and employment levels.

- 6 -

Ecological impacts are largely synonymous with the negative effects occurring due to the concentration of visitors during the peak season at a destination (Grant, Human & Le Pelley, 1997). These include, for example, the strain on the ecological carrying capacity of a particular destination, physical damage of fragile environments, and the disturbance of wildlife. In the long run, this will profoundly influence the number of potential visitors as the full range of services and activities may not be available and the reputation of the overall image of a destination will be, eventually, lowered.

Socio-cultural impacts include not only the effects of seasonal variations

on the host community but also on the visitor. Problems for local people include, for example, congestion, crowded streets, queues for services, and significant increases in the costs of community services, which place a strain on regular infrastructure and services (Murphy, 1985). Mathieson & Wall (1982) draw attention to the link between tourism and increased crime due to the higher number of people present during the peak season. Therefore, extra services (e.g. health and security) are required.

The economic (including employment) impacts of seasonality – which

this paper mainly looks at – relate mostly to problems in the off-peak periods. Manning & Powers, (1984) and Williams & Shaw, (1991) refer to the following points:

Lower contribution of tourist revenues in the foreign exchange

receipts of a particular country. The retreat of the contribution of the tourism sector and the various

activities that have forward- and backward-oriented relations with it, in the GDP.

Short business operating season with reduced level of operation that

creates high levels of off-season unemployment. This is unlike the peak season which creates job opportunities for a big number of citizens in different economic activities.

- 7 - Lower profits of tourism institutions that some enterprises close

during the off-peak season. However, many must remain open to obtain sufficient income in order to cover the fixed costs. Moreover, maintenance work is typically scheduled for the off-peak periods.

Section Two: Tourism Indicators in Egypt:

The number of arrivals increased from 4.3 million (1.1 million or 25.6 percent of which are Arabs) during FY 2001/2002 to 9.8 million (1.9 million or 19.4 percent of which are Arabs) during FY 2006/2007, with an average annual growth rate of 17.9 percent during the period 2002/03 – 2006/07 (against an annual average of 6.0 percent during the period 1998/99 – 2001/02). Moreover, the number of tourist nights spent in Egypt went up from 28.5 million (6.8 million or 23.9 percent of which were spent by Arabs) to 96.3 million (of which 23.4 million or 24.3 percent were spent by Arabs) with an annual growth rate of 27.6 percent on average during the period 2002/03 – 2006/07, against 7.3 percent during 1998/99 – 2001/02. Due to the remarkable increase in the number of arrivals and tourist nights, tourism revenues rose from US$ 3.4 billion in FY 2001/2002 to US$ 8.0 billion in 2006/2007, with an annual average growth rate of 18.7 percent, against 4.1 percent during the period 1998/99 – 2001/02.

- 8 -

Table (1): Tourism Indicators

Average Annual Growth Rate (%)

1997/98

2001/02

2006/07 1998/99-2001/02

2002/03- 2006/07

Number of arrivals (mn), of which: 3.4 4.3 9.8 6.0 17.9 From European countries - 2.8 6.7 - 19.1 From Arab countries - 1.1 1.9 - 11.6 Number of tourist nights (mn), of which:

21.5

28.5

96.3

7.3

27.6

From European countries 19.0 59.6 - 25.7 From Arab countries - 6.8 23.4 - 28.0 Tourism revenues (US$ bn) 2.9 3.4 8.0 4.0 18.7 Source: The CBE Monthly Statistical Bulletin – various volumes.

The remarkable increase in the number of arrivals and tourist nights during the period 2002/03 – 2006/07, compared with the period 1998/99 – 2001/02, is attributed to the fact that Egypt enjoys various kinds of tourism attraction, a pleasant climate, and beach resorts along the Red Sea and the Mediterranean Coast. With this wide range of tourism products, Egypt has a well developed and advanced infrastructure (e.g. tourist facilities) along with high quality service facilities, namely a wide range of up-market hotels and air, land, marine and fluvial transportation network, communication utilities and tourist guide centers. This makes a tourist’s visit to Egypt, whatever the purpose is, always enjoyable, excitable, and beneficial. In addition, the government has exerted many efforts in the field of tourism development since the early 1980s, salient of which was the issue of Presidential Decree No. 425/1992 regarding the establishment of the General Authority for Tourism Development. Up-till the year 2008, the Authority added 75 thousand tourist rooms to the hotel capacity in Egypt. The number of tourist companies reached around 1409 and the number of rooms in tourist villages, and floating and fixed hotels 190.1 thousand.

- 9 - However, tourism activity did not increase in such a way that could

enable it to play a vital role in the Egyptian economy. This was manifest in the modest contribution of the tourism sector to GDP (3.5 percent in FY 2006/2007) and in Egypt's scanty share of total international tourism revenues (only 1.0 percent in 2005).

The continuously modest share of tourism in GDP or in international

tourism is ascribed to a number of factors including seasonality in tourism demand, or in other words, the peak of tourism demand in particular months of the year compared to other months. According to Table no. 2, tourism activity picks up during the first quarter of every year, reaching its peak in August (10.1 percent of total tourists during the whole year). July comes next with 9.6 percent, October with 9.4 percent and April with 9.1 percent. As for tourist nights, August also comes on top with 13.5 percent of the total number of tourist nights during the whole year. September follows with 10.5 percent, then November, October and July with 9.0 percent, 8.9 percent and 8.4 percent, respectively.

- 10 -

Table (2): Average Number of Tourists and Tourist Nights During 1997-2007

Tourist Arrivals Tourist Nights

Month Number % Number %

Grand Total 6405.3 100 53976.2 100 Q1 1788.8 27.9 17542.1 32.5 July 613.8 9.6 4554.1 8.5 August 645.8 10.0 7299.1 13.5 September 529.2 8.3 5688.9 10.5 Q2 1672 26.1 13457.2 24.9 October 604.6 9.4 4799.8 8.9 November 555.7 8.7 4878.3 9.0 December 511.7 8.0 3779.1 7.0 Q3 1440.9 22.5 11240.1 20.8 January 432.1 6.8 434.6 7.5 February 456.3 7.1 3282.8 6.1 March 552.5 8.6 3922.7 7.2 Q4 1503.5 23.5 11736.8 21.7 April 581.6 9.1 4438.2 8.1 May 465.9 7.3 3862.0 7.2 June 456.0 7.1 3436.6 6.4 Source: Ibid

In August, tourism usually reaches its highest activity in terms of the

number of visitors and tourist nights. This is attributed to the fact that the said month is an official holiday in several tourism exporting countries, particularly the Arab and European countries. ∗ Another factor at work is the relatively

∗ The European countries accounts for a higher share of the total number of tourist arrivals to Egypt

in Q1; however, their contribution usually peaks in Q2 (October/December) and Q3 (January/March) of every year.

- 11 -

moderate degrees of temperature and humidity that Egypt enjoys compared to many of tourism exporting countries. The average number of tourist arrivals from the European countries reached around 1 million or 60.0 percent of the total number during the first quarter (July/September) of 2001/2002 - 2006/2007. Concurrently, the average number of tourist arrivals from the Arab countries totaled around 604.7 thousand or 30.0 percent.

Table (3): Average Number of Tourists and

Tourist Nights, 2001/2002 - 2006/2007

Q1 Q2 Q3 Q4 Number % Number % Number % Number % Total Number of Tourists ( in 000s), 2031.0 100 2042.0 100 2059.4 100 2108.6 100

of which: European countries 1217.0 60.0 1474.7 72.2 1486.6 72.2 1468.2 69.6 Arab countries 604.7 29.8 332.3 16.3 334.9 16.3 381.4 18.1 Total Number of Tourist Nights (in 000s), 23885.5 100 17441.8 100 18131.4 100 18918.6 100

of which: European countries 11741.0 49.2 12245.3 70.2 12624.5 69.6 12794.1 67.6 Arab countries 9363.3 39.2 3173.0 18.2 3368.1 18.6 3725.9 19.7 Source: The Central Bank of Egypt

Chart (1) illustrates that the number of tourist arrivals deviated from the

general trend, during January 1997 up to December 2007. Accordingly, the number of tourists fluctuated upwards in certain months; such as August, July, October, April and March, and downwards during the rest of the year.

- 12 -

Chart (1) Fluctuations in the Number of Tourist Arrivals

0.0

100.0

200.0

300.0

400.0

500.0

600.0

700.0

Jan. Feb. March April May June July Aug. Sept. Oct. Nov. Dec.

thousand

average Number of Tourists trend line

Chart (2) demonstrates the highly upward fluctuation in the number of

tourist nights, relative to the general trend, in August and September; yet this trend was less pronounced in April, July, October and November. By contrast, the number of tourist nights deviated from the general trend during the rest of the year, showing a decline.

Chart 2

Fluctuations in the Number of Tourist Nights

0.0

1000.0

2000.0

3000.0

4000.0

5000.0

6000.0

7000.0

8000.0

Jan. Feb. March April May June July Aug. Sept. Oct. Nov. Dec.

thousand

Average Number of Nights trend line

- 13 - Section Three: Effects of Tourism Seasonality on Some Macroeconomic

Variables:

Egypt, similar to many host countries, gives high priority to its tourism industry as a major foreign currency earner. It seeks to maximize its foreign currency revenues so as to help finance its external payments. However, tourism - and its underlying seasonality - affects a number of other economic variables, such as foreign exchange revenues (receipts from travel expenses, hotel accommodations, sightseeing tours, entry fees for tourist attractions and locations, and purchases of souvenirs and others… etc.). Tourism also affects the GDP both directly and indirectly. In a direct way, the sector of hotels and restaurants contributes to the GDP. Meanwhile, the tourism sector indirectly plays a key role in developing the closely related sectors. Moreover, tourism affects employment through its role in job creation not only within this sector per se, but also indirectly in other sectors. Hereunder is an attempt to analyze the impact of the seasonality of tourism demand on some macroeconomic variables. 1- Effects of Tourism Seasonality on Foreign Currency Earnings

Developments in inbound tourism in Egypt manifested a number of positive indicators. Foremost of these was the constant increase in tourism revenues, which reached US$ 8.0 billion or 16.2 percent of total current receipts, covering around 50.6 percent of the trade deficit during FY 2006/2007. The following table shows these positive indicators:

- 14 -

Table (4): Tourism Revenues and

BOP Main Components (Annually) (US$ bn)

1997/1998 2001/2002 2006/2007 Tourism revenues (1) 2.9 3.4 8.0 Invisible receipts (2) 10.5 9.6 20.4 Current receipts (3) 19.3 19.8 49.5 Trade deficit (4) 11.7 7.5 15.8 Travel payments (5) 1.3 1.2 1.9 (1)/(2) % 27.6 35.4 39.2 (1)/(3) % 15.0 17.2 16.2 (1)/(4) % 24.8 45.3 50.6 (5)/(1) % 44.8 35.3 23.8 Source: Central Bank of Egypt.

Egypt is endowed with a wealth of tourism attractions, yet the relative

importance of tourism revenues to the Egyptian economy is considered disproportionately low compared with other countries with less endowments. This is mainly ascribed to the high payments for outbound tourism (religious, therapeutic, cultural, recreational… etc.), which recorded an annual average of 29.1 percent of the total tourism revenues collected during the period 1997/1998 - 2006/2007. Other affecting factors included the impact of seasonality on tourist demand in Egypt. The following table demonstrates the improvement in the aforementioned indicators in the first quarter as compared to the other quarters of the FY.

- 15 -

Table (5): Average Tourism Revenues and some

BOP Components during 2003/2004 - 2006/2007(Quarterly)

(US$ bn) July/Sept. Oct./Dec. Jan./March April/June Tourism revenues (1) 2.1 1.5 1.6 1.6 Invisible receipts (2) 4.4 3.8 4.0 4.2 Current receipts (3) 9.3 9.0 9.6 10.3 Trade deficit (4) 2.6 2.8 2.5 3.6 Travel payments (5) 0.35 0.42 0.4 0.4 (1)/(2) % 47.7 39.5 40.0 38.1 (1)/(3) % 22.6 16.7 16.7 15.5 (1)/(4) % 80.8 53.6 64.0 44.4 (5)/(1) % 16.7 28.0 25.0 25.0 Source: Central Bank of Egypt.

Assuming that tourism demand was not affected by seasonality, or that tourism revenues grew in the periods of October/December, January/March and April/June at the same rate of July/September, the average ratio of tourism revenues to the BOP invisible receipts would rise to 46.7 percent during the year (against an average of 41.5 percent in case tourism is affected by seasonality). Likewise, the average ratio of tourism revenues to current receipts would increase to 21.1 percent (against 17.8 percent) and the average coverage ratio of tourism revenues to the trade deficit would mount to 73.0 percent (against 59.1 percent). On the other hand, the average ratio of travel payments abroad (outbound tourism) to tourism revenues would decline to 18.7 percent (against 23.1 percent). 2- Effects of the Seasonality in Tourism Demand on GDP

The national accounts statistics denote the modest share of the tourism sector in the Egyptian economy and the slight contribution of this sector as a key foreign currency earner to the balance of payments. However, these statistics do not reflect the real contribution of the tourism sector to the

-16 -

various economic activities, because of the fact that a tourist’s use of a particular commodity or service virtually relates it to tourism. Bearing this in mind, the academic studies distinguish between three types of economic effects exerted by tourism. The first type is direct effects (resulting from change in tourist spending), the second is indirect effects (changes caused by spending cycles as a result of tourism's dependence on the commodities and services of other sectors) and the third is induced effects (changes in the economic activity as a result of the household sector’s spending of the income induced directly or indirectly from tourism). In view of the difficulty of measuring indirect and induced effects, this paper will rather focus on measuring the direct effects.

The average annual GDP share of the tourism sector (expressed in terms of the share of restaurants and hotels in GDP which represents direct effects) grew from 18.5 percent during 1998/1999 – 2001/2002, to 30.5 percent during 2002/2003 - 2006/2007. Accordingly, the relative weight of the tourism sector output rises from 1.8 percent at the end of the first period to 3.6 percent at the end of the second period.

Table (6): Tourism Output and its Share in GDP at Current Prices

(LE bn) 1997/1998 2001/2002 2006/2007 Value % Value % Value % Restaurants and hotels output

3.3

1.2

6.5

1.8

24.6

3.6

GDP at current prices 266.7 100 354.5 100 684.4 100 Source: The Central Bank of Egypt.

- 17 - The quarterly data of the national accounts for the period 2003/2004 -

2006/2007 indicated a rise in the share of the sector of restaurants and hotels in GDP during the second quarter (October/December), recording an average of 3.7 percent. The third quarter (January/March) came next with an average of 3.5 percent, whereas the sector's average share in the first and fourth quarters reached only 3.1 percent and 2.8 percent, respectively. This implies that seasonality affects the output of restaurants and hotels as well.

Table (7): Tourism Sector: Average Output and Share in Current GDP, 2003/2004 -

2006/2007 (Quarterly) (LE bn)

Source: Central Bank of Egypt

Assuming that tourism demand is not affected by seasonality, the share of restaurants and hotels sector in GDP rises to an average of 3.5 percent per annum during the mentioned period (against an annual average of 3.2 percent in case it is affected by seasonality).

(3) The Effects of Tourism Demand Seasonality on Employment

In 2001/2002, employment in the restaurants and hotels sector increased from about 215.0 thousand persons to around 345.0 thousand in 2006/2007, with a yearly average growth rate of 9.7 percent. This rate exceeded its counterpart in the productive services sector∗ (4.2 percent) and the economy

∗ Including storage and transportation;, communications; Suez Canal; wholesale and retail trade;

financial intermediaries and insurance; and restaurants and hotels sectors.

July/ September

October/ December

January/March

April/ June

Restaurants and Hotels Output (1) 4.3 4.9 4.9 4.1 Current GDP (2) 139.3 134.1 139.1 144.5 Ratio of (1) to (2) % 3.1 3.7 3.5 2.8

- 18 -

as a whole (2.6 percent). Consequently, the relative importance of employment in the restaurants and hotels sector grew from 1.2 percent to 1.7 percent of total employment in the national economy, and from 15.4 percent to 16.6 percent of total employment in the productive services sectors. As the direct and indirect effects of the tourism sector are not only limited to the restaurants and hotels sector but also extend to other sectors that are economically interrelated with this sector, the relative importance of tourism employment is projected to exceed 1.7 percent of total employment in the economy as a whole. This highlights the importance of the tourism sector in creating more jobs. The effect of seasonality on tourism activity therefore restricts the ability of this sector to absorb a larger amount of employment.

Table (8): Employment in Tourism, Productive Services and the

National Economy

During 1997/98 2001/02 2006/07 Average

Growth Rate During (%)

Number (in

Thousand )

% Number (in

Thousand)

% Number (in

Thousand)

% 98/99-

2001/02

2002/03-

05/06 Employment in:

Restaurants and Hotels Sector

194.0

1.2

217

1.2

345.0

1.7

2.8

9.7 Productive Services Sectors

2384

14.8

2718.6

15.4

3340.0

16.6

3.3

4.2 National Economy

16149

100

17674.0

100

20120

100

2.3

2.6

Source: Ministry of Economic Development

- 19 - Measuring the effect of seasonality on employment in the tourism

industry requires a breakdown of employment in the restaurants and hotels sector on a quarterly basis during the period under review. However, due to data unavailability for this period, employment in the restaurants and hotels sector was distributed on a quarterly basis by using a set of indicators related to tourism employment (such as the number of tourist nights and tourists). This is shown in the following steps:

1- Table (9) shows the correlation coefficient between the number of

employees in the restaurants and hotels sector and the number of tourist arrivals and tourist nights.

Table (9): Correlation Coefficient between The Number of Employees in The Tourism Sector And The Number of Tourist Arrivals and Tourist

Nights

Number of Tourists

Number of Tourist Nights

Number of Employees in the Restaurants and

Hotels Sector Number of Tourists 1 0.99 0.96 Number of Tourist Nights 0.99 1 0.95

Number of Employees in the Restaurants and Hotels Sector 0.96 0.95 1

2- Table (9) also shows the following:

- The simple correlation coefficient between the number of employees in the restaurants and hotels sector and the number of tourists is 0.96.

- The simple correlation coefficient between the number of employees in the restaurants and hotels sector and the number of tourist nights is 0.95.

- The simple correlation coefficient between the number of tourist nights and the number of tourists is 0.99.

- 20 - 3- The increase in coefficients, as shown in the previous table, indicates that

employment is largely affected by the number of tourists and tourist nights. Also, the increase in the coefficient between the number of tourist nights and tourists gives evidence that these two indicators can possibly be used to distribute employment in the tourism sector on a quarterly basis. This can be effected by averaging the quarterly distribution of these two variables to make the following distribution:

Table (10): Quarterly Distribution of Employment in the Sector of

Restaurants & Hotels during 2003/04 - 2006/07 (Thousand)

No. of Tourists

(1)

Relative Importance

(2)

No. of Tourist Nights

(3)

Relative Importance

(4)

Average Relative

Importance*

No. of Workers in Restaurants

& Hotels 2003/04 7511 100 73002 100 ---- 260.0

Q1 1939 25.8 21769 29.8 27.8 70.5 Q2 1858 24.7 16388 22.4 23.55 59.7 Q3 1803 24.0 17237 23.6 23.8 60.3 Q4 1911 25.5 17608 24.1 24.8 62.8

2004/05 8649 100 85731 100 ---- 285.0

Q1 2390 27.6 28147 32.8 30.2 84.3 Q2 1999 23.1 18677 21.8 22.45 62.6 Q3 2101 24.3 19331 22.5 23.4 65.4 Q4 2159 25.0 19576 22.8 23.9 66.7

2005/06 8694 100 85112 100 ---- 309

Q1 2214 25.5 27315 32.1 28.8 90.7 Q2 2134 24.5 18949 22.3 23.4 73.7 Q3 2153 24.8 19228 22.6 23.7 74.7 Q4 2193 25.2 19620 23.1 24.2 76.2

2006/07 9756 100 96270 100 ---- 345

Q1 2269 23.2 28854 30.0 26.6 91.8 Q2 2436 25.0 21602 22.4 23.7 81.8 Q3 2480 25.4 22325 23.2 24.3 83.8 Q4 2571 26.4 23489 24.4 25.4 87.6

* Representing the average relative importance in columns (2) and (4).

- 21 - The table above shows that the average number of workers in restaurants and hotels represented about 28.4 percent of the total employment in the sector in the first quarter of 2003/04 – 2006/07. On the other hand, this average registered some 24.6 percent, 23.8 percent and 23.3 percent in the fourth, third and second quarters, respectively. Assuming that tourism was not influenced by seasonality (for example in 2006/2007), the average number of workers would scale up to 1.82 percent of the total employment in the economy as a whole (against 1.7 percent in case tourism is affected by seasonality). Section Four: Lessons from Countries’ Experiences in Reducing the

Negative Impacts of Tourism Seasonality

Despite the consensus among many researchers١ on the difficulty of addressing the seasonality problems in the tourism sector to reduce its negative impacts, they were of the view that some sort of balance can be stricken between tourism supply and demand at peak and low seasons by applying a number of methods. The most important of these are the following:

1- Providing a variety of incentives at off-peak seasons, by applying the policy of tourist seasonalized pricing during those periods; that is reducing tourism prices, making special offers for tours, scheduling tour prices for a specific period of time, or offering additional free of charge tours to some tourist groups;

2- Cutting down taxes on tourist institutions in low seasons; and

3- Setting intensive programs for festivals, celebrations and conference

tourism at times other than the main tourist seasons, in order to promote demand on tourism during such times.

١ Such as Yacoumis (1980) and McEnnif (1992)

- 22 - Section Five: Statistical Measures of Seasonal Variations, Adjustment,

and Forecasting

The main aim of this part is to clarify the seasonal adjustment approach applicable to the time series of the number of tourists and tourist nights. This is aimed to identify the pattern of the series in the light of its trend and regular variations, and on this basis, forecast its future trends. (1) Statistical Measurement of Seasonal Variations & Adjustment

The applicable statistical approach of seasonal adjustment can be

summarized in the following steps: 1) Assuming that yt is the time series that needs to be seasonally adjusted, a

series for the Moving Average (MA) of the original series is to be formed. The MA series should consist of the same number of periods wherein seasonality recurs. For instance, if the original series is quarterly, the MA should consist of 4 periods, and if it is monthly, the MA should contain 12 periods. Accordingly, the MA is calculated as follows:

For quarterly data: MAt= ¼ (yt-2 + yt-1+ yt + yt+1) For monthly data: MAt= 1/12 (yt-6 + yt-5+…... yt + yt+1+…..+ yt+5)

2) A Centered Moving Average (CMA) is calculated for the MA series (calculated beforehand in the first step), given that each CMA consists of just two time series. Accordingly, the CMA is calculated as follows:

CMAt = 1/2 (MAt + MAt+1)

3) The CMA calculated in the previous step represents the data

deseasonalized by using the MA.

- 23 - 4) By comparing the data of the original time series (yt) with the CMA series

(CMAt), a measurement of seasonality can be inferred. In practice, the seasonal factor is calculated as follows:

SFt = (yt / CMAt)

Given that:

SFt : represents the seasonal factor. Yt : represents the original time series. CMAt: represents the Centered Moving Average series, i.e. the original series, excluding the seasonality effect. In case 1 < SFt, this refers to the period in which y is larger than the annual average. For example, if y is a quarterly sales series, the periods where 1 < SFt should refer to the quarterly observations which reflect high sales.

5) Once the seasonal factors of each period are calculated, i.e. reaching a SFt

series for the periods t = 1, 2, 3,…, it is noticed that the values of each season are extremely consistent. For instance, if the available series is quarterly, it is found that all the seasonal factors corresponding to the first quarter of every year have the same pattern and behaviour. Also, all the seasonal factors corresponding to the second quarter of every year manifest the same pattern and behaviour, and the same holds true for the other seasons.

6) After identifying the seasonal factors for each quarter (or month), the Seasonal Index (SI) can be calculated by using the average seasonal factors of every respective season. For example, the SI of the first quarter can be known by calculating the average seasonal factors of the first quarter of every year. The same holds true for the other seasons.

- 24 - 7) After identifying the SI in the previous step, the original time series can be

seasonally adjusted through the following relation: Deseasonalized data = Raw data / SI (2) Using SI to Forecast the Number of Tourists and Tourist Nights

The Seasonal Index (SI) can be used to predict the value of the phenomenon in a specific year, through identifying the value of this phenomenon in a single quarter or month of that year. This is to be effected by seasonally adjusting the value of the phenomenon according to the relation mentioned in step (7) above, and changing the resultant figure into an annual figure.

For example, if the actual number of tourists in January 2007 was 723

thousand, the seasonally adjusted number of tourists in that month should reach 861 thousand, assuming that the SI of the number of tourists in January is 0.84. Therefore, the number of tourists projected for 2007 as a whole should reach 10329, which approximates the actual number (11091) for the same year. Moreover, if the number of tourists in January 2008 is 916 thousand, the seasonally adjusted number reaches 1090 thousand. Thus, the expected number of tourist arrivals for 2008 as a whole should reach 13080 thousand.

Similarly, if the number of tourist nights in January 2007 was 7920

thousand, the seasonally adjusted number would reach 8165 thousand (assuming that the SI of the number of tourist nights in January was 0.97). Accordingly, the projected number of tourist nights for 2007 as a whole would amount to 97980 thousand, against an actual of 111466 thousand nights during the same year. Moreover, if the number of tourist nights in January 2008 was 11195 thousand, then the seasonally adjusted number should reach 11541 thousand nights. Thus, the number of tourist nights for 2008 as a whole was projected to reach 138495 thousand.

- 25 - When comparing the actual numbers of tourists and tourist nights with

their estimated numbers, according to the method mentioned above, it is noticed that such estimates are highly accurate [see charts (3) and (4)].

Chart (3)

Number of Tourist Arrivals (Actual & Estimated) during 1998-2008

2000

4000

6000

8000

10000

12000

14000

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Thousand

actual number of tourists estimated number of tourists

Chart (4)

Number of Tourist Nights (Actual & Estimated) during 1998-2008

10000

30000

50000

70000

90000

110000

130000

150000

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Thousand

actual number of nights spent estimated number of tourist nights

- 26 - Section Six: Summary and Conclusion

In its five main parts, the paper provides an analysis of tourism seasonality in Egypt. The first part deals with the definitions of seasonality as one of the time series components, besides reviewing its causes, forms, and impacts on the theoretical level. Seasonality is defined as a specific pattern regularly recurring in the time series at a particular time every year. The paper also ascribes seasonality to certain causes; natural and institutional. In addition, it sheds light on three distinctive types of seasonality: a single peak, two-peak and non-peak seasonality; and on the economic, social and environmental impacts of seasonality.

The second part focuses on tourism activity developments in Egypt. Though the available data shows a marked improvement in the performance of this sector during the period of 2002/2003 - 2006/2007, certain factors still adversely affect its performance, including the seasonality in tourism demand.

The third part analyses the impact of the seasonality in tourism demand in Egypt on foreign exchange resources, GDP and employment. The fourth part highlights the main lessons drawn from the experiences of some countries in their pursuit of minimizing the negative effects of tourism seasonality.

Finally, the fifth part sheds light on how to remove the seasonal variations, and seasonally adjust the data of the numbers of tourist arrivals and nights, employing the statistical methods used in this field. In addition, the seasonal indicator (SI) is used in forecasting both the number of tourist arrivals & tourist nights by following the steps clarified in this part.

- 27 - The study came up with the following main conclusions with respect to:

First: analysis of tourism seasonality in Egypt

• The tourism sector experiences a peak season in some months, for instance August and October, whereas other months, e.g. February and June, are low seasons.

• The relative importance of inbound tourism from some European countries peaks in the second quarter of every year; in terms of the number of tourist arrivals (73.7 percent) and tourist nights (71.5 percent). This is ascribable to the moderate weather conditions in Egypt compared with Europe in this period, which also coincides with Christmas holidays.

• The relative importance of tourism from the Arab countries is the highest in the first quarter of every year; in terms of the number of tourists (30.0 percent) and tourist nights (38.0 percent). This is due to the fact that the month of August is an official vacation in many Arab tourism exporting countries.

Second: impact of tourism seasonality on some economic variables

• Tourism revenues cover only 59.1 percent of the trade deficit (instead of 73.0 percent in case tourism activity is not affected by seasonality)

• Tourism activity contributes some 3.2 percent of GDP (instead of 3.5 percent in the absence of seasonal effects).

• The tourism sector accounts for some 1.7 percent of the total employment in the whole economy (instead of 1.82 percent in case it is not affected by seasonality).

- 28 - Third: lessons drawn from country experiences with reducing the

negative effects of tourism seasonality The Egyptian Ministry of Tourism studies the experiences of pioneer

countries in the area of tourism; having an eye on the Egyptian experience itself, to draw the lessons that help promote tourism from the respective countries in the “off-season”. In this respect, efforts are being exerted to activate all types of tourism: (medical, conference, recreational and culture tourism, etc.) during most of the year, by making the best of Egypt’s unique tourism potentials. To this end, Egypt has been endeavoring to maximize benefit from its tourist attractions during the off-peak season, by providing a variety of incentives. This included the application of a seasonalised pricing policy, by offering competitive prices in the off-season, scheduling tour prices for a specific period of time or granting additional free tours for some groups. These measures are bound to boost not only inbound tourism, but also domestic tourism in the off-peak season.

- 29 - Table 1/1: Number of Tourist Arrivals and Tourist Nights

( January 1997 – December 2007) (in thousand)

Source: CBE, Monthly Statistical Bulletin, various issues.

Period Number of

Tourist Arrivals

Number of Tourist Nights

Period Number of

Tourist Arrivals

Number of Tourist Nights

January 1997 260 2221 January 2000 377 2504 February 317 1807 February 403 2322 March 354 2408 March 523 2873 April 344 2389 April 548 2797 May 331 2090 May 410 3244 June 299 1610 June 405 2243 July 425 2032 July 506 2382 August 445 3399 August 515 3491 September 352 3162 September 455 3249 October 391 2477 October 497 2957 November 265 2084 November 483 2820 December 178 910 December 384 1906 January 1998 168 1097 January 2001 355 2882 February 170 994 February 397 2332 March 215 1187 March 513 2811 April 297 1645 April 504 3282 May 241 1270 May 375 2545 June 250 1206 June 363 2045 July 385 1695 July 467 2707 August 420 3152 August 500 3537 September 306 2234 September 372 2655 October 380 2128 October 290 2017 November 323 2025 November 220 1600 December 301 1518 December 293 1400 January 1999 317 2318 January 2002 244 2294 February 291 1634 February 351 1983 March 415 2022 March 459 2768 April 420 2946 April 428 3191 May 361 2187 May 355 2377 June 348 1833 June 363 2012 July 473 2376 July 494 2719 August 483 3783 August 574 4227 September 412 3610 September 498 2957 October 465 2896 October 530 3003 November 459 3324 November 422 2875

December 353 2073 December 474 2259

- 30 - Table 1/1 (Contd.): The Number of Tourist Arrivals and Tourist Nights

(January 1997 – December 2007) (in thousand)

Source: Ibid

Period Number of

Tourist Arrivals

Number of Tourist Nights Period

Number of Tourist Arrivals

Number of Tourist Nights

January 2003 401 2767 July 840 7909 February 427 2307 August 743 10921 March 356 1999 September 631 8485 April 363 1950 October 714 6510 May 319 2879 November 738 6859 June 381 3071 December 682 5580 July 623 4858 January 2006 706 7245 August 743 9349 February 668 5527 September 573 7562 March 779 6456 October 664 6129 April 921 7650 November 620 5591 May 638 6066 December 574 4668 June 634 5904 January 2004 567 6341 July 794 7535 February 580 5151 August 814 12396 March 656 5745 September 661 8923 April 723 6653 October 855 7404 May 612 5800 November 803 7504 June 576 5155 December 778 6453 July 793 6961 January 2007 723 7920 August 877 12129 February 776 6391 September 720 9057 March 981 8014 October 735 7037 April 1031 8892 November 678 6655 May 797 7531 December 586 4985 June 743 7066 January 2005 635 6801 July 952 8921 February 639 5663 August 990 13906 March 827 6867 September 841 10684 April 819 7425 October 1130 10240 May 686 6493 November 1102 12324 June 654 5658 December 1025 9577

- 31 -

References

:English References: First

[1] Allock, J. B. (1994), "Seasonality". In S. F. Witt & L. Moutinho (Eds.),

"Tourism Marketing and Management Handbook", 2nd ed.: 86-92. New York: Prentice Hall.

[2] Ball, R. M. (1988), "Seasonality: A Problem For Workers In The Tourism

Labor Market", Service Industries Journal, 8(4): 501-513. [3] BarOn, R. V. (1975), "Seasonality in Tourism- A Guide to the Analysis of

Seasonality and Trends for Policy Making", The Economist Intelligence Unit Ltd., London: Technical Series No. 2.

[4] Baum, T. (1999), "Seasonality in Tourism: Understanding the Challenges

– Introduction", Tourism Economics, Special Edition on Seasonality in Tourism, 5(1): 5-8.

[5] Baum, T. & Hagen, L. (1999), "Responses to Seasonality: The

Experiences of Peripheral Destinations". International Journal of Tourism Research, 1(5): 299-312.

[6] Butler, R. W. (1994), "Seasonality in Tourism: Issues and Problems." In

A. V. Seaton (Ed.), "Tourism: The State of the Art: 332-339".Chichester: Wiley & Sons.

[7] David W., and Tony, W. (1998), "An Analysis of the Seasonal Variation

in the National Tourism Indicators", Canadian Tourism Commission. [8] Grant, M., Human, B. & Le Pelley, B. (1997), "Seasonality in British

Tourist Authority & English Tourist Board (Eds.) ", Insights – Tourism Intelligence Papers, Vol. 9: A5-9.

- 32 -

[9] Hinch, T. D. & Hicky, G. P. (1996),"Tourism Attractions & Seasonality:

Spatial Relationships in Alberta". In K. Mackay & K. R. Boyd (Eds.), "Tourism for All Seasons: Using Research to Meet the Challenge of Seasonality: 69-76." Winnipeg, Manitoba: University of Manitoba.

[10] Jeffery, D. & Barden, R. R. D. (1999), "An Analysis of the Nature,

Causes and Marketing Implications of Seasonality in the Occupancy Performance of English Hotels." Tourism Economics, 5(1): 69-91.

[11] Koenig, N. & Bischoff, E. (2004b), "Analyzing Seasonality in Welsh

Room Occupancy Data", Annals of Tourism Research. [12] Lim, C. & McAleer, M. (2000), "A Seasonal Analysis of Asian Tourist

Arrivals to Australia", Applied Economics, 32(4): 499-509. [13] Lundtorp, S. (2001), "Measuring Tourism Seasonality". In T. Baum &

S. Lundtorp (Eds.), "Seasonality in Tourism: pp. 23-50". Oxford: Pergamon.

[14] Mathieson, A. & Wall, G, (1982), "Tourism – Economic, Physical and

Social Impacts". Essex: Longman. [15] Nicol K., and Eberhard E. Bischoff, "Seasonality Research: The State

of the Art", European Business Management School, University of Wales Swansea, UK.

[16] Roger G. Francis L., and Alex G. (2000), "Seasonality of Labor

Markets Comparison of Canada, the US and the Provinces", Applied Research Branch, Strategic Policy.

[17] Wanhill, S. R. C. (1980), "Tackling Seasonality: A Technical Note".

International Journal of Tourism Management, 1(4): 23-245.

- 33 - [18] Williams, A. M. & Shaw, G (1991), "Tourism and Economic

Development" Western European Experiences (2nd ed.). Chichester: Wiley & Sons.

Second: Arabic References: (١) " تطور دور النشاط السياحى فى االقتصاد المصري" المجلة االقتصادية الربع سنوية - العدد األول ١٩٨٩/ ١٩٩٠، البنك المرآزى المصري."The Development of the Role of Tourism in the Egyptian Economy": Quarterly Economic Review - Vol. 1, 1989/1990, Central Bank of Egypt.

(٢) " ضبط السالسل الزمنية موسميا (٢٠٠٧)" مرآز دعم المعلومات و اتخاذ القرار، مجلس الوزراء."The Seasonal Adjustment of Time Series" (2007), Information and Decision Support Center, The Egyptian Cabinet.

- 35 -

Chapter 1

Development and Growth

1/1: Gross Domestic Product (GDP) According to the Ministry of Economic Development, Egypt’s economic growth continued to improve during FY 2007/2008. Real GDP grew at factor cost from 7.1 percent during the previous fiscal year to 7.2 percent during the reporting year, reaching some LE 761.4 billion.

Shares of Consumption, Investment and Net Exports in Real GDP Growth Rate (percentage point)

-4-202468

2004/2005 2005/2006 2006/2007 2007/2008

Consumption Investment Net Exports

The steady improvement in the rate of growth was underpinned by stronger domestic demand (consumer and investment) and the marked rise in oil and non- oil exports, particularly finished goods and raw materials. The improvement was also traceable to the favorable impact of ongoing banking reform adopted by the CBE and the tax and customs reforms. This is in addition to the confidence in the efficiency of the foreign exchange market, as well as the efforts made to bolster the infrastructure. Actually, all these factors have had the greatest impact in terms of encouraging domestic investment and attracting further FDI flows, bringing their net flows to US$ 13.2 billion during the reporting year, against US$ 11.1 billion a year earlier.

- 36 -

Egypt Real GDP vs Emerging Economies

4.2 4.6

6.9 7.1

7.2

7.77.5 7.3 7.5

6.5

0.0

2.0

4.0

6.0

8.0

10.0

2003/2004 2004/2005 2005/2006 2006/2007 2007/2008Egypt Emerging Economies

(%)

Source: Ministry of Economic Development, Social and Economic Development Plan. JP Morgan, World Financial Markets, 2008

The commodity, productive and social services sectors accounted for

3.1, 3.6 and 0.5 percentage points, in order, of the real GDP growth rate (7.2 percent).The main contributors to the GDP growth were manufacturing (1.3 percentage point); wholesale & retail trade and restaurants & hotels (0.8 percentage point each); construction & building, extractions and Suez Canal (0.6 point each); and finally agriculture and communications (0.5 percentage point each).

Share of Public Sector in GDP Growth Rate by Sector

(percentage point) 2007/2008

General Government

0.2

Extractions 0.5

Suez Canal 0.6

Financial Intermediaries

0.2

Others 0.8

- 37 -

Shares of Productive and Services Sectors in GDP Real Growth Rate

(At Factor Cost) (percentage point)

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

Of the GDP growth rate (7.2 percent), the private and public sectors contributed some 4.9 and 2.3 percentage points respectively, during the reporting year. The rise in the private sector’s contribution to the GDP growth was ascribed to the higher GDP of its fast-growth sectors (such as manufacturing; restaurants & hotels; wholesale and retail trade and construction & building).

Share of Private Sector in GDP Growth Rate by Sector (percentage point) 2007/2008

Manufacturing 1.2

Wholesale& Retail Trade

0.8Construction&

Building 0.6

Agriculture 0.5

Others 1.0

Restaurants&Hotels 0.8

- 38 - 1/2: GDP by Expenditure

The increase in domestic and external demand was the driving force

behind the improvement in the economic performance during FY 2007/2008. Total investments grew by 28.5 percent, to reach LE 199.5 billion or 22.3 percent of GDP during the reporting year. The sectors of manufacturing, natural gas and communications were the main beneficiaries. The increase in investments was mainly ascribed to the 37.8 percent surge in the private sector’s share in total investments, to post LE 134.1 billion or 67.2 percent of the total. This was accompanied by a pickup of 12.6 percent in the credit granted to the private sector during the year.

Total Implemented Investments

2006/2007 2007/2008 2006/2007 2007/2008 2007/2008

Value in LE billion Structure (%) Growth Rate (%)

Total Investments

155.3 199.5 100.0 100.0 28.5

Private 97.3 134.1 62.7 67.2 37.8 Public 58.0 65.4 37.3 32.8 12.8

Private consumption maintained its high growth rate of 21.2 percent

during the reporting year, reaching LE 653.5 billion or 72.9 percent of GDP. The tangible cuts in income taxes and customs duties contributed to this growth.

- 39 -

Sectoral Breakdown of the Business Sectors Investments (Public and Private) 2007/2008

0.05000.0

10000.015000.020000.025000.030000.035000.040000.045000.050000.0

Transp

ortatio

n, Com

municati

ons and S

torage

Manufac

turing &

Oil P

rodu

cts

Real E

state

Natu

ral G

as, M

ining & C

rude O

i l

Electri

city &

Wate

r

Agr

icultu

re,Irr

igation &

Rec

lamati

on

Wholes

ale &

Reta

il Trad

e

Restau

rants

& Hote

ls

Educati

onal Serv

ices

Others

Private Public

LE million

GDP by Expenditure

(current prices)

Value in LE Billion Growth Rate (%)

2006/07 2007/08 2006/07 2007/08 1- GDP at Market Prices (2+5-6) 744.8 896.5 14.7 20.4 2- Gross Domestic Expenditure (3+4) 778.9 950.5 14.0 22.0 3- Final Consumption 623.6 751.0 12.8 20.4

- Private 539.2 653.5 13.2 21.2 - Public 84.4 97.5 10.6 15.5

4- Gross Capital Formation 155.3 199.5 19.5 28.5 - Implemented investments 155.3 199.5 19.5 28.5 - Inventory change 0.0 0.0 0.0 0.0

5- Exports of Goods and Services 225.3 293.9 13.2 30.4 6- Imports of Goods and Services 259.4 347.9 11.0 34.1 7- Gross Domestic Saving (1-3) 121.2 145.5 24.9 20.0 8- Domestic Resource Gap (5-6) = (7-4) -34.1 -54.0 - - Source: Ministry of Economic Development

- 40 - Moreover, exports of services and goods helped push up the economic

performance during the year, and recorded a growth rate of 30.4 percent (against 13.2 percent during the year of comparison) to reach LE 293.9 billion. Nonetheless, exports' pace of growth was still lagging behind that of imports that registered 34.1 percent (against 11.0 percent in the preceding year) to post LE 347.9 billion. Accordingly, domestic resource gap widened further. However, this was mitigated by the 20.0 percent rise in gross domestic saving, to post LE 145.5 billion during the reporting year.

Resources Gap

-75-50-25

0255075

100125150175200225250275300325350375

2004/2005 2005/2006 2006/2007 2007/2008

Domestic Resources Gap Exports Imports

LE.bn

- 41 -

1/3: Cotton

Hereunder are the main cotton developments for the season of 2007/2008 on the sides of supply and demand:

Production

According to the estimates of the Cotton and Textile Industries Holding Company, the cultivated area expanded by 7.1 percent during 2007/2008 season, amounting to about 575 thousand feddans. The area cultivated with long-staple varieties constituted 81.9 percent of the total, whereas extra-long staples accounted for 18.1 percent.

Area and Production of Cotton Varieties Area

(Thousand Feddans)

Production

(Thousand Metric Cantars)

2006/2007 2007/2008 2006/2007 2007/2008

Final Estimate

Change

+ (-)

% Final Estimate

Change

+ (-)

%

Total 536.4 100.0 574.6 100.0 7.1 4215.4 100.0 4434.9 100 5.2

Extra-long staples 142.5 26.6 103.9 18.1 -27.1 1058.1 25.1 815.5 18.4 -22.9

Long staples 393.9 73.4 470.7 81.9 19.5 3157.3 74.9 3619.4 81.6 14.6 Source: The Cotton and Textile Industries Holding Company. According to the estimates of the aforementioned company, cotton output totaled about 4.4 million metric cantars during 2007/2008 season, up by 5.2 percent as compared with the previous season. Notwithstanding the decrease in the average productivity per feddan from 7.9 to 7.7 cantars/feddan, the increase in cotton output was owed to the expansion in the cotton cultivated area.

- 42 - Stock, Total Supply and Domestic Consumption

During 2007/2008 season, total cotton supply amounted to about 5.9 million metric cantars, with a growth of 28.5 percent compared with the previous season. The increase was attributed to the rise in the opening stock of 2007/2008 season to some 1.4 million metric cantars (against 0.3 million metric cantars), together with the pickup in the production of long staples by 14.6 percent compared with the preceding season.

Total Uses

(Thousand metric cantars) 2006/2007 Season 2007/2008 Season Final Till 30/6/2007 Till 30/6/2008

Total Uses 3176.7 2863.1 5048.7 Domestic consumption 1621.5 1468.7 2356.1 Export commitments 1555.2 1394.4 2692.6

Source: Ibid. As for domestic consumption, local mills received about 2.4 million metric cantars since the beginning of the season up to the end of June 2008, against 1.5 million metric cantars during the previous season.

Egyptian Cotton Position

0

1000

2000

3000

4000

5000

Opening Stock Crop Domestic Consumption Export commitments

2006/2007 2007/2008

Thousand.Metric Cantars

- 43 - Export Commitments

According to the Cotton and Textile Industries Holding Company, total export commitments reached about 2.7 million metric cantars since the beginning of the 2007/2008 season up to end of June 2008. Commitments on extra-long staple varieties represented some 659.3 thousand metric cantars or 24.5 percent of the total, whereas long staples reached 2033.3 thousand metric cantars or 75.5 percent. The private sector companies accounted for the bulk of total commitments (83.4 percent). The share of the public business sector companies reached about 16.6 percent.

Export Commitments (Preliminary) by Variety and Exporting Sector

(From 1/9/2007 till 30/6/2008) (Metric cantars)

2006/2007 Season 2007/2008 Season 1- Variety

Extra-long staples 489516 659323 Long staples 904887 2033273

Total 1394403 2692596 2- Exporting Sector

Public business sector companies

377070

447720

Private sector companies 1017333 2244876 Total 1394403 2692596

As for export commitments by importer, Asian countries (mainly India and Pakistan) came in the forefront, accounting for 72.8 percent of the total. The Arab countries came second with 9.9 percent of the total, headed by UAE and Qatar. The other European countries followed with 9.4 percent of the total. The main importing countries within this group were Switzerland and Turkey. The EU countries (mainly Italy and Germany) made commitments of 6.3 percent of the total.

- 44 -

Export Commitments by Importer (Thousand metric cantars)

Up to End of June 2006/2007 Season 2007/2008 Season Total 1394 2693 Asian countries; of which 837 1959 India 417 914 Pakistan 188 729 EU countries; of which 213 171 Italy 110 65 Germany 38 56 Portugal 45 31 Other European countries; of which

144 253

Switzerland 55 141 Turkey 89 112 USA 36 00 Arab countries; of which 96 266 UAE 94 183 Qatar 00 42 Others 68 44

Source: Ibid.

Export Commitments 2007/2008

Asian Countries

72.8%

EU Countries

6.3%

Other European Countries

9.4%

Arab Countries

9.9%

Others1.6%

Export Commitments 2006/2007

Others 4.9%Arab

Countries 6.9%

Other European Countries

10.3%

Asian Countries

60.0%EU Countries

15.3%

USA 2.6%

- 45 - International Developments

According to the estimates of the International Cotton Advisory

Commission (ICAC), total world supply of cotton retreated by 1.5 percent to 177.7 million bales. The decline was due to the drop in world cotton production by 2.8 percent, influenced by the diminution of the cotton cultivated area, especially in the USA, China and Pakistan. The ICAC forecasted the growth of world consumption at a rate of 1.8 percent to 124.6 million bales, because of the higher consumption of local mills in China, India and Pakistan. The average volume of world trade increased by 7.2 percent, reaching 40.2 million bales.

Position of Egyptian Cotton

(Million bales*)

2006/2007

Season

2007/2008

Season

Change + (-) %

Opening stock 57.5 58.3 1.4 World production 122.8 119.4 -2.8 Total Supply 180.3 177.7 -1.5 World consumption 122.4 124.6 1.8 Carryover 58.0 53.1 -8.4 World trade** 37.5 40.2 7.2

Source: International Cotton Advisory Commission (ICAC). * World bale = 4.6 cantars. ** Measured in terms of average exports and imports.

- 46 - 1/4: Suez Canal

During FY 2007/2008, Suez Canal receipts stepped up 23.6 percent to

US$ 5.2 billion, against US$ 4.2 billion during the previous FY. This reflected the rise in both the number of transiting ships and net tonnage, as well as the appreciation of SDRs-in terms of which tolls are charged- vis-à-vis the US dollar, by about 5.8 percent during the year under review.

The reporting year witnessed the transit of 21.1 thousand ships, up by 1661.0 ships. This was an outcome of the rise in the number of ships (other than oil tankers) by 1684.0 to 17.6 thousand ships or 83.3 percent of the total, and the decline in the number of oil tankers by 23.0 to 3.5 thousand.

Traffic in Suez Canal 2006/2007 2007/2008 Change % Total Number of Ships 19419 21080 8.6 Oil tankers 3536 3513 -0.7 Others 15883 17567 10.6 Total Net Tonnage (million tons) 792.5 890.9 12.4 Oil tankers 157.7 142.0 -10.0 Others 634.8 748.9 18.0

During FY 2007/2008, the volume of cargo transiting the Canal rose by

52.3 million tons or 7.8 percent, reaching 726.2 million tons (against 673.9 million tons during the previous FY). This stemmed mainly from the increase in the southbound cargo by 31.9 million tons or 11.9 percent (mainly oil substances, fabricated metals and others) as well as the rise in the northbound cargo by 20.4 million tons or 5.0 percent (chiefly oil seeds and others).

- 47 -

Traffic in Suez Canal 2005/2006 2006/2007 2007/2008 Oil Tankers Number 3689 3536 3513 Net tonnage Million tons 155.4 157.7 142.0 Average tonnage Thousand tons 42.1 44.6 40.4 Other Ships Number 14787 15883 17567 Net tonnage Million tons 546.9 634.8 748.9 Average tonnage Thousand tons 37.0 40.0 42.6 Total Number 18476 19419 21080 Net tonnage Million tons 702.3 792.5 890.9 Average tonnage Thousand tons 38.0 40.8 42.3

Transiting Cargo by Destination (million tons)

2005/2006 2006/2007 2007/2008 Total 595.1 673.9 726.2 Southbound: 251.9 268.2 300.1 Petroleum and products 31.2 39.4 46.6 Cereals 17.7 20.9 15.9 Mineral fertilizers 21.9 20.7 16.8 Fabricated metals 22.6 16.7 22.5 Others 158.5 170.5 198.3 Northbound: 343.2 405.7 426.1 Petroleum and products 79.6 82.5 77.5 Ores and metals 24.1 34.8 32.0 Cereals 0.7 0.5 0.5 Oil seeds 2.4 2.3 2.5 Others 236.4 285.6 313.6

- 48 - 1/5: Tourism

According to the Ministry of Tourism and CAPMAS statistics,

indicators of tourism flows to Egypt were positive during FY 2007/2008 compared with the preceding FY. As such, the total number of arrivals increased by 25.6 percent to about 12.3 million, and so did the number of tourist nights by 32.3 percent to 127.4 million.

While the average spending per tourist a night remained at the same

level of the previous FY (US$ 85 a night), tourism revenues increased as a result of the rise in the number of tourist nights. As such, tourism revenues went up by 32.3 percent, to US$ 10.8 billion, representing 6.7 percent of GDP (at current and market prices) during FY 2007/2008, and 19.1 percent of total BOP visible and invisible receipts during the same year.

Number of Tourist Arrivals and Tourist Nights (Departures)

020406080

100120140

2006/2007 2007/2008

Million

Tourist Nights Number of tourists

- 49 -

Investments in the tourism sector (restaurants and hotels) amounted to some LE 5.6 billion during FY 2007/2008, constituting 2.8 percent of total investments. The private sector implemented about 88.9 percent of these investments.

Tourism Indicators

2006/2007 2007/2008 Change

+ (-) %

Number of arrivals (000s) 9788 12294 25.6 Number of nights for departures (000s) 96270 127371 32.3 Estimated average spending per tourist a night (US$) 85.0 85.0 0.0 Tourism revenues (US$ mn) 8183.0 10826.5 32.3 Average tourist stay (night) 10.5 10.4 -1.0 GDP (LE bn) 731.2 896.5 22.6

Source: CBE, CAPMAS, Ministry of Tourism, & Ministry of Economic Development

Tourism Revenues / GDP and Visible & Invisible Receipts

0.0

5.0

10.0

15.0

20.0

25.0

30.0

2006/2007 2007/2008

Tourism revenues / GDP Tourism revenues / visible & invisible receipts

%

- 50 -

During FY 2007/2008, total arrivals from all tourist exporting markets

amounted to some 12.3 million, with an increase of about 2.5 million or 25.6 percent in comparison with the previous FY. This was attributed to the development of new tourist areas, particularly in the North Coast, and the diversification of tourism products by introducing new promising types, such as safari, medical and conference tourism.

Number of Tourist Arrivals (Thousand)

July/June 2006/2007 2007/2008

No. Relative Weight

Change + (-)

%

No. Relative Weight

Change + (-)

% Total 9788 100.0 12.6 12294 100.0 25.6 Europe 6690 68.3 15.0 9070 73.8 35.6 Middle East 1860 19.0 1.4 1671 13.6 -10.2 Africa 342 3.5 22.1 396 3.2 15.8 The Americas 356 3.6 9.5 478 3.9 34.3 Asia and the Pacific 534 5.5 23.6 651 5.3 21.9 Others 6 0.1 50.0 28 0.2 366.7 Source: CAPMAS & the Ministry of Tourism

Number of Tourists

Relative Importance of Tourist Arrivals by Groupin FY 2007/08

European countries

73.8%

Others0.2%

Middle East countries

13.6%

African countries

3.2%

The Americas3.9%

Asian & Pacif ic Countries

5.3%

- 51 - The European group remained in the forefront, with a relative weight

of 73.8 percent of total tourist flows, and a rise of 2.4 million tourists or 35.6 percent. The increase was mainly from Russia (666 thousand or 55.5 percent); Ukraine (225 thousand or 85.3 percent); Italy (206 thousand or 24.6 percent); and France (113 thousand or 27.5 percent).

Despite a 10.2 percent decline in tourist flows from the Middle East

group, it continued to occupy the second position, accounting for 13.6 percent of the total number of tourists. Arrivals came mostly from Libya (450 thousand), Saudi Arabia (418 thousand) and Jordan (185 thousand).

Ranking third, the Asian and Pacific group contributed 5.3 percent of

the total number of tourists, with an increase of nearly 117 thousand or 21.9 percent. The increase was mainly in arrivals from India and China (19 thousand each), and Australia (18 thousand).

Arrivals from the Americas group scaled up by about 122 thousand or 34.3 percent, mainly from the USA (28.0 percent) and Canada (33.5 percent).

Likewise, tourists from the African markets mounted by some 54

thousand or 15.8 percent, chiefly from South Africa (38.2 percent), Morocco (30.0 percent), Nigeria (16.6 percent), and Tunisia (9.7 percent).

Tourist Nights

In line with the increase in the number of tourists, the number of tourist nights exhibited an upward trend during FY 2007/2008. The number of nights spent by all departure groups totaled some 127.4 million during the reporting year, up by 31.1 million nights or 32.3 percent compared with the previous FY.

- 52 -

Number of Tourist Nights by Departure Group

(Thousand) July/June

2006/2007 2007/2008 No. Relative

Weight Change

+ (-) %

No. Relative Weight

Change + (-)

% Total 96270 100.0 13.1 127371 100.0 32.3 Europe 59641 62.0 12.6 87763 68.9 47.2 Middle East 23396 24.3 10.2 21833 17.1 -6.7 Africa 4418 4.6 28.7 5433 4.3 23.0 The Americas 4591 4.8 13.5 6117 4.8 33.2 Asia and the Pacific 4154 4.3 23.7 5762 4.5 38.7 Others 70 0.0 6.1 462 0.4 560.0 Source: Ibid.

The European group ranked first in terms of tourist nights, with a

relative weight of 68.9 percent of the total, and a rise of about 28.1 million nights or 47.2 percent compared with the preceding FY. This was mainly ascribed to the increase in the number of nights spent by departures from Eastern Europe, especially from Russia (5.3 million) and Ukraine (1.3 million). This is in addition to the pickup in the nights spent by departures from Western Europe, chiefly from Germany (3.4 million), Italy (2.8 million), the UK (2.1 million), Poland (1.7 million), and France (1.6 million).

Relative Importance of Tourist Nights of Departures by Group in FY 2007/2008

68.9

17.14.3 4.8 4.5 0.4

0

20

40

60

80

100

Europeancountries

Middle Eastcountries

Africancountries

TheAmericas

Asian &Pacific

Countries

Others

%

- 53 - Tourist nights by departures from the Middle East went down by some

1.6 million or 6.7 percent, to some 21.8 million. In the forefront of these countries came Saudi Arabia (5.6 million nights), followed by Libya (5.1 million), Kuwait (2.2 million), and Yemen & Jordan (1.7 million each).

The Americas' group recorded an increase of about 1.5 million nights or

33.2 percent, to reach 6.1 million nights, mostly from the USA (4.0 million) and Canada (1.3 million).

As for the Asian and Pacific markets, tourist nights scaled up by about

1.6 million nights or 38.7 percent, to 5.8 million nights, chiefly from Australia (1.1 million), Japan (0.9 million), India (0.8 million), and China (0.6 million).

The number of tourist nights by departures from the African markets

mounted by some 1 million or 23.0 percent, to 5.4 million nights, mostly contributed by the Sudan (3.2 million) and Tunisia & Morocco (0.4 million each). 1/6: Labor Force and Unemployment

The sustainable improvement in Egypt’s economic performance

contributed to increasing the average income per capita, expanding the absorptive capacity of the labor market, and reducing unemployment. As such, average real income per capita rose during the reporting year by 5.1 percent compared with FY 2006/2007, to reach some LE 10.63 thousand. Also, employment scaled up by 4.1 percent, to about 22.6 million persons, due to the 900 thousand new job opportunities created during FY 2007/2008. The growth in employment outpaced that of the workforce (700 thousand persons) during the reporting year. Accordingly, unemployment declined from 8.9 percent to 8.4 percent.

- 54 -

According to the CAPMAS estimates, the distribution of employees among the economic sectors for FY 2007/2008 ran as follows: around 50 percent in merchandise sectors; 33 percent in services; and 17 percent in productive services.

Employment, Unemployment & Average Productivity

2006/2007 2007/2008

Growth Rate % 2007/08

)LE bn(Current Prices & ket GDP at Mar 744.8 896.5 20.4 ) years of age64-15(Total Employment

)mn (– 21.7 22.6 3.6 Average Real Income per Capita

)LE thousand ((GDP at factor cost and constant prices / population inside A.R.E)

10.11 10.63 5.1

(%)Unemployment Rate 8.9 8.4 )5.6( )LE(Average Real Productivity per Capita

(GDP at market and current prices / number of workers)

34323 39668 15.6

Sectoral Structure of Employment2007/2008

Productive Services Sectors

17%

Services Sectors

33% Merchandise Commodity

Sectors 50%

- 55 - 1/7: Inflation

A-Consumer Price Index (CPI)

Inflation kept its upward trend during FY 2007/2008, recording its highest level since the early nineties of the twentieth century. According to the CPI (urban) published by the CAPMAS, inflation mounted to 20.2 percent during the year, compared with 8.6 and 7.2 percent during FY 2006/2007 and 2005/2006, respectively. The noticeable rise in inflation was a main result of the increase in the price index of food and non-alcoholic beverages that contributed around 12.1 percentage points to overall inflation. As such, the CPI for food and non-alcoholic beverages soared by 27.1 percent during the year under review, against only 10.1 percent a year earlier.

Source: CAPMAS

The noticeable impact of the rise in the above-mentioned index on overall inflation was mainly owed to the successive increases in food prices. This came on the back of the continuous surge in international food prices, triggering further spillovers into other commodities. Moreover, the decline in food self-sufficiency and the consequent rise in imports thereof added upward

CPI and price Index of Food, Electricity, Gas and Other Fuels and Transport (Urban)

95.0100.0105.0110.0115.0120.0125.0130.0135.0

June

2007

July

Augus

t

Septem

ber

Octobe

r

Novem

ber

Decem

ber

Janu

ary 20

08

Februa

ryMarc

hApri

lMay

June

2008

All Items Food and non -Alcoholic BeveragesElectricity, Gas and other fuels Transport

- 56 - pressure on food prices. As such, imports of foodstuffs obviously grew by 51.0 percent during the reporting year. Imports of both wheat and oils surged by 56.5 percent and 49.8 percent, respectively, during the same year. Other commodities, such as tea, were entirely imported. Accordingly, tea imports grew by 108.5 percent during the year.

Source: IMF, IFS, various issues

A breakdown of CPI for food and non-alcoholic beverages group

showed that the main contributors to overall inflation were meat (2.5 percentage points), bread & cereals and milk, cheese & eggs (2.0 percentage points each) and oils and fats (1.7 percentage points). The surge in food prices was also reflected in the prices of restaurants & hotels that went up by 46.1 percent (against 8.5 percent) owing to the price hike of catering services. Accordingly, this group shared with 1.7 percentage points in overall inflation.

Rate of Change in the International Prices of Basic Foodstuffs

0.0

30.0

60.0

90.0

120.0

150.0

180.0

2006/2007 14.3 93.8 50.2 6.8 9.5 2007/2008 56.3 46.5 74.5 155.7 66

Wheat Palm Oil Maize Rice Iron

(%)

- 57 -

Education services group was really a major driver in the CPI-based

inflation rate (urban) as it accounted for 1.6 percentage points. This was a result of the rise in the prices of education services by 37.7 percent (against 11.1 percent) owing to the abolishment of the tax exemptions granted earlier for educational entities. The prices of electricity, gas & fuel and transportation also increased (each contributing 1.0 percentage point). This was due to the fact that domestic prices of some oil products (including solar oil and benzene 90 and 92) were raised by virtue of May 2008 administrative decrees.

Relative Weight of Food ( 42.6% )

Oils and fats 2.8

Fruit 3.1

Sugar and confectionery

2.0

Other food products 0.7

Milk , cheese and eggs 6.1

Fish and seafood 3.1

Meat 12.9

Bread and cereals 5.4Vegetables 6.5

-58 -

Overall Inflation by CPI Groups (Urban)

CPI at the End

of June

Annual Inflation

Rate

Share in Overall Inflation Main CPI Groups 2007 2008 2007/2008

(%) 2007/2008

(Percentage Point)

General Index 101.1 121.5 20.2 20.2 Food & non-alcoholic beverages 102.5 130.3 27.1 12.1 Alcoholic beverages, tobacco and narcotics 100.0 112.1 12.1 0.3 Clothing and footwear 100.2 104.3 4.1 0.3 Housing, water, electricity, gas and other fuel 100.0 107.6 7.6 1.0 Furnishings, household equipment and routine maintenance of the house 100.4 110.7 10.3 0.4 Health 100.0 112.1 12.1 0.4 Transportation 100.0 120.1 20.1 1.0 Communications 100.0 104.0 4.0 0.2 Recreation and culture 100.0 121.7 21.7 0.7 Education 100.0 137.7 37.7 1.6 Restaurants, cafes and hotels 100.0 146.1 46.1 1.7 Miscellaneous goods and services 100.2 111.5 11.3 0.5

The government has adopted a number of measures to mitigate the inflationary pressures, such as cutting customs on some foodstuffs and imposing temporary restrictions on rice exportation. However, the rise in both fertilizers' prices and transportation costs (owing to an increase in fuel prices) contributed to a higher inflation rate. Add to this the inflationary pressures associated with higher economic growth.

- 59 - B- Producer Price Index (PPI)

Similarly, the PPI-based inflation rate released by the CAPMAS jumped to 33.7 percent during the reporting year, against 6.9 percent during the year of comparison.

A breakdown of main PPI components showed that three main groups

contributed 96.7 percent of the overall inflation rate: mining and quarrying (16.4 percentage points), manufacturing (8.9 percentage points) and agriculture, forestry and fishing (7.3 percentage points).

Most of the PPI increase was in the prices of crude oil (25.6 percentage

points), iron and steel (3.6 percentage points) and cereals & leguminous crops (2.4 percentage points). The increase was also seen in the prices of rice; vegetable and animal oils and fats; stone, sand & clay; fertilizers; wood & products; and cement, in addition to a number of other main commodities (see the following table).

PPI according to I.S.I.C. (2004/2005 = 100)

120.0

130.0

140.0

150.0

160.0

170.0

180.0

June

2007

July

Augus

t

Septem

ber

Octobe

r

Novem

ber

Decem

ber

Janu

ary20

08

Februa

ryMarc

hApri

lMay

June

2008

- 60 -

Overall Inflation by PPI Groups

PPI at the End of June

Annual Inflation

Rate

Share in Overall Inflation Main PPI Groups 2007 2008 2007/2008

(%) 2007/2008

(Percentage Point)

General Index 126.0 168.5 33.7 33.7 Agriculture, forestry and fishing, of which: 143.0 179.5 25.5 7.3 Growing of cereals (except rice) and leguminous crops 111.9 182.2 62.8 2.4 Growing of rice 100.3 146.7 46.3 0.7 Raising poultry and egg production 126.5 160.4 26.8 0.8 Mining and quarrying, of which: 136.8 232.3 69.8 16.4 Extraction of crude petroleum 157.6 306.7 94.6 25.6 Quarrying of stone, sand and clay 103.6 161.1 55.5 0.0 Manufacturing, of which: 115.7 144.4 24.8 8.9 Processed food products, of which: 114.9 127.7 11.1 0.9 Vegetable and animal oils and fats 100.0 169.1 69.1 0.6 Dairy products 109.4 125.5 14.7 0.1 Fertilizers 107.4 175.4 63.3 0.3 Wood & products 104.1 142.8 37.2 0.0 Cement industry 122.7 148.6 21.1 0.2 Iron and steel industry 129.6 241.0 86.0 3.6 Electricity, gas, steam and air conditioning supply, of which: 100.0 114.0 14.0 0.2 Electric power generation, transmission and distribution 100.0 119.7 19.7 0.3 Water supply and sewerage activities 128.0 138.7 8.4 0.2 Transportation and storage, of which: 101.7 110.9 9.0 0.2 Land transport 112.0 130.3 16.3 0.1 Accommodation and food service activities, of which: 105.2 117.5 11.7 0.5 Meal serving services in limited-service facilities 121.8 218.2 79.1 0.4 Information and communication 107.8 107.8 0.0 0.0

- 61 - On the other hand, the recent data (during the preparation of this

Review) showed that because of the current global financial crisis, the international prices of some primary commodities (particularly oil and foodstuffs) showed a decline. This came on the back of a liquidity decline in international markets and the resultant weakening demand. This is expected to exert a downward pressure on local prices. Accordingly, domestic inflationary pressures are expected to ease, especially in light of the projected global slowdown.

- 62 -

2: Monetary and Banking Developments

2/1: Monetary and Banking Policy and Monetary Aggregates 2/1/1: Monetary Policy

In virtue of the Law of the Central Bank, the Banking Sector and

Money No. 88 for 2003, an institutional framework enhancing the effective and scientific conduct of monetary policy was set and implemented in 2005. The Monetary Policy Committee (MPC), affiliating to the CBE Board of Directors, was also established. This Committee is responsible for setting, implementing and studying the targets of monetary policy, as well as taking the decisions related to the key CBE interest rates in light of relevant studies. Moreover, the Coordinating Council was established under the chairmanship of the Prime Minister in 2005. The membership of this Council includes the Ministers of Finance, Planning and Investment, the CBE Governor and his two deputies, and six members who have international expertise in economic, banking and financial affairs. The Coordinating Council determines the monetary policy targets in a way that realizes price stability and banking system soundness, within the context of the general economic policy of the State.

According to this institutional framework and until fully meeting the fundamental prerequisites of the inflation-targeting framework, the CBE will meet its inflation target by steering short-term interest rates, keeping in view the developments in credit and money supply, as well as a host of other factors that may influence the inflation rate. The framework relies on the use of the corridor system, within which the ceiling is the overnight interest rate on lending from the Bank and the floor is the overnight deposit interest rate at the Bank.

- 63 - Monetary Policy Performance

As the overriding objective of the monetary policy is price stability, the CBE seeks to bring inflation to a low and stable level that helps build confidence and sustain reasonable rates of investment and economic growth. The following is a summary of the monetary policy performance in FY 2007/2008: First: Interest Rates:

To cope with the global and domestic economic changes, especially the moderation of CPI inflation, the Monetary Policy Committee -in its meetings during the first half of the reporting year- decided to keep the CBE overnight deposit and lending rates unchanged at 8.75 percent and 10.75 percent, in order.

However, at the end of the first half of FY 2007/2008, the CPI inflation rate gradually increased to reach 19.7 percent and 20.2 percent in May and June 2008, respectively. It further increased to post 23.6 percent in August of the same year. The increase was an effect of the rise in international food prices (as of November 2007), administered price adjustments of energy and oil products, in addition to a surge in economic growth rates in various sectors (particularly in construction and manufacturing sectors). This was accompanied by expectations of higher inflation rate. Against this background, the MPC made successive increases in its key interest rates during February-June 2008, by a total of 1.75 percent. This brought the overnight deposit and lending rates to 10.5 percent and 12.5 percent, respectively, at the end of June 2008. In the period following the reporting year, the MPC continued to raise the key policy rates, bringing the overnight deposit and lending rates to 11.5 percent and 13.5 percent, respectively, in its last meeting on 18/9/2008.

The successive increases in the key interest rates were reflected on the market interest rates as follows:

- 64-

• Consistency was achieved between the operational target of the monetary policy (the interbank overnight interest rate) and the MPC’s decisions. Moreover, the weighted average of the said rate moved close to the CBE overnight deposit rate, under large excess liquidity at the banking system during the year under review (see the following chart).

Overnight Interbank Rate and Policy Rates

7.50

8.00

8.50

9.00

9.50

10.00

10.50

11.00

11.50

12.00

12.50

13.00

06/0

6/20

06

07/0

7/20

06

07/0

8/20

06

07/0

9/20

06

08/1

0/20

06

08/1

1/20

06

09/1

2/20

06

09/0

1/20

07

09/0

2/20

07

12/0

3/20

07

12/0

4/20

07

13/0

5/20

07

13/0

6/20

07

14/0

7/20

07

14/0

8/20

07

14/0

9/20

07

15/1

0/20

07

15/1

1/20

07

16/1

2/20

07

16/0

1/20

08

16/0

2/20

08

18/0

3/20

08

18/0

4/20

08

19/0

5/20

08

19/0

6/20

08

( % )

Overnight Interbank Rate Deposit Facility Rate Lending Facility Rate

• The monetary policy transmission mechanisms improved, following the

adoption of a new framework for its implementation in June 2005. As such, the interest rates on clients' deposits and loans have become more responsive to the changes in the CBE’s overnight interest rates. Annual interest rates on six-month deposits reached about 7.3 percent at the end of June 2008 (against 7.0 percent at the end of June 2007). Interest rates on one-year-or-less loans reached about 11.6 percent per annum at the end of June 2008 (against 11.1 percent at the end of June 2007).

(%)

- 65 - Second: Open Market Operations:

To absorb the structural excess liquidity in the banking system, the CBE continued to undertake operations to sterilize excess liquidity. It used deposit auctions as a main instrument to contain the inflationary pressures arising from monetary expansion. 2/1/2: Reserve Money

Reserve money (currency in circulation outside the CBE and banks'

deposits in local currency with the CBE) augmented by LE 35.8 billion or 26.7 percent during FY 2007/2008, to record LE 169.9 billion at the end of June 2008. Such a rise stemmed from the increase in the currency in circulation outside the CBE by LE 19.2 billion or 20.9 percent and banks' deposits in local currency with the CBE (under the established reserve requirement ratio) by LE 16.6 billion or 39.4 percent.

Reserve Money and Counterpart Assets*

(LE mn) Change during FY 2006/2007 2007/2008

Balances at End of

June 2008 Value % Value % A- Reserve Money 169911 18076 15.6 35785 26.7- Currency in circulation

outside the CBE 111412 13571 17.3 19238 20.9- Banks' deposits in local

currency 58499 4506 12.0 16547 39.4B- Counterpart Assets 169911 18076 15.6 35785 26.7Net Foreign Assets 180333 34070 55.6 84961 89.1Foreign assets 182021 30720 23.7 21824 13.6Foreign liabilities 1688 (3350) (4.9) (63137) (97.4)Net Domestic Assets -10422 (15994) (29.2) (49176) (126.9)Claims on the government (net) 81872 3200 2.8 (35382) (30.2)Claims on banks (net) 77581 58495 5746.0 18069 30.4Other Items (Net) -169875 (77687) 128.8 (31863) 23.1* Derived from the CBE balance sheet

- 66 - As for the counterpart assets of reserve money, the increase of LE 85.0

billion worth or 89.1 percent in net foreign assets of the CBE had an expansionary effect on reserve money. This was somewhat mitigated by the contractional effect of net domestic assets, which declined by LE 49.2 billion.

It is noteworthy that the significant increase in net foreign assets and the decline in net domestic assets were the outcome of the settlement agreement between the CBE and the Ministry of Finance. According to this agreement, the rescheduled accounts of external debt which have not yet fallen due under Paris Club agreement were used to settle a part of the government debt to the CBE. This resulted in a decline in foreign liabilities with the CBE, on the one hand, and a drop in claims on the government, on the other. 2/1/3: Banknote Issue

Banknote issue (including subsidiary coins) rose by LE 19.2 billion or

20.5 percent during the reporting year, against LE 14.2 billion or 18.0 percent during the previous FY. This brought the balance of banknote issue to LE 112.7 billion at the end of June 2008. The rise in banknote issue during the year was attributed mainly to the pickup in net foreign assets with the CBE.

Change in Banknote Issued (During Fiscal Year)

0

5000

10000

15000

20000

25000

2003/2004 2004/2005 2005/2006 2006/2007 2007/2008

LE mn

- 67 - As for the components of the issue cover, the value of gold climbed by

about LE 2.0 billion worth to LE 8.7 billion, due to its revaluation on the 30th of June 2008. Likewise, Egyptian government bonds rose by LE 17.2 billion to LE 103.7 billion. Accordingly, government bonds contributed 92.3 percent and gold 7.7 percent to the issue cover at the end of June 2008.

Such a rise in banknote issue was reflected on the currency in circulation outside the CBE, which grew by LE 19.2 billion or 20.9 percent to LE 111.4 billion at the end of June 2008. A breakdown of the currency in circulation outside the CBE by denomination showed an increase in the circulation of the LE 200-note (issued in May 2007). This came at the expense of other denominations, except for the pt 50 note which remained unchanged. The LE 200-note circulation mounted to 17.1 percent at the end of June 2008, from 3.3 percent at the end of June 2007. This was a result of the rise in the issuance of the LE 200 note -since its introduction- in line with the rising level of prices and higher value of transactions.

Accordingly, the average value per note climbed to LE 30.3 at the end

of June 2008, against LE 25.6 at the end of June 2007.

Relative Importance of Currency in Circulation outside the CBE

0.0

10.0

20.0

30.0

40.0

50.0

60.0

PT 25 PT 50 LE 1 LE 5 LE 10 LE 20 LE 50 LE 100 LE 200

(%)

June 2007

June 2008

- 68 - 2/1/4: SWIFT Local Services and Clearing Houses Activity

Data of local banking transfers under the Fin-Copy system, conducted

via SWIFT, indicate a rise in the number of LE executed messages during the year under review. As such, they reached 700.7 thousand messages with a value of LE 3092.4 billion during FY 2007/2008, against 525.2 thousand messages with a value of LE 2280.2 billion a year earlier.

SWIFT Local Services in Local Currency

No. of Messages

Value of Transfers Change during FY During FY

(Unit) (LE mn) Number Value 2004/2005 326341 1246023 67840 275406 2005/2006 404776 1658794 78435 412771 2006/2007 525236 2280198 120460 621404 2007/2008 700668 3092401 175432 812203

Likewise, foreign currency transactions conducted via the Fin-Copy system mounted to 13.9 thousand, with a value of US$ 105.6 billion, against 12.1 thousand and US$ 79.0 billion during the previous FY.

SWIFT Local Services in US Dollar

No. of Messages

Value of Transfers Change during FY During FY

(Unit) (US$ mn) Number Value 2005/2006 11049 39773 445 27840 2006/2007 12070 78997 1021 39224 2007/2008 13925 105586 1855 26589

- 69 - According to the CBE Automated Clearing House, the number and

value of exchanged cheques rose during the year under review. The number of exchanged cheques reached 11.7 million, with a total value of LE 483.1 billion (against 10.5 million cheques with a total value of LE 356.9 billion during the previous FY). Accordingly, the average value per cheque jumped from LE 34.1 thousand during the previous fiscal year to LE 41.2 thousand during the year under review.

CBE Clearing Houses* Activity

No. of Cheques Value of Cheques Change During FY (000s) (LE mn) Number Value

2004/2005 9321 262423 (2.8) 5.7 2005/2006 9508 288713 2.0 10.0 2006/2007 10481 356900 10.2 23.6 2007/2008 11725 483113 11.9 35.4 * As of 1/1/2006, the manual clearing houses in Alexandria and Port-Said were cancelled and all

their activities were transferred to Cairo Automated Clearing House. 2/1/5: Domestic Liquidity and Affecting Factors

Domestic liquidity (M2) grew by LE 104.0 billion or 15.7 percent

during FY 2007/2008, against LE 102.3 billion and 18.3 percent a year earlier, to reach LE 766.7 billion at the end of June 2008, representing 85.5 percent of GDP in FY 2007/2008. The rise in domestic liquidity during the year stemmed from the increase in LE deposits with banks by LE 80.3 billion or 19.0 percent and foreign currency deposits by LE 5.9 billion worth or 3.8 percent. Add to this the pickup in money in circulation outside the banking system by LE 17.8 billion or 20.5 percent.

- 70 -

Analysis of domestic liquidity components shows that the first component (money supply or M1) went up by LE 39.3 billion or 29.9 percent during the reporting year (against LE 22.0 billion or 20.1 percent a year earlier), to reach LE 170.6 billion or 22.2 percent of total domestic liquidity at the end of June 2008. The rise was an outcome of the increase in money in circulation outside the banking system by LE 17.8 billion or 20.5 percent (against LE 12.6 billion or 17.0 percent), to record LE 104.7 billion at the end of June 2008. Added to this was the step-up in LE demand deposits by LE 21.5 billion or 48.4 percent (against LE 9.4 billion or 26.8 percent), to LE 65.9 billion at the end of June 2008. Deposits of the private business sector constituted the bulk of the increase (63.4 percent) in LE demand deposits.

Growth Rate of Domestic Liquidity by Component During FY

02468

10121416182022

2004/2005 2005/2006 2006/2007 2007/2008

%Money SupplyQuasi-moneyDomestic Liquidity

Domestic Liquidity Components End of June 2008

Foreign Currency Time & Saving

Deposits17.4%

Foreign Currency Demand Deposits

3.5%

Money Supply22.2%

Quasi-money77.8%

Local Currency Time & Saving

Deposits56.9%

- 71- Likewise, quasi-money (the second component of domestic liquidity)

augmented by LE 64.7 billion or 12.2 percent during FY 2007/2008 (against LE 80.3 billion or 17.8 percent during the previous FY) to reach LE 596.1 billion or 77.8 percent of total domestic liquidity at the end of June 2008. Around 85.5 percent of the increase in quasi-money was concentrated in LE time and saving deposits of the private sector (household and private business). These deposits grew by LE 55.3 billion or 15.3 percent to LE 415.5 billion or 69.7 percent of total quasi-money at the end of June 2008. Meanwhile, foreign currency deposits rose by only LE 5.9 billion worth or 3.8 percent during FY 2007/2008 (against LE 17.1 billion worth or 12.5 percent during the previous FY), to reach the equivalent of LE 159.8 billion at the end of June 2008. This mirrored a continued preference for saving in Egyptian pound, particularly given the stability of its exchange rate vis-à-vis the US dollar under the continued confidence in the efficiency of the forex market. In addition, the remarkable rise in the private sector's LE time and saving deposits was attributed to higher LE interest rates, particularly in the second half of FY 2007/2008.

As for the counterpart assets of domestic liquidity, net foreign assets contributed the bulk (12.8 percentage points) of the domestic liquidity growth. Contribution of net domestic assets (domestic credit and net balancing items) was confined to 2.9 percentage points.

Contribution of Domestic Liquidity Counterpart Assets to Domestic Liquidity Growth

During FY ending in June 2005 2006 2007 2008 Domestic liquidity growth rate (%) 13.6 13.5 18.3 15.7 Net foreign assets 8.2 10.6 15.2 12.8 Net domestic assets 5.4 2.8 3.1 2.9

- 72 - Net foreign assets at the banking system went up by LE 85.1 billion

worth or 38.9 percent during the year under review, against LE 85.2 billion worth or 63.9 percent during the previous FY, to reach the equivalent of LE 303.7 billion at the end of June 2008. Most of the increase during 2007/2008 was attributed to the surge of LE 85.0 billion worth in net foreign assets at the CBE. This was an outcome of the increase in its foreign assets by LE 21.9 billion worth and the decline in its foreign obligations by LE 63.1 billion worth. The decline was a result of the agreement between the CBE and the government to use the rescheduled debts which have not yet fallen due under Paris Club agreement to settle a part of the government debt to the CBE.

0

100

200

300

400

LE bn

2004 2005 2006 2007 2008

Foreign Assets & Liabilities of the Banking System at End of June

Foreign Assets

Foreign Liabilities

- 73 -

Domestic Liquidity Counterpart Assets (LE mn)

Change during FY + (-) End of June 2008 2006/2007 2007/2008

BalancesRelative

Importance Value % Value % Counterpart Assets 766664 100.0 102332 18.3 103976 15.7Net Foreign Assets 303680 39.6 85244 63.9 85051 38.9CBE 180333 23.5 34071 55.6 84961 89.1Banks 123347 16.1 51173 71.0 90 0.1 Domestic Credit 570953 74.5 21782 4.3 39639 7.5 Government (net) 174005 22.7 (5808) (3.2) (4319) (2.4)Public business sector 26897 3.5 (8442) (25.7) 2451 10.0Private business sector 291719 38.1 29269 12.2 23113 8.6 Household sector 78332 10.2 6763 12.7 18394 30.7Other Items (Net) -107969 -14.1 (4694) 5.7 (20714) 23.7

Domestic credit scaled up by LE 39.6 billion or 7.5 percent during FY

2007/2008, against LE 21.8 billion or 4.3 percent a year earlier, to reach LE 570.9 billion at the end of June 2008.

Domestic Credit by Sector (End of June)

0

100

200

300

400

500

600

700

2003 2004 2005 2006 2007 2008

LE bnHousehold SectorPrivate Business SectorPublic Business SectorGov. Sector (Net)

Relative Structure of Domestic Credit(End of June 2008)

51.1% 4.7%

30.5%13.7%

Gov. Sector (Net) Public Business SectorPrivate Business Sector Household Sector

- 74 - Around 60% of this rise reflected an expansion in the credit to the

private business sector. As such, credit to this sector increased by LE 23.1 billion or 8.6 percent, bringing the sector's indebtedness up to LE 291.7 billion or 51.1 percent of total domestic credit at the end of June 2008. The rise in credit to this sector comes in view of the increasing importance of its role in development, as its share in total implemented investments reached 67.2 percent during FY 2007/2008. Trade units obtained 45.3 percent of the increase in loans extended to this sector. The manufacturing and services units accounted for 34 percent and 29.6 percent, respectively. However, loans received by agriculture units declined. On the other hand, credit to the household sector mounted by LE 18.4 billion or 30.7 percent (against LE 6.8 billion or 12.7 percent during the previous FY). This rise was attributed to the fact that some banks increased their retail services and consumer credit (particularly personal and car loans).

In addition, credit to public business sector edged up by LE 2.5 billion or 10.0 percent, (against a decline of LE 8.4 billion or 25.7 percent). This lifted its debt to banks up to LE 26.9 billion or 4.7 percent of total credit at the end of June 2008.

Net credit to the government

(including public economic authorities) retreated by LE 4.3 billion or 2.4 percent during FY 2007/2008 (against a drop of LE 5.8 billion and 3.2 percent during the preceding FY). This brought the debt of this sector to LE 174.0 billion or 30.5 percent of the total domestic credit at the end of June 2008. The decrease was an outcome of the decline in banks' holdings of government securities by LE 6.2 billion (due to the redemption of some government bonds in accordance with the aforementioned settlement agreement between the CBE and the government). It was also an effect of both the increase in government deposits by LE 13.7 billion and higher loans by LE 15.6 billion.

- 75 - Net balancing items had a contractional effect on domestic liquidity, as

their credit (negative) balance escalated by LE 20.7 billion during the reporting year, against LE 4.7 billion a year earlier. The rise was mainly ascribed to augmenting capital accounts by LE 21.0 billion (LE 3 billion of which was for increasing the CBE capital). Add to this the retreat in unclassified assets and liabilities by LE 14.5 billion (partly due to the aforementioned settlement agreement between the CBE and the government). However, such retreat was offset by the rise in the balance of interbank net debit and credit position by LE 14.8 billion.

Banking Liabilities & Relative Importance of their Components

at End of June

0%

20%

40%

60%

80%

100%

2004 2005 2006 2007 20080

300

600

900

1200

1500

LE bn

Equities ProvisionsBonds & Long-term Loans Obligations to Local BanksObligations to Banks Abroad Total DepositsOther Liabilities Total Liabilities (Right Scale)

- 76 -

2/2: Banking Developments

2/2/1: Banks' Aggregate Financial Position

The aggregate financial position of banks operating in Egypt (40 banks) reached LE 1.1 trillion at the end of June 2008. This denoted a rise of LE 145.4 billion or 15.5 percent in FY 2007/2008, against LE 176.4 billion or 23.2 percent in the previous FY.

The breakdown of the financial position indicates that around 78 percent of the total increase in liabilities was concentrated in deposits and obligations to banks in Egypt. As such, deposits grew by LE 97.2 billion and obligations by LE 16.1 billion (mainly because of the increase in the CBE’s foreign currency deposits at banks).

In addition, banks increased

their provisions by LE 8.8 billion and equities by LE 7.8 billion.

Banking Assets & Relative Importance of their Components

at End of June

0%20%40%60%80%

100%

2004 2005 2006 2007 2008030060090012001500LE bn

Cash Securities & Inv estmentsBalances with Local Banks Balances with Banks Abroad

Loan & Discount Balances Other AssetsTotal Assets (Right Scale)

- 77 -

Change in Liabilities (LE mn)

Change in FY 2006/2007 2007/2008 Value % Value % Capital 5925 21.9 4258 12.9 Reserves (866) (6.5) 3589 28.6 Provisions (1481) (2.7) 8845 16.5 Bonds and long-term loans 8825 50.4 (4066) (15.4) Obligations to the CBE 56106 540.6 17680 26.5 Obligations to local banks 5025 45.2 (1600) (9.9) Obligations to banks abroad 1236 14.1 3321 33.2 Deposits 81112 14.3 97246 15.0 Other liabilities 20479 41.4 16115 23.0 Total Liabilities 176361 23.2 145388 15.5

On the assets side, the increase mainly stemmed from a rise in the balances with local banks by LE 60.8 billion (because of higher balances at the CBE, particularly the deposits accepted under the monetary policy instrument of open market operations) and also in lending and discount balances by LE 47.7 billion.

Relative Structure of Banks' Portfolio Investment

34.4

28.8

2.0

10.08.2

42.0

31.6

2.6

16.2

0.0

7.6

16.6

05

1015202530354045

TreasuryBills

Gov. Bonds Non-gov.Bonds

Corp.Equities

CBE Notes ForeignSecurities

%

June 2007

June 2008

- 78 -

Change in Assets (LE mn)

Change in FY 2006/2007 2007/2008 Value % Value % Cash 892 13.1 2556 33.2 Securities and investments (17867) (9.2) 25760 14.6 Balances with the CBE 89944 82.1 62745 31.4 Balances with local banks 5724 47.3 (1923) (10.8) Balances with banks abroad 51812 71.4 (1574) (1.3) Lending and discount balances 29705 9.2 47679 13.5 Other assets 16151 38.0 10145 17.3 Total Assets 176361 23.2 145388 15.5

Banks' investments in

securities and treasury bills rose by LE 25.8 billion. This was an outcome of some factors. One of them was the rise in banks’ investments in TBs by LE 24.3 billion; in government bonds by LE 13.1 billion; participations in corporate equities by LE 3.5 billion; non-government bonds by LE 1.6 billion and foreign securities by LE 0.9 billion. Another affecting factor was the sharp drop in banks' investments in CBE notes by LE 17.6 billion, after the CBE had ceased to issue such notes and used the deposit auctions instead.

Banks' net transactions with their correspondents abroad

FY 2007/2008 showed a decline in banks' net credit balances by the

equivalent of LE 4.9 billion or 4.3 percent to LE 109.5 billion worth at the end of June 2008 (against LE 114.4 billion worth at the end of June 2007). The

Deposits in the Interbank Money Market

0

2000

4000

6000

8000

10000

12000

End of June 2007 End of June 2008

LE mn

Local Currency Foreign Currencies

- 79 -

decline in banks' credit position was due to a decrease in their balances with banks abroad by the equivalent of LE 1.6 billion, and the increase in their obligations to these banks by LE 3.3 billion worth.

Transactions with Banks Abroad

(LE mn) June Change during FY

2007 2008 2006/2007 2007/2008 At End of Value % Value %

Net Position 114360 109465 50576 79.3 (4895) (4.3)

Balances at banks abroad 124366 122792 51812 71.4 (1574) (1.3) Obligations to banks abroad 10006 13327 1236 14.1 3321 33.2

2/2/2: Interbank Money Market in Egypt

The volume of transactions in the interbank money market declined in terms of deposits by LE 1.9 billion or 10.8 percent in the year under review, to LE 15.9 billion at end of June 2008 (against a surge of LE 5.7 billion or 47.3 percent in the year of comparison). The decline was in both local and foreign currency transactions.

- 80 -

2/2/3: Deposits

At the end of June 2008, banks’ deposits (including government deposits) reached LE 747.2 billion or 69.0 percent of banks' aggregate financial position, rising by LE 97.2 billion or 15.0 percent in FY 2007/2008, against LE 81.1 billion or 14.3 percent a year earlier. In the light of the propensity to save in the Egyptian pound, encouraged by its higher interest (vs. foreign currencies) and the confidence in the efficiency of the Foreign Exchange Market, the increase in deposits in the reporting year was concentrated in local currency (around 91.3 percent of the total). Deposits in local currency rose by LE 88.8 billion or 19.2 percent to LE 552.1 billion, representing 73.9 percent of total deposits with banks at the end of June 2008. On the other hand, deposits in foreign currencies modestly edged up by LE 8.5 billion worth.

Deposits with Banks by Sector

(LE bn) Local Currency Foreign Currencies End of June

2006 2007 2008 2006 2007 2008 Total 401.1 463.3 552.1 167.7 186.6 195.1 Government sector 49.4 37.2 44.8 29.3 30.3 33.2 Public business sector 20.4 23.5 29.5 5.6 6.7 9.1 Private business sector 41.4 77.5 119.7 39.3 49.1 57.2 Household sector 288.0 321.8 354.1 92.2 98.3 93.7 External sector 1.9 3.3 4.0 1.3 2.2 1.9

The private business sector contributed around 47.6 percent to the rise

in total local currency deposits. Its LE deposits scaled up by LE 42.2 billion or 54.5 percent, standing at LE 119.7 billion (21.7 percent of the total deposits in local currency) at the end of June 2008. Likewise, the household sector's deposits in local currency stepped up by LE 32.3 billion or 10.0 percent. On the other hand, the private business sector contributed 95.5 percent to the growth in foreign currency deposits, with a rise of LE 8.1 billion worth in its

- 81 - deposits, to reach LE 57.2 billion worth or 29.3 percent of the total foreign currency deposits at the end of June 2008. Meanwhile, for the first time since FY 2004/2005, the household sector’s deposits in foreign currencies retreated by the equivalent of LE 4.7 billion.

2/2/4: Lending Activity

Banks expanded their lending activity in FY 2007/2008, as their lending and discount balances grew by LE 47.7 billion or 13.5 percent, recording the highest growth rate since the beginning of 2001. These balances totaled LE 401.4 billion, representing 37.1 percent of total assets and 53.7 percent of total deposits at the end of June 2008. Credit facilities to small-scale enterprises reached some LE 29.6 billion or 7.4 percent of total credit at the end of June 2008, with a rise of LE 4.7 billion above the preceding FY.

Around 61 percent of the increase in lending and discount balances was concentrated in loans in foreign currencies, which significantly rose by LE 29.1 billion worth or 27.6 percent to LE 134.3 billion worth or 33.5% of the total lending and discount balances at the end of June 2008. This noticeable increase in foreign currency loans was attributed to the lower interest on the US dollar, the abatement of concerns about exchange rate fluctuations, and the

Rate of Change in Deposits by Sector

(40)

(20)

0

20

40

60

80

100

2006/2007 2007/2008 2006/20007 2007/2008

Local Currency Foreign Currencies

%

Gov ernment Sector Public Business Sector Priv ate Business SectorHousehold Sector Foreign Sector

- 82 -

continued stability in the foreign exchange market. Accordingly, the ratio of loans in foreign currencies to deposits in foreign currencies rose to 68.8 percent at the end of June 2008, against 56.4 percent at the end of June 2007. The major recipient was the private business sector which accounted for 51 percent of this increase, with a growth of LE 14.8 billion worth, mostly obtained by the sector’s manufacturing units.

Relative Structure of Loans to the Business Sectors

in FY 2007/2008 (LE mn)

Local Currency Foreign Currencies Change % Change % Total 18622 100 29057 100 Government sector (1090) (5.8) 5564 19.1 Public business sector 1378 7.4 1086 3.7 Private business sector 3966 21.3 14809 51.0 Household sector 14385 77.2 4009 13.8 External sector (17) (0.1) 3589 12.4

Loan and discount balances in local currency slightly went up by LE

18.6 billion or 7.5 percent, posting LE 267.2 billion at the end of June 2008. As a consequence of banks’ expansion in retail business and the concurrent decline in real interest rates, the household sector accounted for about 77.0 percent of the total increase in LE loans, with a rise of LE 14.4 billion or 26.0 percent in its loans (against LE 5.3 billion or 10.6 percent in the year of comparison). On the other hand, loans to the private business sector recorded a tiny increase of LE 4.0 billion or 2.4 percent. LE Loans/LE deposits retreated to 48.4 percent at the end of June 2008, against 53.6 percent at the end of June 2007, because LE deposits grew at a higher pace than LE loans.

The relative breakdown of loans (local and foreign currencies) by economic activity shows that the manufacturing sector was the major recipient, with a relative share of 36.0 percent of the total at the end of June 2008. The services sector followed with 26.6 percent, trade with 14.4 percent and agriculture 1.6 percent.

- 83 -

At the end of June 2008, loans and advances (excluding discounts)

offered by banks registered LE 399.5 billion, with an increase of LE 47.1 billion or 13.4 percent in the reporting year. Around 71.1 percent of this increase was pronounced in short-term loans (one-year-or-less) which rose by LE 33.5 billion or 17.0 percent. The increase resulted from the growth in foreign and local currency loans by LE 25.8 billion worth and LE 7.7 billion, in order. On the other hand, the increase in long-term loans (more than one year) reached LE 13.6 billion or 8.7 percent, as an outcome of the increase in loans in local currency by LE 10.9 billion and in foreign currencies by LE 2.7 billion worth.

Credit Facilities by Economic Activity

at End of June 2008

020406080

100120140160

Agriculture Manufacturing Trade Services Unclassif ied

LE bn

Local Currency Foreign Currencies

Loans & Advances by Banks (Excluding Discounts)

020406080

100120140160

2007 2008 2007 2008

One Year or Less Over One Year

LE bn

Local Currency Foreign Currencies

- 84 -

3: Non-Banking Financial Sector 3/1: Stock Exchange

In continuation of the moves taken to promote trading on the Egyptian

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

The Minister of Investment issued Decree No. 126/2008, amending

certain provisions of Article 175 of the Executive Regulations of the Capital Market Law No. 95/1992. By virtue of this Decree, banks and insurance companies may carry out the activities of money market funds. A money market fund is a managed investment scheme that fully invests its assets in short-term investments. Furthermore, companies engaged in primary dealers activity may establish money funds, provided that they maintain a stable net asset value for their certificates, as to be determined by CMA Board of Directors. Moreover, the Minister of Investment issued Decree No. 144/2008, by virtue of which companies established before 13 June 2006, for the purpose of practicing underwriting and promotion activities in the fields of investment (e.g. underwriting and venture capital) stated in item (11) of

- 85 - Article One of the Executive Regulations of Law No. 8/1997) are required to raise their minimum issued capital to at least three million Egyptian pounds, half of which should be paid within a period of one year at most, from the date of the decree’s enforcement (3/6/2008).

In the context of the efforts made to regulate the market, the CMA

issued a decision amending the rules of listing and delisting of securities, at official and unofficial schedules on the Stock Exchange. In this respect, the issued capital of a company should be paid in full. Amendments were made also to the rules determining the value of corporate capital and the profits generated from the company's activities according to the type of its listing schedule. Also amended were the purchase rules of treasury shares (domestic shares and GDRs). Accordingly, the period for which a company is allowed to maintain shares should not be less than three months and not more than one calendar year. The CMA also amended the capital adequacy rules of brokerage companies, aiming to measure the ability of the companies operating in the field of securities to fulfill their current obligations and face all types of risks arising from practicing their activities. In addition, the CMA issued a decision to improve the scope of disclosure for transactions made by the board members of a company and the other parties concerned, with listed companies, with the aim of providing more protection for investors and enhancing transparency.

In support of the activity of the Nile Stock Exchange (Nilex), launched

in October 2007, CMA approved the licensing of eight companies to act as nominated advisors of small and medium enterprises (SMEs) that desire to list their securities on Nilex.

To foster cooperation with regional and global capital markets, CASE

signed a memorandum of understanding with Cyprus Exchange to enhance cooperation between the two Exchanges on issues of mutual interest. The key areas of cooperation related to the development of capital markets included exchange of information, setting a regulatory framework for the exchange of

- 86 -

experience among the staff of the two Exchanges, to acquaint them with the main mechanisms for the development of capital market performance. Add to this, the activation of mutual cooperation programs to jointly conduct various studies and researches for the benefit of the two Exchanges.

As for trading on the Stock Exchange, CASE Trading Committee

decided to add 27 companies to the list of companies licensed to trade without price limits. The decision took effect on the session dated 20/4/2008. The trading indices showed a notable pickup during the reporting year. CASE 30 index went up by 25.9 percent during the year, recording 9827.3 points. Likewise, CMA index rose by 21.8 percent to 3329.7 points at the end of June 2008. It is worth mentioning that the Egyptian Stock Exchange showed a buoyant performance at the beginning of the first half of 2008. Indicative of this, CASE 30 index hit an unprecedented level of 12 thousand points on the 1st of May. However, the performance started to slow down in May and June as a reflection of some endogenous and exogenous factors, namely May economic decisions, and the repercussions of the global financial and sub-prime mortgage crisis.

CMA & CASE 30 Indices

2000

4000

6000

8000

10000

12000

14000

Jun-07Jul-07

Aug-07Sep-07

Oct-07Nov-07

Dec-07Jan-08

Feb-08Mar-08

Apr-08May-08

Jun-08

CASE 30

Capital Market Authority

- 87 - The volume of trading on the Exchange increased during the year, as the

number of transactions went up by 68.3 percent, reaching 13.0 million. The number of dealt-in securities rose by 109.7 percent, posting 23.6 billion. The value of traded securities also went up by LE 120.4 percent, reaching LE 610.7 billion.

Of the total trading value, shares accounted for 96.1 percent against

94.4 percent in the previous FY, while bonds constituted 3.9 percent (against 5.6 percent).

The relative structure of dealings by institutional and retailer investors

on the Exchange changed in favor of retailers. Retailers' transactions scaled up to 56.9 percent of the total value of transactions at end of June 2008, from 39.7 percent at end of June 2007. On the other hand, institutions' transactions retreated to 43.1 percent, against 60.3 percent.

During FY 2007/2008, the Egyptian Exchange continued to attract an

increased number of foreigners. Consequently, the value of foreigners’ transactions mounted to LE 327.8 billion during the year, compared with LE 135.7 billion in the previous FY. Meanwhile, their transactions unfolded net sales of LE 2.4 billion, against net purchases of about LE 14.0 billion. Foreigners' transactions in LE securities resulted in net sales of LE 4.1 billion, while their transactions in US dollar unfolded net purchases of US$ 308.8 million (equivalent to LE 1.7 billion).

-60-40-20

020406080

100120

Purchases Sales Net

2006-20072007-2008

Transactions of Foreign Investors on the ExchangeLE mn

- 88 -

During FY 2007/2008, the CMA approved 3365 new issues, with a total

value of LE 99.6 billion. Of these issues, 2301 were for new incorporations, with a value of LE 19.3 billion, or 68.4 percent of the total number of issues, and the remainder (1064 issues) was for capital increases, with a value of LE 80.3 billion or 80.6 percent of the total.

New Share Issues on the Stock Exchange

During FY 2006/2007 2007/2008

Total Number of Issues (Unit) 2850 3365 New incorporations 1937 2301 Capital increases 913 1064 Total Number of Shares (mn) 4833 10128 New incorporations 1772 1953 Capital increases 3061 8175 Total Value of Shares (LE mn) 93669 99587 New incorporations 35384 19341 Capital increases 58285 80246

Source: CMA.

The number of listed companies declined from 544 at end of June 2007

to 377 at end of June 2008 (due to delisting the companies that did not comply with the listing conditions and standards). Nonetheless, the nominal capital

3/1/1: Shares Market

1: Primary (Issue) Market

A: New Issues

B- Companies Listed on the Stock Exchange

- 89 - value of these companies rose to LE 138.0 billion at end of June 2008 against LE 121.1 billion at end of June 2007. Likewise, the market capitalization of their shares mounted to LE 813.3 billion (against LE 601.8 billion) or 74.1 percent of GDP during FY 2007/2008.

Companies Listed on the Stock Exchange (LE mn)

June 2007 June 2008 No. of

Companies (Unit)

Nominal Capital

Market Capital-ization

No. of Companies

(Unit)

Nominal Capital

Market Capital- ization

Total 544 121072 601826 377 137974 813341 Official schedule 147 73403 497319 121 65897 644180 Unofficial schedule 394 47387 104055 255 72027 169111 Temporary schedule 3 282 452 1 50 50

Source: Egyptian Exchange.

Trading in the secondary market was notably active in FY 2007/2008. This was reflected on the total value of share trading in LE and US dollar (on the floor and over the counter), driving it up to LE 586.7 billion (against LE 261.6 billion during the previous FY). Trading on the floor (88.7 percent of the total value of trading), was concentrated in LE shares. Their trading volume amounted to 18.2 billion papers at a value of LE 495.8 billion, through 12.3 million transactions.

2: Secondary (Trading) Market

- 90 -

Trading in Shares on the Stock Exchange*

2006/2007 2007/2008

No. of Transactions

(000s)

Volume

(mn)

Market Value

(LE mn)

No. of

Transactions (000s)

Volume

(mn)

Market Value

(LE mn) Total Trading 7708 11243 261609 12972 23590 586740 On the Floor 7482 9438 243843 12372 19417 520188 LE shares 7211 8522 228365 12075 18206 495847 Shares in foreign currencies

271

916

15478

297

1211

24341

Over the Counter

226 1805 17766 600 4173 66552

LE shares 217 1638 14627 592 3569 54347 Shares in foreign currencies

9

167

3139

8

604

12205

Source: the CMA. * Table No. (3/2), the Statistical Section

Trading in US$ shares was brisk on the floor, as the volume of traded

securities reached 1.2 billion, at a value of US$ 4.4 billion. OTC dealing in shares reached only 11.3 percent of the total. The bulk of the trading was in LE shares, registering an overall volume of 3.6 billion at a value of LE 54.4 billion, through 0.6 million transactions. About 604.4 million shares were traded in US dollar, at a value of US$ 2.1 billion, through 8 thousand transactions. Added to this were 42 transactions in euro shares, dealt on 0.7 million papers, at a value of € 72 million.

- 91 -

During FY 2007/2008, the nominal value of listed bonds increased by LE 22.4 billion, to LE 84.5 billion at end of June 2008. The increase was a result of the rise in the balance of treasury bonds (primary dealers system) by LE 21.5 billion and corporate bonds by LE 0.1 billion. Also, securitization bonds moved up by LE 1.2 billion (Securitization bonds are nominal bonds, non-convertible to shares, and backed by a securitization portfolio. The interest and nominal value of these bonds are paid from the receipts of the said portfolio). On the other hand, bank bonds decreased by LE 0.1 billion. Accordingly, the relative structure of bonds changed with the government bonds edging up to 93.2 percent of the total listed bonds at end of June 2008. Corporate bonds came next, followed by securitization bonds and bank bonds with shares of 4.5 percent, 2.2 percent and 0.1 percent, respectively.

Bonds Listed on the Stock Exchange (LE mn)

June 2007 June 2008 Value % Value %

Total 62130 100.0 84546 100.0Government Bonds 57598 92.7 78770 93.2-Treasury bonds 4000 6.4 4000 4.8-Treasury bonds (primary dealers system)

53000 85.3 74500 88.1

-Housing bonds 118 0.2 117 0.1-US dollar development bonds 480 0.8 153 0.2Corporate Bonds 3693 6.0 3830 4.5Bank Bonds 150 0.2 50 0.1Securitization Bonds 689 1.1 1896 2.2Source: Egyptian Exchange.

3/1/2: Bonds Market

1: Primary (Issue) Market

- 92-

The total value of traded bonds (in LE and US dollar) rose by some LE

8.7 billion or 56.8 percent during FY 2007/2008, reaching LE 23.9 billion, against LE 15.3 billion during the preceding FY. Trading on the floor was mostly in LE bonds, through 1100 transactions, 23.2 million papers and a value of LE 23.9 billion. Treasury bonds (under the primary dealers system) accounted for 88.1 percent of the total value of trading in LE. Their trading volume registered 22.8 million bonds, at a value of LE 23.8 billion, traded through 1058 transactions.

Dealing in Listed Bonds on the Floor

During FY 2006/2007 2007/2008 No. of

Transac- tions

(Unit)

Volume (000s)

Value (mn)

No. of Transac-

tions (Unit)

Volume (000s)

Value(mn)

Total Bonds (LE) 923 16628 15266.1 1100 23172.1 23941.5 Treasury bonds 19 1064.1 406.4 9 126.1 138.6 Treasury bond (primary dealers) 803 13948.5 14692.0 1058 22821.2 23778.9 Housing bonds 31 5.6 0.3 9 1.2 0.1 Corporate bonds 67 1609.8 167.4 23 222.0 23.7 Bank bonds 3 0.0 0.0 1 1.6 0.2 Total Bonds (US$)

9

207.3

21.3

1

0.1

0.0

Development bonds

-

-

-

1

0.1

-

Corporate bonds 9 207.3 21.3 0 0.0 0.0 Source: CMA.

Secondary (Trading) Market

- 93 -

The number of mutual funds reached 41 at end of June 2008 (38 of

which are open-end and 3 are close-end). The nominal value of the funds' certificates at the time of incorporation reached LE 7.9 billion.

The insurance sector in Egypt comprises the Supreme Council of

Insurance, the Egyptian Insurance Supervisory Authority (EISA), and the establishments that transact insurance and re-insurance business. At the end of June 2008, the number of insurance companies was 21, consisting of 19 direct insurance companies, the Export Credit Guarantee Company of Egypt (ECGE) and a single cooperative insurance society. This is in addition to governmental insurance funds, private insurance funds, insurance pools and federations, and other auxiliary organs.

At the end of June 2008, total investments of the insurance sector were

estimated to reach LE 299.3 billion, up by LE 7.4 billion or 2.5 percent (against an actual increase of LE 13.1 billion and 4.7 percent during the previous FY).

The higher investments of the insurance sector resulted partly from a

pickup in the total estimated investments of insurance companies and funds, by LE 4.8 billion or 12.1 percent during FY 2007/2008, posting LE 44.4 billion or 14.8 percent of total investments at end of June 2008. Another factor at work was the rise in the investments of the National Authority for Social Insurance by only LE 2.6 billion or 1.0 percent (against LE 8.9 billion and 3.7 percent during the previous FY), reaching LE 254.9 billion or 85.2 percent of total investments at end of June 2008.

3/1/3: Mutual Funds

3/2: Investments of the Insurance Sector

- 94 -

Investments of the Insurance Sector (LE bn)

End of June 2007 2008

Private Insurance

Companies & Funds

National Authority For Social Insurance

Total

Private Insurance Companies & Funds*

National Authority For Social Insurance

Total

Grand Total 39.6 252.3 291.9 44.4 254.9 299.3 Real estates 0.8 - 0.8 0.9 - 0.9 Securities 25.5 204.3 229.8 28.6 203.2 231.8 Deposits with NIB - 48.0 48.0 - 51.7 51.7 Loans 0.5 - 0.5 0.6 - 0.6 Deposits at banks 12.5 - 12.5 14.0 - 14.0 Other Investments 0.3 - 0.3 0.3 - 0.3

* Estimates of the Central Bank of Egypt are based on the rise of this item at the same rate of the previous FY.

The distribution of estimated investments of insurance companies and

funds indicated that securities accounted for 64.4 percent of the total estimated investments at the end of June 2008. Moreover, their deposits at banks recorded 31.5 percent and other investments 4.1 percent of the total at the end of June 2008.

As to the investments of the National Authority for Social Insurance,

securities accounted for 80 percent of its total investments. This was attributed to the fact that the balance of government debt to the said Authority was cleared and replaced by government bonds. This debt was transferred to the Authority from the NIB as of the beginning of FY 2006/2007. The remaining 20 percent represented deposits at the NIB.

- 95 -

4: Public Finance and Domestic Public Debt 4/1: Consolidated Fiscal Operations of the General Government

In FY 2007-2008, the fiscal policy aimed at mitigating the impact of

price hikes on low-income brackets, by substantially increasing subsidies by LE 30.2 billion compared with the previous FY, to LE 84.2 billion (almost one third of total government spending). The subsidy increase was focused on petroleum products and ration commodities, to offset the spillover effects of high global prices. In this direction, partially-subsidized ration cards were replaced by fully-subsidized ones, and the number of beneficiaries was increased by 15 million persons. Moreover, subsidies to the EGPC were raised, and also to GASC; in order to build up commodity stocks to face the prospects of further world price hikes.

5.8

20.1 21.318.1

16.618.4

4.5 4.2

18.1

0.02.04.06.08.0

10.012.014.016.018.020.022.024.0

2005/2006 2006/2007 2007/2008

Education & Health GASC SubsidiesEGPC Subsidies

% Subsidies to EGPC, GASC, Education & Health as a Percentage of Total Government Expenditure

During the reporting year, wages and compensations of employees

scaled up by LE 10.7 billion compared with the preceding FY, reaching LE 62.8 billion or 22.3 percent of the total government spending. This amount included the periodical and social allowances that have been raised recently to

- 96 -

30 percent of the basic pay. Likewise, expenditures on education rose by 21.3 percent to LE 33.7 billion, representing 11.9 percent of total government spending. Expenditures on health increased by 26.1 percent to LE 13.1 billion or 4.6 percent of total government spending. Despite the tangible increase in expenditures on education and health, their percentages of GDP were still as modest as 3.8 percent and 1.5 percent, respectively, during the reporting year.

Government expenditures and public revenues increased by 27.1 percent

and 22.9 percent, in order, in the reporting year. Consequently, the overall budget deficit widened to LE 61.1 billion during FY 2007/2008, against LE 54.7 billion a year earlier. However, the budget deficit/GDP ratio declined to 6.8 percent in FY 2007/2008, from 7.5 percent in FY 2006/2007, mainly because of the higher GDP.

05

10152025303540

2003/2004 2004/2005 2005/2006 2006/2007 2007/2008

Revenues Expenditures Overall Deficit

Ratios of Expenditures, Revenues & Overall Deficit / GDP %

In an effort to reduce the budget deficit, the government issued a number of legislations to boost state revenues and rationalize subsidies. In this context, the Law No. 114/2008 was issued; amending – among others –the Laws of the

- 97 - State Financial Resources Development Levy and the Public Sales Tax, whereupon the vehicle licensing fees and the sales tax on cigarettes and certain oil products were increased. In addition, by virtue of the said Law, tax exemptions on treasury bills were also abolished. On the other hand, the new Real Estate Tax Law was enacted in the reporting year, and amendments were made to certain provisions of the Executive Regulations of the Income Tax Law, the Customs Exemptions Law, and the Public Sales Tax Law. Moreover, customs tariffs were cut on capital goods to correct customs distortions in some local industries. In addition, natural gas and electricity prices were raised for companies in energy-intensive industries, given that developments in energy prices are to be closely monitored to ensure efficient and effective pricing. With respect to the rationalization of subsidies, a number of foodstuffs were exempted from customs duties in order to reduce their prices in the local market.

Hereunder is a follow-up of the executed consolidated fiscal operations of the general government in FY 2007/2008, according to the preliminary actual data of the Ministry of Finance: 4/1/1: Budget Sector (Administrative System -

Local Administration - Service Authorities) Total collected revenues reached LE 221.4 billion, up by 22.9 percent

over the previous FY and 18.3 percent above the budgeted revenues for the whole year, representing 24.7 percent of GDP.

Tax revenues contributed 55.5 percent of the total rise in public revenues, reaching LE 137.2 billion, up by 20.0 percent as compared with the preceding FY. 45.1 percent of the increase came from the sales tax revenues, which rose by LE 10.3 billion or 26.2 percent over the preceding year, to LE 49.7 billion or 36.3 percent of total tax revenues. This was largely ascribed to the expanding sales taxable base, and the imposition of severer penalties on tax evasion.

- 98 -

Tax Revenues / Total Budget Revenues

Taxes on Goods & Services

22.5%

Taxes on International

Trade 6.3%

Other Taxes 2.9%

Taxes on Income 30.3%

FY 2007/2008

Revenues from taxes on income and business profits went up by LE 8.5

billion or 14.6 percent compared with LE 10.3 billion or 21.3 percent in the previous FY, posting LE 67.1 billion or 48.9 percent of the total tax revenues during FY 2007/2008. Taxes collected from the EGPC reached LE 29.3 billion, accounting for 45.6 percent of the increase in taxes on income and business profits. Revenues collected from the Suez Canal Authority also rose by LE 1.1 billion or 12.3 percent, from the taxes on individual income by LE 1.8 billion or 18.3 percent, and from taxes on companies by LE 1.7 billion or 12.2 percent.

Moreover, receipts from customs duties scaled up by LE 3.7 billion or

35.2 percent as compared with the previous FY, owing to the escalation in merchandise imports by 37.8 percent, to US$ 52.8 billion during the reporting year.

- 99 -

Total Revenues,Tax Revenues & Property Income

0 50 100 150 200 250

2003/2004

2004/2005

2005/2006

2006/2007

2007/2008

Total Revenues Tax Revenues Property Income

(LE bn)

Likewise, property income revenues from the EGPC, SCA, CBE and

some other economic authorities surged by LE 7.3 billion or 16.3 percent, to LE 52.5 billion or 23.7 percent of total collected revenues.

Grants obtained during FY 2007/2008 reached LE 1.5 billion, down by

62.4 percent below the level of the previous FY. The decline in current and capital grants was essentially attributed to the drop in grants from the USA.

- 100 -

Consolidated Fiscal Operations of the General Government Budget Sector

(Public Revenues) (LE bn)

2006/2007 2007/2008 Preliminary

Actual % Change

(%) Preliminary

Actual % Change

(%) Total Revenues

180.2 100.0 19.1 221.4 100.0 22.8 Tax Revenues 114.3 63.4 16.9 ١٣٧٫٢ 62.0 20.0 Taxes on Income and Profits 58.5 32.5 21.3 67.1 30.3 14.6 The EGPC 25.4 14.1 7.5 29.3 13.3 11.4 The SCA 9.1 5.1 24.9 10.3 4.6 12.3 The CBE 0.0 0.0 0.0 0.0 0.0 0.0 Other entities 14.3 7.9 79.9 16.0 7.2 12.2 Payable by Individuals

9.7 5.4 3.6 11.5 5.2 18.3 Taxes on Property 1.8 1.0 47.3 2.1 0.9 14.8 Taxes on Goods and Services 39.4 21.9 13.7 49.7 22.5 26.1 Taxes on International Trade (Customs) 10.4 5.7 7.4 14.0 6.4 35.2 Other Taxes 4.2 2.3 6.4 4.3 1.9 2.8 Grants 3.9 2.2 63.3 1.5 0.6 -62.4 Current 2.1 1.2 257.6 0.4 0.2 -79.0 Capital 1.8 1.0 0.3 1.0 0.4 -43.0 Other Revenues 62.0 34.4 21.3 82.7 37.4 33.4 Property Income 45.1 25.1 24.0 52.5 23.7 16.2 The EGPC 11.0 6.1 -12.1 25.3 11.4 129.5 The SCA 11.9 6.6 13.8 15.1 6.8 26.5 The CBE 0.0 0.0 0.0 0.0 0.0 0.0 Economic authorities 0.6 0.3 22.1 3.0 1.4 424.0 Companies 2.2 1.2 156.6 2.6 1.2 19.2 Others (the EGPC & the third

mobile license) 16.0 8.9 131.9 3.1 1.4 -80.6 Other 3.4 1.9 -34.2 3.2 1.5 -3.7 Selling Proceeds of Goods and Services 9.8 5.4 23.9 12.0 5.4 23.1 Financial Investments 4.4 2.4 18.1 5.7 2.6 31.7 Others 2.7 1.5 -12.7 12.5 5.7 355.8 Source: Ministry of Finance. Percentages are calculated in terms of LE million.

- 101- Expenditures, according to the actual data, totaled LE 282.3 billion or

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

Total Expenditures of the Budget Sector

Investments 34.2

Other Expenditures

23.9

Subsidies, Grants & Social

Benefits 92.4

Purchases of Goods & Services

18.5

Interests 50.5

Compensations of Employees

62.8

2007/2008( LE bn )

- 102 - Interest payments on public debt (external and domestic) rose by LE 2.8

billion or 5.9 percent, to LE 50.5 billion or 17.9 percent of total expenditures. This was due to the increase in domestic interest payments to the NIB and SIFs and also other public debt service expenditures by LE 2.1 billion or 4.8 percent, and in external interest payments by LE 0.7 billion.

Purchases of non-financial assets (investments) amounted to LE 34.2

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

- 103 -

Consolidated Fiscal Operations of the General Government Budget Sector

(Public Expenditures) (LE bn)

2006/2007 2007/2008 Preliminary

Actual % Change

(%) Preliminary

Actual % Change

(%) Total Expenditures 222.0 100.0 6.8 282.3 100.0 27.1 Wages & Compensations of Employees 52.2 23.5 11.6 62.8 22.3 20.5 Salaries and Wages 42.4 19.1 12.5 51.2 18.1 20.7 Social contributions 5.5 2.5 8.3 6.1 2.2 11.7 Other 4.2 1.9 7.3 5.5 2.0 29.9 Purchases of Goods & Services 17.0 7.6 18.0 18.5 6.5 8.5 Goods 6.5 2.9 13.3 7.3 2.6 11.2 Services 7.0 3.1 15.8 7.6 2.7 9.2 Others 3.5 1.6 33.5 3.6 1.2 1.9 Interest 47.7 21.5 29.6 50.5 17.9 5.9 Foreign 3.0 1.4 7.4 3.7 1.3 23.2 Domestic 44.7 20.1 31.4 46.8 16.6 4.8 NIB & SIFs 17.3 7.8 97.9 18.9 6.7 9.1 Others 27.4 12.3 8.3 27.9 9.9 2.0 Subsidies, Grants and Social Benefits 58.4 26.3 -15.2 92.4 32.7 58.1 Subsidies 54.0 24.3 -0.5 84.2 29.8 56.1 GASC 9.4 4.2 0.0 16.4 5.8 74.8 Petroleum 40.1 18.1 -3.9 60.2 21.3 50.1 Others 4.4 2.0 44.5 2.7 Grants 2.6 1.2 19.5 3.9 1.4 49.7 Social Benefits 1.6 0.7 -86.9 4.1 1.4 151.2 Contribution to SIFs 0.0 0.0 0.0 2.6 0.9 Others 1.6 0.7 20.7 1.5 0.5 -10.0 Others 0.3 0.1 91.5 0.2 0.1 -16.9 Other Expenditures 21.2 9.6 7.4 23.9 8.5 12.7 Defense 17.7 8.0 12.4 19.8 7.0 12.0 Others 3.5 1.6 -12.1 4.1 1.5 15.8 Purchases of Non-Financial Assets (Investments) 25.5 11.5 20.2 34.2 12.1 34.1 Fixed assets 20.9 9.4 18.9 28.2 10.0 34.7 Others 4.6 2.1 26.8 6.0 2.1 31.4 Source: Ministry of Finance. Percentages are calculated in terms of LE million.

- 104 - As a result of the above-mentioned developments on the revenue and

expenditure sides during FY 2007/2008, the cash deficit amounted to LE 60.9 billion or 6.8 percent of GDP, against 5.7 percent during the previous FY. By adding the net acquisition of financial assets (LE 236 million), the overall budget deficit would post LE 61.1 billion in FY 2007/2008.

The overall budget deficit (LE 61.1 billion) and various domestic

repayments of LE 14.9 billion were chiefly financed by the government’s blocked account at the CBE, which was used to redeem the CBE’s government bonds (LE 39.0 billion), after making settlements with the Ministry of Finance. In addition, miscellaneous non-banking sources were used, comprising the budget entities (LE 14.8 billion); subscriptions for TBs and government bonds by individuals (LE 7.5 billion) and the NIB and SIFs (LE 2.4 billion); and net privatization proceeds (LE 0.7 billion). The remaining finance was covered by some miscellaneous non-banking local sources (LE 0.2 billion) and external borrowing (LE 11.4 billion worth).

Budget Deficit Financing Sources & Repayments

Subscriptions of Individuals for

Treasury Bills & Bonds

7.5

Net Privatization Proceeds & Others

0.9

Foreign Borrowing 11.4

Blocked Account Used in Amortizing Government Bonds

39.0

NIB & SIFs 2.4

Non-Banking Financing through

Budget Entities 14.8

(LE bn)

- 105 -

4/1/2: Budget Sector, NIB and SIFs

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

sector during FY 2007/2008, collected revenues would surge by LE 27.4 billion to LE 248.8 billion, constituting 27.8 percent of GDP. Likewise, expenditures would rise by LE 23.5 billion, to LE 305.8 billion or 34.1 percent of GDP.

Cash & Overall Deficits of the General Government as a percentage of GDP

7.76.4

9.2

7.06.1

5.2

7.78.2

7.58.4

0

2

4

6

8

10

2003/2004 2004/2005 2005/2006 2006/2007 2007/2008

Cash Deficit Overall Deficit

%

Accordingly, the above-mentioned fiscal operations gave rise to a cash deficit of LE 57.0 billion in the consolidated fiscal operations of the general government during FY 2007/2008. By adding the net acquisition of financial assets (LE 10.6 billion), the overall deficit reaches LE 67.6 billion.

- 106 -

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

(LE bn) 2006/2007 2007/2008

Budget Sector

% Consolidated Fiscal

Operations of the

General Government

% Budget Sector

% Consolidated Fiscal

Operations of the

General Government

%

Total Revenues 180.2 205.6 221.4 248.8 Total Expenditures 222.0 244.0 282.3 305.8 Cash Deficit 41.8 38.4 60.9 57.0 Net Acquisition of financial Assets 12.9 17.8 0.2 10.6 Overall Deficit -54.7 -56.2 -61.1 -67.6 Finance Sources 54.7 100.0 56.2 100.0 61.1 100.0 67.6 100.0 Domestic Finance 33.3 60.8 35.4 63.0 0.5 0.9 6.6 9.8 Banking Finance -20.9 38.3 -17.7 -31.4 -3.2 -5.2 -4.7 -9.6 CBE 3.2 5.7 3.2 5.7 -33.4 -54.6 -35.3 -52.2 Other banks -24.1 -44.0 -20.9 -37.1 30.2 49.4 30.6 45.3 Non-Banking Finance 54.2 99.1 53.1 94.4 3.7 6.1 11.3 16.3 The NIB 0.1 0.3 0.0 0.0 2.3 3.7 0.0 0.0 SIFs 6.9 12.5 0.0 0.0 0.1 0.2 0.0 0.0 Other non-banking

resources 28.5 52.1 28.5 50.7 7.5 12.3 7.5 11.2 NIB Borrowing 0.0 0.0 5.9 10.4 0.0 0.0 10.0 14.7 Special accounts for economic authorities 18.7 34.2 18.7 33.2 -6.2 -10.1 -6.2 -9.2

The Blocked Account Used in Amortizing Part of the CBE bonds 0.0 0.0 0.0 0.0 39.0 63.8 39.0 57.7 External Borrowing 3.6 6.5 3.6 6.3 11.4 18.7 11.4 16.9 Arrears -0.7 -1.2 -0.7 -1.2 -1.0 -0.1 -0.1 -0.1 Others, of which: 19.9 36.4 19.3 34.4 14.8 24.2 15.2 22.4

Special accounts for budget entities 13.0 23.7 13.0 23.0 0.0 0.0 0.0 0.0

Financing Effects for Eliminations 0.0 0.0 0.0 0.0 ٠٫٠ ٠٫٠ ٠٫٠ ٠٫٠ Exchange Rate Revaluation -0.4 -0.8 -0.4 -0.8 -4.3 -7.0 -4.3 -6.3 Net Privatization Proceeds

0.2 0.3 0.2 0.3 0.7 1.1 0.7 1.0

Difference between Treasury Bills Face Value & Present Value -1.2 -2.1 -1.2 -2.1 -1.1 -1.9 -1.1 -1.7 Discrepancy 0.0 0.1 0.0 0.1 0.2 0.3 0.2 0.3 Source: Ministry of Finance.

- 107 - The blocked account at the CBE was primarily drawn upon to cover this

deficit (by using it to redeem the CBE's government bonds after making settlements with the Ministry of Finance), and to make some domestic repayments. Other sources of finance included miscellaneous local sources and external borrowing.

- 108 -

4/2: Domestic Public Debt

Domestic Public Debt

During FY 2007/2008, domestic public debt scaled up by LE 28.9 billion or 4.5 percent, reaching LE 666.1 billion at the end of June 2008, representing 74.3 percent of GDP at market and current prices during the said year. The government's domestic debt represented 71.9 percent of the total, public economic authorities' 7.5 percent and net debt of the NIB 20.6 % .

Domestic Public Debt at End of June 2008

(LE bn)

Economic Authorities Debt 50.1

NIB Debt137.3

Government Debt478.7

4/2/1: Debt of the Government

At the end of June 2008, the government's domestic debt totaled LE

478.7 billion or 53.4 percent of GDP, up by LE 0.5 billion or 0.1 percent during the reporting year. The increase was an outcome of both the rise in the balances of bills and bonds by LE 6.0 billion and the improvement in the net credit position of the government’s balances with the banking system by LE 3.3 billion (as deposits mounted by LE 8.1 billion and loans by LE 4.8 billion). Another contributing factor was the LE 2.2 billion decrease in the SIFs deposits with the Public Treasury.

- 109 -

Domestic Debt of the Government

(LE bn) 2007 2008 ChangeBalances at End of June Value % Value % + (-)

Government Debt 478.2 100.0 478.7 100.0 0.5 -Balances of Bonds & Bills 562.9 117.7 568.9 118.4 6.0 • Notes and bonds* 444.2 92.9 422.4 87.8 (21.8)

Of which, tradable on exchanges 61.0 12.8 82.4 14.5 21.4 • Treasury bills 118.7 24.8 146.5 30.6 27.8

- Deposits of the SIFs at the Treasury 4.5 1.0 2.3 0.5 (2.2) -Net Balances at the Banking System -89.2 -18.7 -92.5 -19.3 (3.3) • Facilities 23.6 4.9 28.4 5.9 4.8 • Deposits -112.8 -23.6 -120.9 -25.2 (8.1)

Net government debt/GDP (%) 64.2 53.4 Source: Ministry of Finance, CBE and NIB. Ratios are calculated in terms of LE million. * Including Treasury bonds; housing bonds; bonds denominated in foreign currencies with public

commercial banks; the 5 percent ratio retained from the profits of corporations subject to Law No. 97 of 1983 for the purchase of government bonds; and the holdings of resident financial institutions (banking system and insurance sector) of dollar-denominated sovereign bonds tradable on world exchanges.

The LE 6.0 billion rise in the balances of treasury bills and bonds was

an outcome of the following:

1) The LE 27.8 billion rise in the outstanding balances of treasury bills, to LE 146.5 billion at the end of June 2008. This was a result of the increase in the issues of 182-day TBs by LE 5.5 billion and 364-day TBs by LE 24.5 billion. By contrast, there was a drop of LE 2.2 billion in the issues of 91-day TBs. It is noteworthy that the average interest rate on 91-day TBs increased by 42.7 percent∗ from the end of June 2007 to the end of June 2008.

∗ The average interest rate reached 9.675 percent at the end of June 2008 and 6.781 percent at the

end of June 2007.

- 110 - 2) The LE 21.8 billion decline in the balances of treasury bonds, to LE

422.4 billion at the end of the reporting year. This was an outcome of the following:

A) A decrease of LE 44.4 billion in the balances of treasury bonds as a

result of: • The early full redemption of 10 treasury bond issues, at a value of

LE 30.7 billion to cover the cash and fiscal deficits and revaluation differences of both loan repayments to abroad and foreign currency balances.

• The early partial redemption of 10-year treasury bonds for LE 10.5 billion, issued on 30/6/2002 at a value of LE 8.3 billion and an interest rate of 9 percent.

• The redemption of four treasury bond issues (at a value of LE 4.7 billion), falling due on 20/8/2007, 10/3/2008, 29/6/2008 and 30/6/2008.

• The decline of LE 0.7 billion worth in the value of treasury bonds issued to cover the deficit of the foreign currency position of public sector commercial banks due to revaluation differences.

B) An increase of LE 21.5 billion in the value of treasury bonds due to

the following: • Two Treasury bond issues on 27/5/2008 and 10/6/2008: the first (7-

year) at a value of LE 3.0 billion and an annual interest rate of 10.65 percent, and the second (8- year) at a value of LE 2.0 billion and an annual interest rate of 10.95 percent. This is in addition to six treasury bond issues in July/March 2007/2008 at a value of LE 15.5 billion.

• An increase of LE 3.0 billion on 4/3/2008 in the value of the treasury bond issue floated on 13/11/2007( LE 5.0 billion ); on the same conditions.

- 111-

• The redemption of treasury bonds at a value of LE 2.0 billion on 14/2/2008, bringing their balances to LE 78.5 billion at the end of June 2008.

C) Issuance of treasury bonds for the benefit of the Social Insurance

Fund for Civil Servants at a value of LE 1.1 billion on 30/6/2008.

Government's Domestic Debt (End of June)

-200-100

0100200300400500600700

2003 2004 2005 2006 2007 2008-5515253545556575

BondsTreasury BillsBorrowing from NIBNet Government Balances with the Banking SystemRatio of Government Debt / GDP

%LE bn

4/2/2: Debt of Public Economic Authorities

Public economic authorities ran a higher debt of LE 50.1 billion at the

end of June 2008, up by LE 5.6 billion during the reporting year. This was attributable to the following developments: first, the decline in their net credit position with the banking system by LE 6.0 billion as an outcome of the rise in their loans from the banking system by LE 10.7 billion and in their deposits by LE 4.7 billion. Second, their borrowing from the NIB fell by LE 0.4 billion.

- 112 -

Debt of Public Economic Authorities (LE bn)

2007 2008 Change Balances at End of June Value % Value % + (-) Total Debt 44.5 100.0 50.1 100.0 5.6 -Net Credit Position at the Banking System -7.2 -16.1 -1.2 -2.3 6.0 • Credit Facilities 28.8 64.7 39.5 78.9 10.7 • Deposits -36.0 -80.9 -40.7 -81.2 -4.7

-Borrowing from the NIB 51.7 116.1 51.3 102.3 -0.4 Total Debt/GDP (%) 6.0 5.6 Source: Ibid. 4/2/3: National Investment Bank (NIB)

NIB's resources augmented by LE 23.3 billion during the reporting year,

standing at some LE 192.5 billion at the end of June 2008. The rise was a result of the following increases: LE 10.2 billion in the proceeds of investment certificates, LE 5.7 billion in post office savings, LE 4.1 billion in the resources transferred from substitute insurance funds, saving certificates & deposits of various authorities, and LE 3.7 billion in the transfers from the two Social Insurance Funds for Civil Servants and for Public and Private Business Sector Employees. On the other hand, the accumulated interest on investment certificates (group A) declined by LE 0.1 billion and so did the US dollar development bonds by LE 0.3 billion.

Social insurance funds 51.7

Dollar development bonds & others

5.3Post office Saving account

49.3

Proceeds of investment certificates & accumulated returns

86.2

Resources of the NIB at End of June 2008

( LE bn )

- 113 - The Bank used the bulk of its resources (around LE 137.3 billion or

71.3 percent of the total) in lending to holding companies and their affiliate units; and in equity participations, and concessional lending to projects. In addition, LE 51.3 billion or 26.7 percent of total resources were used to finance the investments of public economic authorities. The remainder of about LE 3.9 billion (2.0 percent of total resources) was deposited at the banking system.

Deposits with the banking system

3.9

Economic authorities

51.3

Concessional lending & loans to

holding companies & affiliate units

137.3

Uses of the NIB at End of June 2008

( LE bn )

Domestic public debt service slightly declined by LE 17 million to LE 47.6 billion during FY 2007/2008, compared with the previous FY. The decline was an outcome of the retreat in principal repayments by LE 2.0 billion to LE 0.9 billion and the rise of nearly LE 2.0 billion in interest payments to LE 46.7 billion. The ratios of domestic public debt service to GDP and to revenues declined to 5.3 percent and 21.8 percent, respectively, during the reporting year, against 6.4 percent and 26.4 percent a year earlier. This was a main result of the increase in GDP and revenues during the year under review.

-114 -

7.1

8.6

6.45.3

0123456789

10

2004/2005 2005/2006 2006/2007 2007/2008

The Budget Domestic Debt Service/GDP%

- 115 -

5: External Transactions 5/1: Foreign Exchange Market

The CBE went ahead with its successful management of the foreign

exchange market. This proved effective in boosting confidence in the efficiency of the market, determining exchange rates with higher flexibility and dispelling dealers’ concerns about exchange rate fluctuations.

The volume of transactions in the interbank market amounted to US$

67.8 billion during FY 2007/2008 (against US$ 46.5 billion during the previous FY). Thus, the total volume of transactions reached US$ 150.0 billion since the initiation of the interbank market up to the end of June 2008. The interbank exchange rate of the Egyptian pound improved vis-à-vis the US dollar by 6.8 percent during the reporting year or 16.5 percent since the launch of the interbank mechanism on 23/12/2004. Thus, the weighted average of the US dollar interbank rate reached LE 5.3331 on 30/6/2008 against LE 5.6968 on 28/6/2007.

Net foreign assets of banks -excluding the CBE- increased by US$ 0.8

billion, reaching US$ 5.2 billion at the end of June 2008. The ratio of banks’ assets to their obligations in foreign currencies remained almost unchanged at 109.3 percent at the end of June 2008 (against 109.4 percent at the end of June 2007). This was due to the fact that the rate of increase in their foreign currency obligations was close to that of their foreign currency assets.

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

0.02.04.06.08.0

10.012.014.016.018.020.0

Q4_05/06 Q1_06/07 Q2_06/07 Q3_06/07 Q4_06/07 Q1_07/08 Q2_07/08 Q3_07/08 Q4_07/085.10

5.20

5.30

5.40

5.50

5.60

5.70

5.80

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

LEUS$ bn

- 116 - Net international reserves (NIR) with the CBE continued to improve,

rising by US$ 6.0 billion or 21.1 percent during FY 2007/2008, to US$ 34.6 billion (covering 7.9 months of merchandise imports at the end of June 2008).

Net International Reserves & Months of Merchandise Imports

End of June

05

101520253035

2002 2003 2004 2005 2006 2007 2008

US$ bn

02468101214

Import Months

NIR NIR/Months of Merchandise Imports

The CBE’s investment policy aimed at distributing international

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

Overall Balance

4.5

3.3

5.3 5.4

0.0

1.0

2.0

3.0

4.0

5.0

6.0

2004/2005 2005/2006 2006/2007 2007/2008

US$ bn

- 117 -

5/2: Balance of Payments*

Egypt’s transactions with the external world showed a satisfactory performance for the fourth year in a row. As such, Egypt’s BOP* realized an overall surplus of US$ 5.4 billion during FY 2007/2008∗∗, due to a net inflow of US$ 7.1 billion in the capital and financial account, and a surplus of US$ 0.9 billion on the current account. The surplus on the current account was an outcome of the rise in the services surplus and net unrequited transfers, which offset the impact of the widened trade deficit.

5/2/1: Trade Balance

The volume of Egypt’s external trade rose by 36.1 percent during FY 2007/2008 compared with the previous FY, reflecting more economic openness to the external world. Exports and imports increased by 33.3 percent and 37.8 percent, respectively, to US$ 29.4 billion and US$ 52.8 billion.

Against this background, the trade deficit enlarged by 43.7 percent to

US$ 23.4 billion. Moreover, the coverage ratio of merchandise export proceeds/merchandise import payments fell from 57.5 percent to 55.6 percent.

* Compiled in accordance with the Fifth Edition of the IMF’s Balance of Payments Manual,

September 1993. ∗∗ Net errors and omissions amounted to a negative US$ 2.6 billion during FY 2007/2008.

- 118 - The following chart shows the total exports and imports and the trade

deficit during the years (2005-2006 till 2007-2008).

5/2/1/1: Commodity Distribution of Exports and Imports

A- Exports by Degree of Processing

Merchandise export proceeds reached some US$ 29.4 billion with a

growth of 33.3 percent compared with the previous FY. Non-oil and oil exports rose by 25.0 percent and 43.2 percent in order, representing 50.7 percent and 49.3 percent, respectively, of total exports. The following chart shows the distribution of merchandise exports by relative importance during the period under review:

Marchandise Foreign Trade

29.4

22

18.4

-52.8

-38.3

-30.4

-23.4

-16.3

-12

Exports Imports Trade Balance

2008/2007

2007/2006

2006/2005

- 119 -

Concerning the relative importance of the different sectors to foreign

trade -as shown in the chart-, the public sector came on top, accounting for 46.5 percent of the total export proceeds. Its key exports were fuel, mineral oils and products (90.3 percent of its total exports). The private sector came second with 41.5 percent, exporting mainly finished goods with a share of 78.4 percent of the total. The investment sector came next with a share of 12.0 percent of the total, with oil exports constituting 61.4 percent of its total exports. _______________________ * Calculated on FOB basis, as their value is calculated at the customs borders of the Egyptian economy, i.e.,

excluding the costs of the shipment, insurance and freight. They include exports of free zones to the rest of the world.

Commodity Exports* US$ 29.4 bn

Non oil 50.7%US$14.9 bn

Oil 49.3% US$14.5 bn

Natural gas 22.6%

Crude oil33.9%

Raw materials7.3%

Petrol products 32.9%

Semi - finishedgoods12.3%

Finished goods73.4%

Natural gas7.8%

Liquefied gas92.2%

Main commodities Electric machines & appliances.Cement.Articles of iron and steel.Pharmaceuticals.Articles of base metals.

Main commoditiesCast iron.Organic & inorganic chemicals. Plastic & articles thereof.Animal & vegetable fats, greases & oils & products.

Main commoditiesEdible vegetables ,roots & tubers.Cotton.Edible fruits & nuts.Iron, ore

- 120 -

B- Imports by Degree of Use

During the year under review, import payments grew by 37.8 percent to

US$ 52.8 billion (against US$ 38.3 billion during the previous fiscal year), representing 32.5 percent of GDP. The rise reflected higher import payments for all commodity groups, particularly intermediate and investment goods which accounted for 29.2 percent and 22.5 percent, respectively of the total rise in import payments. It is noteworthy that the rise in both groups has largely contributed to stimulating production and enhancing the role of exports in strengthening economic growth. Likewise, imports of raw materials increased, contributing around 18.3 percent of total imports increase. The following chart illustrates the distribution of merchandise imports by relative importance during FY 2007-2008.

Sectoral Distribution of Exports 2007/2008

Investmentsector12.0%

Private sector41.5%

Public sector46.5%

- 121 -

The following chart demonstrates that the private sector was the main importer (60.5 percent). The chief imports of this sector were iron and steel products, organic and inorganic chemicals, plastics and articles thereof, car accessories & spare parts and pharmaceuticals.

By contrast, the relative importance of the public sector’s imports fell

from 47.3 percent to 30.6 percent to rank second. Its key imports were crude oil and products, wheat, and animal & vegetable fats and greases & oils and products.

As for the investment sector, the relative importance of its imports represented 8.9 percent of total imports. The chief imports of the sector were crude oil and products; iron and steel products; pumps and fans and parts thereof; organic and inorganic chemicals; and car spare parts and accessories. _____________________ * Calculated on CIF basis, i.e. including the costs of shipment, insurance and freight. They include imports

of free zones from the rest of the world.

Commodity Imports*

US$52.8 bn

Fuel and Mineral Oils 9.3%

Consumer goods16.1%

Raw materials18.3%

Investment goods 22.5%

Intermediate goods 29.2%

Durable goods27.9%

Non-Durable goods72.1%

Main commodities Iron & steel products.Organic & inorganic chemicals. Plastic & articles thereof

Main commodities Parts & accessories of motor vehiclesCranes and bulldozers & parts thereofElectric appliances for telephones & telegraphComputers

Main commoditiesCrude oilWheatMaizeMetal ores

Main commoditiesPharmaceuticalsMiscellaneous edible preparationsReady-made clothes

Main commodities Vehicles for transport of persons.Household electric-motor appliances

Main commoditiesPetroleum products

- 122 -

5/2/1/2: Geographical Distribution of Export Proceeds and Import Payments

The volume of Egypt’s foreign trade picked up by 36.1 percent to US$

82.2 billion, following the reduction in import restrictions since the advent of the current century, on the one hand, and the upsurge in exports and trade with Europe, Africa and a large number of major world markets on the other. The following chart displays the volume of trade between Egypt and its major trade partners (groupings and countries).

Sectoral Distribution of Imports 2007/2008

Public sector30.6%

Investment sector8.9%

Private sector60.5%

Egypt 's Volume of Trade with its Partners Fiscal Year 2007/2008

0

5000

10000

15000

20000

25000

30000

EU USA Asian Countries Arab Countries

UK 19.9%

Italy 18%

Germany 16.9%

India 21.1%

Japan 14.9%South korea 12.9%

Saudi Arabia 23.8%

UAE 27.5%

Other Countries45.2%

Other Countries51.1%

Other Countries48.7%

(US$ mn)

100%

Development of Main Items of Services Receipts

7.28.2

10.8

5.24.23.6

0.0

2.0

4.0

6.0

8.0

10.0

12.0

2005/2006 2006/2007 2007/2008

US$ bn

Travel Suez Canal

Services Receipts Items as a Percentage of Total Services Receipts

FY 2007/2008

Tr anspor tation27.8%

Tr avel39.8%

Investment Income12.1%

Gover nment Receipts0.7%

Other Receipts19.6%

- 123 - 5/2/2: Services Balance and Transfers

The services balance unfolded a surplus of US$ 15.0 billion, as a reflection of a 33.0 percent rise in invisible receipts to post US$ 27.2 billion, exceeding the 36.7 percent increase in invisible payments which recorded US$ 12.2 billion.

The rise in services receipts was

due to the pickup in most items, particularly travel (tourism revenues)∗, which moved up by 32.3 percent to US$ 10.8 billion. This was an outcome of the increase in the number of tourist nights to 127.4 million during the reporting year, against 96.3 million during the year of comparison, with the average tourist spending per night remaining unchanged at US$ 85.

Transportation receipts

also grew by 18.7 percent to US$ 7.6 billion, because of the 23.6 percent rise in the Suez Canal receipts (due to the increase in the number of transiting ships and their net tonnage, and the ongoing development of the navigation course of the Canal). Likewise, investment income went up by 8.0 percent to US$ 3.3 billion, as a result of the rise in the receipts of investment (portfolio) income. ∗ Calculated on the basis of the number of tourist nights multiplied by average tourist spending per

night.

Services Payments Items as a Percentage of Total Services Payments

FY 2007/2008

Transportat ion%١٣٫٢

Travel%٢٣٫٦

GovernmentPayments

%١٠٫٧

OtherPayments

%٣٦٫٧

InvestmentIncome

%١٥٫٨

- 124 - Moreover, other receipts climbed by US$ 2.7 billion, as a result of the

higher services receipts of communications, construction and contracting, legal and consultation fees, insurance, and computer services and subscriptions in magazines and journals.

Services payments increased by 36.7 percent, due to the rise in all items,

particularly: - Travel by 51.0 percent due to

higher expenses of tourism and medical treatment abroad, and the increase in payments abroad by tourism companies and hotels, and in pilgrimage and "Omra" fees.

- Transportation by 27.3 percent because of the rise in transfers by foreign navigation and aviation companies, and transfers for aircraft repair and hiring at foreign airports.

- Investment income by 11.0 percent due to the pickup in transfers of interest payments and dividends of bonds and securities, as well as interest payments for loans and importers’ external facilities.

- Government expenditure by 9.9 percent as an outcome of the increase in the salaries and expenses of government employees seconded abroad, and the expenses of Egyptian embassies.

- Other payments by 66.0 percent due to the pickup in transfers abroad by Egyptian and foreign petroleum companies, and the increase in the payments for communications services, and construction and contracting services, and legal and consultation fees.

Egyptian Workers' Remittances By Main Country

FY 2007/2008

UAE 16.3%

Kuwait 21.0%

Saudi Arabia 11.2%

Other Countries 19.2%

USA 32.3%

- 125 - Net unrequited transfers rose by US$ 2.3 billion or 32.2 percent,

representing 14.2 percent of current receipts during FY 2007/2008, as an outcome of the following factors: - The pickup in private

transfers by 33.8 percent as a main result of higher remittances of Egyptian workers abroad.

- The increase in official transfers by 20.0 percent due to the rise in cash grants and the fall in commodity grants.

Unrequited Transfers

(US$ mn) FY Change

2006/07 2007/08 Value % Net Current Transfers 7061.3 9337.6 2276.3 32.2 1- Official Transfers (Net) 800.3 960.5 160.2 20.0 - Inward cash grants 375.0 643.1 268.1 71.5 - Other inward grants 461.1 395.2 -65.9 -14.3 - Outward official transfers (-) -35.8 -77.8 -42.0 117.3 2- Private Transfers (Net) 6261.0 8377.1 2116.1 33.8 - Workers' remittances 6321.0 8559.2 2238.2 35.4 - Other transfers 92.4 49.9 -42.5 -46.0 - Foreigners' transfers abroad (-) -152.4 -232.0 -79.6 52.2

As a result of the above-mentioned developments in FY 2007/2008,

the current account ran a surplus of US$ 0.9 billion. This was an outcome of the rise in current receipts by US$ 16.4 billion or 33.0 percent to US$ 65.9 billion, exceeding the rise in current payments by US$ 17.7 billion or 37.6 percent to US$ 65.0 billion.

Current Receipts & Payments

22.0

0.8

-38.3

20.5

6.3

-9.0

29.4 27.2

8.4

-12.2

-52.8

1.0

-60.0

-50.0

-40.0

-30.0

-20.0

-10.0

0.0

10.0

20.0

30.0

40.0

MerchandiseExports

ServicesReceipts

Net PrivateTransfers

Net Off icialTransfers

MerchandiseImports

ServicesPayments

US$ bn

2006/20072007/2008

- 126 - The following chart shows the developments in current receipts and

payments in the reporting year and the previous fiscal year.

5/2/3: Capital and Financial Account

The capital and financial account revealed a net inflow of US$ 7.1

billion during FY 2007/2008, compared with US$ 0.9 billion, due to the interaction of the following factors:

1. Foreign investment in Egypt (direct and portfolio) realized a total inflow of

US$ 42.1 billion, and a total outflow of US$ 30.2 billion. This brought about a net inflow of US$ 11.8 billion, as an outcome of net FDI inflow of US$ 13.2 billion and net portfolio investment outflow of US$ 1.4 billion.

A- Net FDI∗ in Egypt included the following:

∗ FDI represents foreign investors who own 10 percent or more of the capital of any resident

economic entity or have an effective vote in its management. In Egypt, a foreign investor's equity participation shall be at least 10 percent of the capital of any enterprise.

Net Foreign Investments in Egypt

6.1

11.113.2

-1.4-0.9

2.8

- 4 .0- 2 .00 .02 .04 .06 .08 .0

10 .012 .014 .016 .0

2005/2006 2006/2007 2007/2008

US $ bn

Net FDI in EgyptNet Portfolio Investment in Egypt

Sectoral Distribution of Total FDI Inflows FY 2007/2008

Undistributed %٢١٫٩

Finance 12.3%

Manufacturing %٨٫٦

Services 5.2%

Construction %٢٫٤

Others 4.1%

Petroleum %٤٥٫٥

- 127 - - Net investments of US$ 6.4 billion

as green-field investments or capital raises, against US$ 5.2 billion.

- Net investments of US$ 4.1 billion in the oil sector, against US$ 3.0 billion.

- Privatization proceeds of US$ 2.3 billion, from selling local companies and productive assets to foreign investors (against US$ 2.8 billion).

- Direct real estate investments by non-residents in the amount of US$ 394.9 million, against US$ 39.0 million.

The sectoral distribution of

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

B- Net portfolio* investment in Egypt revealed the following:

- Net foreigners’ sales of US$ 2.2 billion on the Egyptian Stock Exchange (outflows), and their sales of Egyptian CDs of US$ 0.7 billion (outflows).

* Representing foreigners' net portfolio (according to the CMA statement), and their dealings in

Egyptian bonds and notes.

- 128 - - Net foreigners’ subscriptions of US$ 1.1 billion for LE bonds abroad

(inflows), and their net transactions on Egyptian treasury bills in the amount of US$ 0.7 billion (inflows).

2. The decline in net outflows of other assets and liabilities to US$ 3.4 billion

(representing the change in both banks’ foreign assets and liabilities and the CBE’s non-reserve foreign assets, and the counterpart of some items included in the current account), against US$ 10.2 billion.

3. Medium- and long-term loans and facilities resulted in a net repayment of

US$ 1.6 billion during the reporting year, against US$ 0.4 billion a year earlier, as an outcome of the following:

• The decrease in total repayments to US$ 2.1 billion (against US$ 2.3

billion), due to the decline in the repayments of international organizations’ loans by 24.5 percent, and bilateral loans by18.7 percent.

• The decline in disbursements to US$ 0.4 billion (against US$ 1.9

billion), due to the fall in the disbursements of international organizations’ loans by 85.0 percent and bilateral loans by 6.0 percent.

- 129 -

5/3: International Finance

According to the international finance data, net flows of resources from abroad declined by about US$ 0.4 billion, reaching US$ 11.5 billion in FY 2007/2008 against US$ 11.9 billion in the previous FY. This was attributed to the net repayments of US$ 1.7 billion resulting from transactions on medium- and long-term loans and facilities (against about US$ 0.4 billion). In addition to this, outflows of foreign investment abroad (direct and portfolio) reached US$ 2.1 billion against about US$ 1.1 billion. Other factors at work were the rise in net inflows of foreign investment in Egypt (direct and portfolio) to US$ 11.9 billion from US$ 10.1 billion, and the pickup of US$ 0.2 billion in net official grants (inflows) above the level a year earlier.

- 130 -

Net Resource Flows (US$ mn)

FY 2006/2007 2007/2008+ Change

Total Net Flows 11862.8 11457.6 (405.2)-External Debt 2039.1 706.4 (1332.7)• Bilateral loans -1067.0 -890.8 176.2

Disbursements 215.0 202.0 (13.0)Principal repayments -1282.0 -1092.8 189.2

• International organizations’ loans 832.7 -318.5 (1151.2)

Disbursements 1565.4 234.9 (1330.5)Principal repayments -732.7 -553.4 179.3

• Medium- and long-term suppliers’ & buyers' credit -191.5 -463.4 (271.9)

Disbursements 89.0 8.9 (80.1)Principal repayments -280.5 -472.3 (191.8)

• Short-term suppliers’ & buyers' credit (Net) 2464.9 2379.1 (85.8)

-Official Grants (Net) 800.3 960.5 160.2-Direct Investment in Egypt (Net) 11053.2 13236.5∗ 2183.3-Direct Investment Abroad -535.6 -1112.7 (577.1)-Portfolio Investment in Egypt (Net), of which: -936.7 -1373.6∗∗ (436.9)• Bonds -550.7 775.0 1325.7-Portfolio Investment Abroad -557.5 -959.5 (402.0)

+ Provisional. ∗ Including net FDI of US$ 4.1 billion in the oil sector and the privatization proceeds of US$ 2.3

billion. ∗∗ Including foreigners’ purchases of Egyptian bonds and notes, the bonds issued in LE abroad at a

value of US$ 1072.5 million (inflows), US$ 718.8 million representing foreigners’ net transactions on treasury bills (inflows), and about US$ 659.8 million resulting from net foreigners’ transactions on Egyptian certificates of deposits (outflows).

- 131 - Net resources from abroad (net inflows less interest payments and profit

transfers) declined by about US$ 0.3 billion, reaching US$ 13.4 billion in FY 2007/2008 (against US$ 13.7 billion in the previous FY). This was mainly the outcome of the decrease of the net inflows of resources by about US$ 0.4 billion to about US$ 11.5 billion, as mentioned above, and the US$ 0.1 billion rise in the total outflows of payments (net) to US$ 1.9 billion.

Net Resource Transfers from Abroad

(US$ mn) FY 2006/2007 2007/2008 Net Resources from Abroad 13730.5 13387.3 - Net Inflows 11862.8 11457.6 - Outflows (Interest Payments and Profit Transfers) 1867.7 1929.7

1- External Loans and Facilities 547.3 631.4 · Bilateral loans 325.8 346.3 · International organizations' loans 173.8 244.7 · Suppliers' and buyers' credit 47.7 40.4

2- Deposits at Local Banks 60.9 43.5 3- Profit Transfers of FDI 1074.4 960.1 4- Profit Transfers of Portfolio Investment 185.1 294.7

5/3/1: Foreign Direct Investment in Egypt

In the light of the stable investment climate in Egypt, net FDI has been on

the rise, recording a growth of about US$ 2.2 billion in FY 2007/2008, thus reaching US$ 13.2 billion (against US$ 11.1 billion in the previous FY). The increase was an outcome of a rise in total investment inflows by US$ 4.7 billion or 36.1 percent, to US$ 17.8 billion (against US$ 13.1 billion) and about US$ 2.5 billion rise in capital repatriation to US$ 4.6 billion.

- 132 -

The following chart shows the sectoral distribution of total FDI (inflows)

in Egypt in FY 2007/2008.

FDI by Sector during FY 2007/2008(Inflows)

Agriculture 0.7%

Real Estate2.2%

Tourism1.1%

Services5.2%

Constructions2.4%

IT & Communications

0.1%

Manufacturing8.6%

Finance12.3%

Undistributed21.9%

Petroleum45.5%

- 133 - FDI in Egypt

(US$ mn) FY 2006/2007 2007/2008* Change (-) FDI Flows in Egypt (Net) 11053.2 13236.5 2183.3 Inflows 13084.3 17802.2 4717.9 USA 4681.3 6434.9 1753.6 EU 4061.0 5114.1 1053.1 Germany 97.2 197.3 100.1 France 36.7 1249.9 1213.2 UK 2209.6 3041.1 831.5 Italy 1631.4 30.9 (1600.5) Greece 22.2 108.5 86.3 Spain 6.7 20.8 14.1 The Netherlands 39.6 48.9 9.3 Portugal 0 0.4 0.4 Belgium 8.7 326.3 317.6 Luxemburg 1.0 63.3 62.3 Denmark 2.5 9.2 6.7 Sweden 0.5 4.3 3.8 Austria 1.7 0.3 (1.4) Cyprus 2.8 9.8 7.0 Others 0.4 3.1 2.7 Arab Countries 3351.4 3059.0 (292.4) Saudi Arabia 204.0 217.7 13.7 UAE 3049.5 718.1 (2331.4) Tunisia 0.6 1.3 0.7 Kuwait 24.8 1587.8 1563.0 Lebanon 11.4 118.2 106.8 Libya 20.6 137.2 116.6 Jordan 3.5 39.0 35.5 Bahrain 18.6 34.7 16.1 Qatar 2.5 184.7 182.2 Oman 1.2 4.9 3.7 Yemen 2.8 6.3 3.5 Sudan 1.5 1.7 0.2 Others 10.4 7.4 (3.0) Other Countries 990.6 3194.2 2203.6 Switzerland 49.4 235.8 186.4 Japan 0.6 15.4 14.8 Canada 4.8 37.5 32.7 China 8.4 17.5 9.1 Australia 9.3 4.7 (4.6) India 4.1 3.3 (0.8) Turkey 8.6 14.3 5.7 Bermuda 3.0 7.1 4.1 Others 902.4 2858.6 1954.3 Capital Repatriation -2031.1 -4565.7 (2534.6)

* Provisional.

- 134 -

The pickup in net FDI inflows in Egypt is attributed to the rise in flows

from the USA by US$ 1.8 billion to US$ 6.4 billion, from the EU by US$ 1.1 billion to US$ 5.1 billion and from the rest of the world by about US$ 2.2 billion to US$ 3.2 billion. In contrast, flows from the Arab countries fell by about US$ 0.3 billion to about US$ 3.1 billion. This was primarily due to the US$ 2.3 billion decrease of flows from the UAE to about US$ 0.7 billion in the reporting FY, compared with about US$ 3.0 billion a year earlier, representing UAE investments in the third mobile network in Egypt. 5/3/2: Official Grants

Net transfers of official grants (cash and in-kind) reached US$ 960.5

million in FY 2007/2008 (against US$ 800.3 million in the previous FY), with an increase of US$ 160.2 million or 20.0 percent.

Transfers of Official Grants

(US$ mn) FYs 2006/2007 2007/2008 Change Official Grant Transfers (Net) 800.3 960.5 160.2 Inward grants 836.1 1038.3 202.2 - Cash grants 375.0 643.1 268.1 - In-kind grants 461.1 395.2 -65.9 Outward grants -35.8 -77.8 -42.0

According to the data of the Ministry of International Cooperation, total grant commitments in the period under review rose by US$ 812.5 million, standing at US$ 1.5 billion. This was an outcome of the increase in the value of commitments with the European Commission and the fall in commitments with the Council of the European Union and Italy.

- 135 - Actual inflows of official grants also edged up by about US$ 0.2 billion,

recording about US$ 1.0 billion in FY 2007/2008. Most of this increase was in grant inflows from the USA and Germany. As for the outflows of official grants, they revealed an increase of about US$ 42.0 million, reaching US$ 77.8 million.

New Commitments and Net Actual Flows of Official Grants

(US$ mn)

* Provisional.

New Commitments Actual Flows FYs 2006/2007 2007/2008 2006/2007 2007/2008* Net Inflows 800.3 960.5 Inflows 693.7 1508.9 836.1 1038.3 USA 414.4 322.1 693.0 903.8 Japan 8.9 32.2 7.4 33.5 Germany 21.6 13.5 45.3 55.0 Italy 101.9 2.3 3.4 UK 0.1 0.7 Spain 14.7 Denmark 4.2 Finland 1.1 China 6.6 4.0 9.6 Canada 5.0 3.6 4.3 Belgium 78.9 27.2 The Council of the European Union

130.7 27.3

European Commission 1038.7 Arab Fund for Economic and Social Development

0.9 0.8

African Development Bank 0.9 2.9 World Bank 1.2 50.2 Others 1.3 1.5 1.5 0.8 Outflows -35.8 -77.8

- 136 -

The sectoral breakdown of grant commitments shows that the grants offered to the services sector increased by about US$ 0.8 billion, reaching US$ 1.4 billion against US$ 0.6 billion in the previous year. This is ascribed to the increase in the grant commitments of both sectors of the general government and health and education. Add to this the US$ 31.5 million increase in commitments for the productive sectors, to US$ 105.8 million (essentially directed to the sectors of agriculture and irrigation and energy and electricity).

Breakdown of Official Grant Commitments

(By Beneficiary) (US$ mn)

FY 2006/2007 % 2007/2008 % Change

Total 693.7 100.0 1508.9 100.0 815.2 Productive Sectors 74.3 10.7 105.8 7.0 31.5 Agriculture and irrigation 7.6 1.1 42.2 2.8 34.6

Energy and electricity 0.0 0.0 63.3 4.2 63.3 Potable water & sanitary sewage 6.2 0.9 0.3 0.0 (5.9) Construction and building 60.5 8.7 0 0.0 (60.5)

Services Sectors 619.4 89.3 1403.1 93.0 783.7 Transportation, communications & information 5.2 0.7 0 0.0 (5.2) Wholesale and retail trade 197.3 28.5 0 0.0 (197.3)

Financial intermediaries 0.0 0.0 31.6 2.1 31.6 Insurance & social solidarity 0.0 0.0 27.3 1.8 27.3

General government 285.3 41.1 1070.3 70.9 785.1 Health & education 128.1 18.5 273.9 18.2 145.8 Others 3.5 0.5 0 0.0 (3.5)

- 137 - 5/3/3: External Debt

The outstanding balance of external debt (public and private) at all

maturities (denominated in the US dollar), scaled up by about US$ 4.0 billion, reaching US$ 33.9 billion, in comparison to its balance at the end of June 2007. The rise was an outcome of two factors. Firstly, most currencies of borrowing appreciated against the US dollar, resulting in an increase of US$ 2.7 billion worth in the debt balance. Secondly, net disbursements of loans and facilities amounted to US$ 1.3 billion (as an outcome of disbursements of US$ 3.2 billion of loans and facilities and principal repayments of US$ 1.9 billion).

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

long-term external debt amounted to US$ 31.4 billion or 92.6 percent of the gross debt at the end of June 2008. The bulk of this debt was owed to Paris Club member countries; in the form of bilateral loans (rescheduled and non-rescheduled) and net suppliers’ and buyers’ credits of about US$ 20.5 billion or 60.5 percent of the total. Debts to non-Paris Club members reached merely US$ 0.8 billion or 2.5 percent.

External Debt by Type(End of June 2008)

Short term debt7.4%

Private sector (Non guaranteed)

0.1%

Suppliers' & buyers' credit2.2%

Other bilateral debt14.7%

Rescheduled bilateral debt

46.1%

International & regional organizations

21.7%

Egyptian bonds and notes7.8%

- 138 - Debts to international and regional organizations reached about US$ 7.4

billion or 21.7 percent of the total (95.9 percent was owed by the public sector) at the end of June 2008. The balance of Egyptian notes and bonds (holdings of non-residents) reached US$ 2.7 billion or 7.8 percent of the gross external debt, comprising US$ 1.3 billion of guaranteed government securities, US$ 0.3 billion worth of sovereign US dollar bonds and US$ 1.1 billion of LE bonds). The private sector’s non-guaranteed debts posted US$ 18.2 million or 0.1 percent of the total at the end of June 2008.

On the other hand, the share of short-term debts was as tiny as US$ 2.5

billion or 7.4 percent (59.7 percent was owed by the private sector). The public sector was the main obligor, with a share of US$ 32.1 billion

or 94.6 percent of the gross external debt at the end of June 2008. The private sector accounted for the remaining US$ 1.8 billion or 5.4 percent of the gross external debt, at the end of June 2008.

The breakdown of external debt by debtor at the end of June 2008

showed rises in the debts of the central government by US$ 2.1 billion, standing at US$ 21.6 billion; of other sectors by US$ 1.3 billion to US$ 9.4 billion and banks by US$ 0.6 billion to US$ 2.5 billion. By contrast, the CBE debt declined by US$ 25.7 million, recording US$ 0.3 billion.

External Debt by DebtorShare in total increase/decrease

During FY

633.5

(318.7)

(25.7)109.1

2149.2

627.5

(348.6)

587.8

(165.6)

219.9 192.1

1283.6

-500

0

500

1000

1500

2000

2500

2005/2006 2006/2007 2007/2008

(US$ mn)

Central & Local Government Monetary Authority (CBE)Banks Other Sectors

- 139 - Despite the aforementioned developments, the structure of external debt

by debtor showed no significant change; for the central government remained the major obligor, with a share of 63.9 percent of the gross external debt, followed by the other sectors with 27.7 percent, banks 7.5 percent and the CBE 0.9 percent.

The distribution of the external debt by creditor indicated that the debt to

the EU countries constituted 39.9 percent of the gross debt, primarily owed to France and Germany with shares of 14.6 percent and 12.7 percent, respectively. In addition, the USA and Japan accounted for 11.4 percent and 10.5 percent, respectively. The debt due to the Arab countries combined amounted to 4.2 percent. Debt to international and regional organizations represented 21.7 percent, mainly due to the European Investment Bank (6.0 percent).

External Debt by DebtorEnd of June

0

5

10

15

20

25

30

35

40

200820072006

(US$ bn)

Other Sectors Banks

Monetary Authority (CBE) Central & Local Government

- 140 -

External debt by main component currency indicates that the US dollar

was the major borrowing currency with a share of 38.7 percent of the gross external debt, because Egypt’s outstanding obligations in US dollar are owed to other creditors alongside the USA. The euro came next with 33.6 percent, followed by the Japanese yen with 10.6 percent, and the Kuwaiti dinar with 5.3 percent (see the following chart).

External Debt by Creditor

France14.6%

Japan10.5%

Germany12.7%United Kingdom

4.7%

Arab Countries4.2%

Other countries12.4%

International & regional

organizations21.7%

USA11.4%

Egyptian bonds and notes

7.8%

June 2008

External Debt by Major CurrenciesEnd of June 2008

SDRs4.3%

Egyptian Pound3.3%

Other currencies

1.7%US dollar

38.6%

Euro33.6%

Japanese yen10.6%

Kuwaiti dinar5.3%

Sterling pound0.7%

Swiss franc1.8%

- 141 - Total payments of external debt service fell by US$ 75.1 million,

reaching US$ 2.9 billion in FY 2007/2008, in comparison to the previous FY. The decrease was an outcome of the fall in principal repayments by US$ 0.2 billion to US$ 2.1 billion and the rise in interest payments by US$ 0.1 billion to US$ 0.8 billion.

The table of main external debt indicators shows continued improvement in the FY ending June 2008, for the third consecutive year. This reflected the fall of the external debt balance/GDP ratio to 20.1% from 22.8%. Furthermore, the 33.0% rise in the receipts of exports of goods and services as well as transfers in FY 2007/2008 brought down the ratio of debt service to current receipts (including transfers) to 4.3% from 5.9% and its ratio to the exports of goods and services to 5.1% from 6.9%.

As a consequence of the higher balance of external debt, the per capita share rose to US$ 450.0 at the end of June 2008 from US$ 398.5 at the end of June 2007.

Main Indicators of External Debt (%)

FY 2005/2006 2006/2007 2007/2008+ Debt balance*/GDP 27.6 22.8 20.1 Debt balance*/exports of goods and services 82.4 70.4 59.9 Debt service/exports of goods and services 8.5 6.9 5.1 Debt service/current receipts (including transfers) 7.3 5.9 4.3 Interest**/exports of goods and services 1.6 1.5 1.3 Interest**/current receipts (including transfers) 1.4 1.3 1.1 Short-term debt/gross debt 5.5 4.8 7.4 Short-term debt/net international reserves 7.1 5.1 7.3 Average external debt per capita (US$) 401.7 398.5 450.0

+ Provisional. * External debt balance was evaluated in LE according to the US$ exchange rate at the end of the

period. ** Including interest payments on bonds and notes held with non-residents.

- 142 - The following table indicates that Egypt’s ratio of debt service payments

was less than the general average of all regional groups of developing countries:

Egypt’s Debt Service/Exports of Goods & Services

in Comparison with Groups of Developing Countries (%)

2006 2007 Interest Principal

RepaymentsTotal Interest Principal

Repayments Total

Developing Countries 4.4 9.4 13.8 4.2 6.6 10.8 Africa 3.0 9.5 12.5 2.6 4.9 7.5 Developing Asia 2.2 4.4 6.6 2.1 3.8 5.9 Middle East 1.9 4.4 6.3 2.2 2.9 5.1 Egypt* 1.6 5.9 7.5 1.4 3.6 5.1 Source: World Economic Outlook (WEO), Statistical Appendix – April 2007. *According to the BOP data for calendar years 2006 and 2007.

In FY 2007/2008, new commitments on loans and facilities registered

US$ 1.8 billion. International and regional organizations accounted for the majority of these commitments (US$ 1.3 billion or 70.7 percent of the total, mostly from the International Bank for Reconstruction and Development (IBRD), African Development Bank (ADB) and European Investment Bank (EIB). Commitments on bilateral loans and facilities reached US$ 0.5 billion or 28.2 percent. Medium- and long-term suppliers’ and buyers’ credit represented a scanty share of US$ 19.2 million or 1.1 percent of the total new commitments.

Annex

- 143 -

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) Implemented Investments by Economic Sector (1/4) Output of Main Crops (1/5) Position of Egyptian Cotton (1/6) Cotton Export Commitments by Importing Countries (1/7) Output of Main Industrial Products (1/8) Number of Tourists (By Group) (1/9) Number of Tourist Nights (By Group) (1/10) Consumer Price Index (Urban Population) (January 2007 =100) (1/11) 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 the Egyptian Banking System as at 30/6/2008 (2/2/2) Banking Density

- 144 - (2/2/3) Representation Offices Registered with the CBE (on June 30,2008) (2/2/4) Local Mutual Funds : Authorized and Operating as at 30/6/2008 (2/2/5) Egyptian Insurance Market Structure Activity of the Banking System

Central Bank of Egypt

(2/3/1) Note Issued, including Cash in CBE Vaults, by Denomination (2/3/2) Currency in Circulation Outside CBE by Denomination (2/3/3) Activity of Clearing Houses

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 Securities 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 (Quarterly Weighted Averages) (2/5/4) Interest Rates on Treasury Bills (Weekly Weighted Averages)

- 145 - 3- Non-Banking Financial Sector

(3/1) Companies Listed on the Stock Exchange (3/2) Trading in Shares on the Stock Exchange (3/3) Trading in Bonds on the Stock Exchange (3/4) Foreign Transactions on the Stock Exchange (3/5) Global Depository Receipts (GDRs) (3/6) Investments of the Insurance Sector (3/7) Outstanding Balance of Treasury Bills (Quarterly) (3/8) Outstanding Balance of Treasury Bills (Weekly) (3/9) Outstanding Balance of Treasury Bonds 4- Public Finance & Domestic Public Debt

(4/1) Consolidated Fiscal Operations of the General Government (Total Expenditures) (4/2) Consolidated Fiscal Operations of the General Government (Total Revenues) (4/3) Summary of Consolidated Fiscal Operations of the General

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

(5/1) Balance of Payments (US$) (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 Structure (5/7) External Debt Indicators (5/8) Distribution of External Debt by Main Currencies

(LE mn)

Public Private Total Public Private Total Public Private TotalTotal GDP 266516.4 443871.3 710387.7 282626.8 478746.6 761373.4 6.0 7.9 7.2Agriculture, Irrigation & Fishing 18.8 99934.3 99953.1 19.6 103279.5 103299.1 4.3 3.3 3.3 Extractions 86191.0 17465.4 103656.4 89530.6 18301.6 107832.2 3.9 4.8 4.0

Oil 37871.0 6188.0 44059.0 38950.0 6555.0 45505.0 2.8 5.9 3.3Natural gas 47975.0 8615.0 56590.0 50213.0 8973.0 59186.0 4.7 4.2 4.6Others 345.0 2662.4 3007.4 367.6 2773.6 3141.2 6.6 4.2 4.4

Manufacturing Industries 14955.7 99519.5 114475.2 15976.6 107672.3 123648.9 6.8 8.2 8.0Oil refining 3503.0 2552.0 6055.0 3665.0 2898.0 6563.0 4.6 13.6 8.4Others 11452.7 96967.5 108420.2 12311.6 104774.3 117085.9 7.5 8.1 8.0

Electricity 8337.6 1542.5 9880.1 9107.5 1539.0 10646.5 9.2 -0.2 7.8Water 2390.0 0.0 2390.0 2561.0 0.0 2561.0 7.2 - 7.2Construction & Building 3500.6 26674.7 30175.3 3854.4 30788.9 34643.3 10.1 15.4 14.8Transportation & Storage 6479.8 23069.2 29549.0 6989.4 24958.7 31948.1 7.9 8.2 8.1 Communications 7476.9 15585.5 23062.4 8427.7 17909.4 26337.1 12.7 14.9 14.2Suez Canal 24123.8 0.0 24123.8 28454.5 0.0 28454.5 18.0 - 18.0Wholesale & Retail Trade 2792.4 75055.4 77847.8 2985.5 80363.4 83348.9 6.9 7.1 7.1Financial Intermediaries & Supporting Services 17970.5 9560.4 27530.9 19319.5 10312.7 29632.2 7.5 7.9 7.6Insurance 1619.0 475.0 2094.0 1732.0 509.4 2241.4 7.0 7.2 7.0Social Solidarity 24278.4 0.0 24278.4 25905.5 0.0 25905.5 6.7 0.0 6.7Restaurants & Hotels 264.3 24301.1 24565.4 303.6 30232.4 30536.0 14.9 24.4 24.3Real Estate 878.6 20064.2 20942.8 911.2 20805.6 21716.8 3.7 3.7 3.7

Real Estate Ownership 356.5 10479.9 10836.4 370.0 10862.1 11232.1 3.8 3.6 3.7 Business Services 522.1 9584.3 10106.4 541.2 9943.5 10484.7 3.7 3.7 3.7

General Government 64219.8 0.0 64219.8 65484.8 0.0 65484.8 2.0 - 2.0Education, Health & Personal Services 1019.2 30624.1 31643.3 1063.4 32073.7 33137.1 4.3 4.7 4.7

Education 0.0 8376.0 8376.0 0.0 8746.5 8746.5 0.0 4.4 4.4Health 1019.2 8982.1 10001.3 1063.4 9377.0 10440.4 4.3 4.4 4.4Others 0.0 13266.0 13266.0 0.0 13950.2 13950.2 0.0 5.2 5.2

Source : Ministry of Economic Development.

- 146 -

Sectors

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

2007/20082007/20082006/2007Growth Rate %

(1/2) GDP by Expenditure At 2006/2007 prices

2006/2007 2007/2008 2006/2007 2007/2008 2006/2007 2007/2008

1- GDP at Market Prices (2+5-6) 744.8 798.1 100.0 100.0 7.1 7.22- Total Domestic Expenditure (3+4) 778.9 835.6 104.6 104.7 9.1 7.33- Final Consumption 623.6 656.3 83.7 82.2 4.1 5.2

Final private consumption 539.2 570.1 72.4 71.4 4.2 5.7

Final government consumption 84.4 86.2 11.3 10.8 3.2 2.1

4- Gross Capital Formation 155.3 179.3 20.9 22.5 31.8 15.5Investments 155.3 179.3 20.9 22.5 31.8 15.5

Change in stock 0.0 0.0 0.0 0.0 0.0 0.05- Exports of Goods & Services 225.3 290.1 30.2 36.3 23.3 28.86- Imports of Goods & Services 259.4 327.6 34.8 41.0 28.5 26.37- Gross Domestic Saving (1- 3) 121.2 141.8 16.3 17.8 22.3 17.0

8- Domestic Resources Gap (5-6)=(7-4) -34.1 -37.5

Source : Ministry of Economic Development.

- 147 -

Structure % Growth Rate % Value at LE bn

Government Sector

EconomicAuthorities

Public Companies

Private Sector Total Government

SectorEconomicAuthorities

Public Companies

Private Sector Total

All Items 25498.4 9478.4 23064.8 97300.3 155341.9 32094.9 10496.7 22893.5 134050.2 199535.3Agriculture, Irrigation & Reclamation 2349.0 84.7 0.0 5357.5 7791.2 2546.8 113.7 0.0 5223.0 7883.5

Mining & Crude Oil 0.0 17.7 941.6 11400.0 12359.3

Natural Gas 0.0 51.6 3250.0 18800.0 22101.6

Oil Refining 0.0 0.0 1446.0 5500.0 6946.0

Other Manufacturing 455.6 36.0 4715.0 30922.7 36129.3

Electricity 731.1 2224.8 7030.9 0.0 9986.8

Water 5384.4 866.8 0.0 0.0 6251.2Construction & Building 57.3 0.0 420.2 2000.0 2477.5 65.2 0.0 600.9 2655.0 3321.1Transportation & Storage 4408.8 4180.6 3583.8 13017.0 25190.2

Communications 705.0 219.4 0.0 13744.5 14668.9

Suez Canal 0.0 333.5 0.0 0.0 333.5 0.0 276.9 0.0 0.0 276.9

Wholesale & Retail Trade 0.0 37.2 354.6 2050.0 2441.8 0.0 59.7 153.4 5000.0 5213.1

Financial Intermediaries 4.2 374.4 557.5 0.0 936.1

Insurance & Social Solidarity 13.0 31.3 6.0 0.0 50.3

Restaurants & Hotels 97.6 16.6 260.0 3450.0 3824.2 264.0 15.2 339.9 4938.0 5557.1

Real Estate 48.0 36.7 0.0 11500.0 11584.7 119.7 92.3 0.0 12800.0 13012.0

Educational Services 2782.4 27.8 0.0 2000.0 4810.2 2683.3 17.2 0.0 3000.0 5700.5

Health Services 1629.0 123.9 0.0 1400.0 3152.9 2483.1 147.6 203.3 1875.0 4709.0

Drainage 0.0 0.0 0.0 0.0 0.0 4393.6 802.0 0.0 0.0 5195.6

Others 9544.1 358.3 62.7 2723.9 12689.0 5265.8 969.5 65.2 5175.0 11475.5

Settlements 0.0 0.0 0.0 0.0 0.0 2571.3 0.0 0.0 0.0 2571.3

0.0

25242.5

- 148 -

468.4

4057.2 2583.6 4476.5 14125.2

4.5 55.8 408.1

2006/2007 2007/2008 (Provisional) ( LE mn/Current Prices)

36.9

4578.0 2200.3

27053.5

36290.0

0.0

16403.7

(1/3) Implemented Investments by Economic Sector

3552.0 7060.9

Source : Ministry of Economic Development.

314.4 68.0

4784.8

41909.4

11563.1

5237.0

Crops Productivity Production Area Productivity Production Area Productivity

Unit (Thousand (Thousand per Feddan (Thousand (Thousand per FeddanTons) Feddans) Tons) Feddans)

Wheat d 7279 2716 18.81 8015 2920 18.3

Barley d 137 83 14.17 132 83 13.21

Maize Summer Crops d 5708 1566 26.28 5573 1605 24.8

Nile Crops 666 246 19.58 782 320 19.7

Millet Summer Crops d 876 367 17.17 799 322 17.17

Nile Crops 11 4 19.5 25 10 17.5

Rice ton 6744 1592 4.25 6902 1681 4.1

Beans d 302 212 9.2 244 170 9.3

Lentils d 2 2 5.0 1 2 5.3

Cotton (seeds) mc 600 536 7.10 628 575 6.93

Flax ton 117 30 3.9 140 35 4.0

Groundnuts d 184 132 18.4 218 156 18.3

Sesame d 42 75 4.97 48 85 4.98

Soybeans ton 23 18 1.270 26 19 1.360

Sunflower ton 38 37 1.000 27 27 0.982

Sugar cane ton 16611 326 51.5 16860 330 51.5

Sugar beet ton 5459 249 22.3 4621 258 17.9

Vegetables ton 20349 1888 10.77 20580 1885 10.90

Onion ton 2002 112 13.7 2265 120 13.8

Fruits ton 8503 1207 7.2 9100 1300 7.2

d: Ardeb mc: metric cantarSource : Ministry of Economic Development.

-149 - 2006/2007

(1/4) Output of Main Crops

2007/2008 (Provisional)

(Thousand metric cantars)Cultivated Crop Average

Season Area Extra Long Total Productivity Opening Total Total Egyptian Imported Total Purchase

(Thousand Long & Long Metric cantar Stock Supply Exports Price *

Feddans) Medium per Feddan LE / Cantar

2000/2001 518 620 3535 4155 8.0 1026 5181 1391 2708 393 3101 498

2001/2002 731 1025 5238 6263 8.6 1082 7345 2177 2905 - 2905 379

2002/2003 706 1316 4411 5727 8.1 2279 8006 3649 4140 120 4260 444

2003/2004 531 1168 2795 3963 7.5 24 3987 1137 1412 1061 2473 595

2004/2005 715 1551 4282 5833 8.3 370 6203 2837 3247 1458 + .. 594

2005/2006 650 858 3161 4019 6.2 118 4137 1865 1936 772 + .. 899

2006/2007 536 1058 3157 4215 7.9 337 4553 1555 1622 656 + .. 777

2007/2008** 575 816 3619 4435 7.7 1416 5851 2693*** 2356*** .. .. ..

Source: Cotton, Spinning and Weaving Holding Company.

* The average price of Giza 70 and 86 varieties due to suspending the cultivation of Giza 75 variety.

** Provisional.

*** Until 30/6/2008.

+ Calendar years.

.. Not available

- 150 -

(1/5) Position of Egyptian Cotton

Local Consumption

(Thousand metric cantars)

Quantity Relative Importance Quantity Relative

Importance

Export Commitments 1394.0 100 2693.0 100Asian Countries 837.0 60.0 1959.0 72.8India 417 29.9 914 33.9Pakistan 188 13.5 729 27.1China 94 6.8 165 6.8South Korea 51 3.7 62 2.3Japan 38 2.7 25 0.9Bangladesh 15 1.1 22 0.8Indonesia 8 0.6 9 0.3Taiwan 2 0.1 16 0.6Thailand 20 1.4 16 0.6Malaysia 2 0.1 1 0.0Philippines 2 0.0 0 0.0EU Countries 213 15.3 171 6.3Italy 110 7.9 65 2.4

Portugal 45 3.2 31 1.2

Germany 38 2.7 56 2.1

Spain 10 0.7 1 0.0

The Netherlands 1 0.1 0 0.0

Greece 5 0.4 2 0.0

The UK 0 0.0 11 0.1Slovenia 2 0.0 4 0.4Belgium 0 0.1 1 0.1Hungary 2 0.2 0 0.0Other European Countries 144 10.3 253 9.4Switzerland 55 3.9 141 5.2Turkey 89 6.4 112 4.2The USA 36 2.6 0 0.0Arab Countries 96 6.9 266 9.9The UAE 94 6.8 183 6.8Bahrain 0 0.0 17 0.6Morocco 2 0.1 3 0.1Qatar 0 0.0 42 1.6Tunisia 0 0.0 21 0.8Other Countries 68 4.9 44 1.6Brazil 59 4.2 30 1.1Mexico 5 0.4 9 0.3Colombia 1 0.1 0 0.0El Salvador 3 0.2 2 0.1South Africa 0 0.0 3 0.1Source: Cotton, Spinning and Weaving Holding Company.

-151-

2006/2007 Season 2007/2008 Season

(1/6) Cotton Export Commitments by Importing Countries

till the end of June 2007 till the end of June 2008

2006/2007 2007/2008 (Provisional)Unit Public Private Total Public Private Total

Refined sugar Thousand tons 1088.0 611.0 1699.0 1175.0 642.9 1817.9Animal & poultry fodder " 521.8 10552.1 11073.9 553.0 11185.2 11738.2Carbonated drinks Box (million) 0.0 366.9 366.9 0.0 396.3 396.3Cigarettes Billion 68.2 11.4 79.6 69.6 15.5 85.1Cotton yarn, fibran Thousand tons 73.7 201.2 274.9 79.0 215.0 294.0Wool yarn " 6.1 23.7 29.8 6.5 24.8 31.3Silk yarn " 0.6 19.3 19.9 0.6 20.5 21.1Synthetic fibres " 2.8 91.1 93.9 2.9 96.6 99.5Blankets Million pieces 1.2 17.3 18.5 1.3 18.0 19.3Ready-made clothes " " 10.6 285.6 296.2 11.3 305.7 317.0Cars Units 7977.0 28136.0 36113.0 8535.0 29745.0 38280.0Buses " 312.0 5985.0 6297.0 333.0 1055.0 1388.0Lorries " 578.0 23201.0 23779.0 612.0 24593.0 25205.0Washing machines Thousands 6.0 936.4 942.4 6.4 992.5 998.9Refrigerators " 5.9 951.8 957.7 6.2 1009.0 1015.2Electric lamps Million 27.9 174.6 202.5 29.6 185.1 214.7Butagaz heaters Thousands 84.4 201.0 285.4 89.5 213.0 302.5Water metres Thousands 534.0 0.0 534.0 566.0 0.0 566.0Etectric metres Thousands 850.6 0.0 850.6 901.0 0.0 901.0Aluminium & sheets thereof Thousand tons 273.0 0.0 273.0 289.0 0.0 289.0Reinforcing iron Thousand tons 115.2 4891.7 5006.9 123.3 5284.2 5407.5Cement " " 3146.0 33750.0 36896.0 3366.0 36112.0 39478.0Glass sheets " " 30.8 143.0 173.8 32.3 151.9 184.2Phosphatic fertilizers " " 515.0 844.0 1359.0 546.0 894.5 1440.5Azotic fertilizers " " 429.8 10948.8 11378.6 455.6 11605.7 12061.3Caustic soda Thousand tons 135.0 0.0 135.0 141.7 0.0 141.7Tyres Thousands 698.5 478.0 1176.5 740.0 507.0 1247.0Laundry soap Thousand tons 49.0 325.0 374.0 51.9 344.5 396.4Toilet soap Thousand tons 37.0 145.8 182.8 39.6 157.8 197.4Source : Ministry of Economic Development.

Products

(1/7) Output of Main Industrial Products

- 152 -

1998/1999 1999/2000 2000/2001 2001/2002 2002/2003 2003/2004 2004/2005 2005/2006 2006/2007 2007/2008*Total 4266 5311 5347 4341 5239 7512 8650 8693 9788 12294European Countries 2282 3241 3501 2769 3469 4965 5983 5818 6690 9070East Europe 242 298 369 469 733 1205 1432 1620 2187 ..West Europe 2040 2943 3132 2300 2736 3760 4551 4198 4503 ..France 268 371 346 244 282 419 521 393 412 525Germany 426 698 804 647 656 897 1024 947 1046 1135Italy 546 742 722 517 726 990 1000 754 835 1041Spain 52 109 97 73 81 141 167 138 166 ..Switzerland 55 89 116 89 97 120 139 123 129 ..United Kingdom 300 358 388 318 371 446 694 990 1041 1137Others 393 576 659 412 523 747 1006 853 874 5232The Middle East Countries 1388 1303 1070 1025 1179 1736 1743 1834 1860 1671Jordan 82 75 76 81 84 115 125 127 162 185Kuwait 71 71 61 64 69 91 94 101 137 134Palestine 195 155 133 131 156 219 176 281 148 ..Saudi Arabia 240 258 229 229 229 307 325 370 390 419Syria 70 60 75 71 77 88 90 93 106 114Others 730 684 496 449 564 916 933 862 917 819African Countries 150 148 145 144 168 221 258 280 342 396South Africa 28 21 19 16 14 18 22 24 28 39Morocco 14 15 14 14 19 19 21 23 25 32Sudan 49 52 55 53 60 90 110 115 155 166Tunisia 23 27 20 19 21 30 28 31 35 38Others 36 33 37 42 54 64 77 87 99 121Americas 244 315 325 184 168 237 276 325 356 478Canada 33 43 43 31 32 45 50 55 63 84United States 170 219 229 127 115 156 182 216 237 304Latin America 41 53 53 26 21 36 44 54 56 90Asia & Pacific 200 301 304 217 253 349 386 432 534 651Australia 36 48 45 34 31 41 52 56 56 65Japan 36 75 90 40 53 78 73 75 112 122South Korea 15 36 33 20 25 38 43 54 64 68China 10 12 14 14 21 28 33 41 64 82India 25 35 30 30 31 44 46 59 70 89Others 78 95 92 79 92 120 139 147 168 225

Other Countries 2 3 2 2 2 4 4 4 6 28

.. Not available

-153 -

* Because of the lack of data, Israel was included among the European Countries in FY 2007/2008, while in the remaining years, it was included among the Middle East Countries .

(1/8) Number of Tourists (by Group) (Thousands)

Source : Ministry of Tourism and Central Agency for Public Mobilization and Statistics (CAPMAS) .

1998/1999 1999/2000 2000/2001 2001/2002 2002/2003 2003/2004 2004/2005 2005/2006 2006/2007 2007/2008*

Total 25692 34045 32702 28542 33011 73002 85730 85113 96270 127371European Countries 15426 23056 22627 19021 22399 46182 55631 52987 59641 87764East Europe 1285 1496 1717 2461 4022 11266 13333 14727 19427 ..West Europe 14141 21560 20910 16560 18377 34916 42298 38260 40214 ..France 1982 2817 2482 1981 1965 3952 4805 3593 3574 5174Germany 3329 5469 5942 5129 4809 9452 11015 9712 10063 13414Italy 4217 5920 5047 3698 4855 8337 8123 5914 6486 9250Spain 384 898 779 531 630 1387 1456 1259 1822 ..Switzerland 342 690 734 619 626 1067 1383 1125 1168 ..United Kingdom 1548 2064 2160 1989 2204 3886 6121 8581 9154 11254Others 2339 3702 3766 2613 3288 6835 9395 8076 7947 48672The Middle East Countries 7017 6760 5709 6080 7213 18297 20249 21223 23396 21833Jordan 409 386 364 434 480 1129 1221 1254 1549 1706Kuwait 515 513 553 544 574 1268 1461 1683 2080 2160Palestine 535 563 411 568 623 2133 2054 2487 2104 ..Saudi Arabia 1813 1858 1773 1788 1967 3982 5161 5417 5907 5562Syria 361 295 328 404 420 841 884 938 1125 ..Others 3384 3145 2280 2342 3149 8944 9468 9444 10631 12405African Countries 874 966 934 1003 1106 2553 3101 3434 4418 5434South Africa 79 82 72 60 52 116 137 154 188 ..Morocco 93 92 98 126 117 220 229 241 273 379Sudan 426 522 502 493 608 1430 1900 2062 2800 3163Tunisia 89 93 81 94 105 255 252 280 319 382Others 187 177 181 230 224 532 583 697 838 1510Americas 1422 1926 1979 1294 1164 3149 3605 4046 4591 6117Canada 188 235 277 218 220 603 687 763 880 1261United States 1060 1461 1479 953 836 2246 2544 2844 3213 3993Latin America 174 230 223 123 108 300 374 439 498 863Asia & Pacific 939 1320 1441 1130 1117 2762 3088 3357 4154 5762Australia 234 316 337 256 209 585 688 716 741 1075Japan 145 357 440 217 242 529 478 500 692 878South Korea 45 83 86 61 75 185 201 250 299 ..China 47 65 67 75 111 216 245 297 461 634India 118 137 138 141 127 328 334 419 539 789Others 350 362 373 380 353 919 1142 1175 1422 2386Other Countries 14 17 12 14 12 59 56 66 70 461

.. Not available* Because of the lack of data, Israel was included among the European Countries in FY 2007/2008, while in the remaining years, it was included among the Middle East Countries .

(1/9) Number of Tourist Nights (by Group)

Source : Ministry of Tourism and Central Agency for Public Mobilization and Statistics (CAPMAS) .

-154 -

(Thousands)

2006 2007 2008 2006/2007 2007/2008

General Index 100.0 93.1 101.1 121.5 8.6 20.2

Food & Non-Alcoholic Beverages 43.9 93.1 102.5 130.3 10.1 27.1

Tobacco 2.5 100 100 112.1 0.0 12.1

Clothing & Footwear 7.9 95.6 100.2 104.3 4.8 4.1

Housing , Water, Electricity, Gas & Fuel 13.5 94.6 100 107.6 5.7 7.6

Furnishings, Household Equipment & Routine Maintenance of the House 4.2 95.4 100.4 110.7 5.2 10.3

Health Care 3.6 97.2 100.0 112.1 2.9 12.1

Transportation 5.2 91.1 100 120.1 9.8 20.1

Communications 3.6 98.8 100.0 104.0 1.2 4.0

Recreation & Culture 3.4 83.7 100 121.7 19.5 21.7

Education 4.4 90.0 100.0 137.7 11.1 37.7

Hotels & Restaurants 3.6 92.2 100.0 146.1 8.5 46.1

Miscellaneous 4.2 90.1 100.2 111.5 11.2 11.3

of income, expenditure and consumption. The series was updated on the basis of the weights of January 2007.

* A new series of CPI was introduced in September 2007. The weights involved in the formation of the Index were taken from the results of the 2004/2005 survey

- 155 -

(1/10) Consumer Price Index (Urban Population) (Jan. 2007=100)*

Inflation Rate %

JuneRelativeWeights

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

July / June

2006 2007 2008 2006/2007 2007/2008

All Items 100.0 117.9 126.0 168.5 6.9 33.7

Agriculture, Forestry and Fishing 25.1 133.1 143.0 179.5 7.5 25.5

Mining and Quarrying 21.8 128.6 136.8 232.3 6.4 69.8

Manufacturing Industries 38.9 106.8 115.7 144.4 8.3 24.8

Electricity, Gas, Steam and Air Conditioning Supply 2.3 100.0 100.0 114.0 0.0 14.0

Water Supply, Sewerage, Waste Management and Remediation Activities 2.0 111.7 128.0 138.7 14.6 8.4

Transportation and Storage 2.8 100.9 101.7 110.9 0.7 9.0

Accommodation and Food Service Activities 5.0 105.2 105.2 117.5 0.0 11.7

Information and Communication Activities 2.1 107.8 107.8 107.8 0.0 0.0

Source: Central Agency for Public Mobilization and Statistics (CAPMAS) the PPI Bulletin as of Sept. 2007 to replace the WPI Bulletin,

as the publication of the latter was stopped as of January 2008.

- 156 -

(1/11) Producer Price Index (2004/2005 = 100)

RelativeWeights

Inflation Rate % July / June

Groups June

End of June 2002 2003 2004 2005 2006 2007 2008Reserve Money 73772 82955 94288 101080 116050 134126 169911

Currency in circulation outside CBE 45376 51959 59415 67241 78604 92174 111412Bank deposits in local currency 28396 30996 34873 33839 37446 41952 58499

Counterpart Assets 73772 82955 94288 101080 116050 134126 169911Net Foreign Assets 9816 12343 9858 37295 61302 95372 180333

Foreign Assets 61894 86287 88313 108738 129477 160197 182021Gold 2568 3808 4438 4500 6429 6744 8695Foreign securities 13621 15569 17103 16665 48353 108606 151175Foreign currencies 45705 66910 66772 87573 74695 44847 22151

Foreign Liabilities* 52078 73944 78455 71443 68175 64825 1688Net Domestic Assets 63956 70612 84430 63785 54748 38754 -10422

Net Claims on Government 71325 70768 99472 122264 114055 117254 81872 Claims; of which: 117532 136722 181313 227367 171808 192192 159697

Government securities* 98512 116527 164441 208021 164761 166724 123123Deposits 46207 65954 81841 105103 57753 74938 77825

Net Claims on Banks -17687 -34505 -35544 -21983 1018 59512 77581Claims 10292 9766 9530 11572 17412 77270 97828Banks deposits in foreign currencies 27979 44271 45074 33555 16394 17758 20247

Net Balancing Items 10318 34349 20502 -36496 -60325 -138012 -169875Assets * 18413 48758 54355 49071 41743 39141 25233Liabilities 8095 14409 33853 85567 102068 177153 195108

Source : Central Bank of Egypt.* At the end of June 2008, the CBE and the government agreed on using part of the rescheduled debts -under Paris Club agreement-

which are not yet due, to settle part of the government debt to the CBE.

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

- 157 -

End of June 2002 2003 2004 2005 2006 2007 20081- Domestic Liquidity 328728 384262 434911 493884 560356 662688 766664

A- Money Supply 59805 67212 77606 89685 109274 131290 170579

Currency in circulation outside the banking system 42299 48258 55933 63029 74239 86860 104656

Demand deposits in local currency 17506 18954 21673 26656 35035 44430 65923

B- Quasi-Money 268923 317050 357305 404199 451082 531398 596085

Time & saving deposits in local currency 192718 212010 233610 283020 314188 377424 436268

Demand and time & saving deposits in foreign currencies 76205 105040 123695 121179 136894 153974 159817

2- Counterpart Assets

Net foreign assets* 17285 25429 45241 80913 133385 218629 303680

Domestic credit* 360090 387446 422040 466771 509532 531314 570953

Other items (net) * -48647 -28613 -32370 -53800 -82561 -87255 -107969

* Due to the agreement between the CBE and the government, as mentioned in the footnote of table (2/1/1).Source : Central Bank of Egypt.

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

(LE mn)

- 158 -

End of June 2002 2003 2004 2005 2006 2007 2008Total Deposits in Local Currency 210224 230964 255283 309676 349223 421854 502191

1- Demand Deposits 17506 18954 21673 26656 35035 44430 65923

Public business sector * 2813 2937 2857 3027 4934 6278 8698

Private business sector 7385 7989 9235 12228 15863 20681 34301

Household sector 8255 8674 10306 11985 14831 18378 24003

Minus: Purchased cheques & drafts 947 646 725 584 593 907 1079

2- Time and Saving Deposits 192718 212010 233610 283020 314188 377424 436268

Public business sector * 11116 10990 12557 13700 15465 17186 20736

Private business sector 24209 22099 25984 27439 25580 56823 85415

Household sector 157393 178921 195069 241881 273143 303415 330117

- 159 -

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

Source : Central Bank of Egypt.

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

(LE mn)

End of June 2002 2003 2004 2005 2006 2007 2008

Total Deposits in Foreign Currencies 76205 105040 123695 121179 136894 153974 159817

1- Demand Deposits 8267 12159 16280 18140 18533 26917 26581

Public business sector * 311 475 878 1249 935 947 943

Private business sector 4155 6123 8891 10234 10417 18453 17417

Household sector 3992 5689 6697 6823 7392 7689 8404

Minus: Purchased cheques & drafts 191 128 186 166 211 172 183

2- Time and Saving Deposits 67938 92881 107415 103039 118361 127057 133236

Public business sector * 1883 2403 2554 2946 4734 5774 8202

Private business sector 15272 19056 20659 21103 28845 30641 39785

Household sector 50783 71422 84202 78990 84782 90642 85249

- 160 -

(LE mn)

Source: Central Bank of Egypt.

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

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

End of June 2002 2003 2004 2005 2006 2007 2008Net Foreign Assets 17285 25429 45241 80913 133385 218629 303680

1- Foreign Assets 90125 126068 145297 174328 218982 304968 330770

Central Bank of Egypt 61894 86287 88313 108737 129477 160197 182021

Banks 28231 39781 56984 65591 89505 144771 148749

2- Foreign Liabilities 72840 100639 100056 93415 85597 86339 27090

Central Bank of Egypt* 52078 73944 78455 71443 68176 64825 1688

Banks 20762 26695 21601 21972 17421 21514 25402

- 161 -

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

Source: Central Bank of Egypt.

(LE mn)

* Due to the agreement between the CBE and the government, as mentioned in the footnote of table (2/1/1).

End of June 2002 2003 2004 2005 2006 2007 2008

1- Domestic Credit 360090 387446 422040 466771 509532 531314 570953

Net claims on the government (A+B-C) 95423 103518 126343 159889 184131 178323 174005

A- Securities* 162675 203845 258178 311375 295974 278011 271788

B- Credit facilities 33580 33493 33075 41364 28044 52151 67732

C- Government deposits 100832 133820 164910 192850 139887 151839 165515

Claims on public business sector ** 31143 34986 35588 37420 32888 24446 26897

Claims on private business sector 200230 214308 223096 228195 239338 268607 291719

Claims on household sector 33294 34634 37013 41267 53175 59938 78332

2- Other Items (Net) -48647 -28613 -32370 -53800 -82561 -87255 -107969

Capital accounts -68579 -76905 -83821 -94179 -102139 -114534 -135401

Net unclassified assets and liabilities* 19932 48292 51451 40379 19578 27279 27432

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

(LE mn)

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

Source: Central Bank of Egypt.

* Due to the agreement between the CBE and the government, as mentioned in the footnote of table (2/1/1).

- 162 -

End of June 2002 2003 2004 2005 2006 2007 2008

Total Saving Vessels 335651 395068 445887 498190 560229 655376 742177

Savings at the Banking System 268923 317050 357305 404199 451082 531398 596085

Time & saving deposits in local currency 192718 212010 233610 283020 314188 377424 436268

Demand and time & saving deposits in foreign currencies 76205 105040 123695 121179 136894 153974 159817

Net Sales of Investment Certificates 49008 55218 60178 58485 63697 68311 79354

Post Office Saving Deposits 17720 22800 28404 35506 45450 55667 66738

- 163 -

(LE mn)

(2/1/7) Total Saving Vessels

Source: Central Bank of Egypt.

End of June 2002 2003 2004 2005 2006 2007 2008Total 30892 34885 35430 37242 32636 24163 26652

In Local Currency 25831 26834 27690 30165 26269 18072 19475

Agriculture 399 55 44 16 59 7 11

Manufacturing 15539 16854 17263 18318 16215 9071 9066

Trade 4985 5094 5272 5936 4318 3986 4114

Services 4908 4831 5111 5895 5677 5008 6284

In Foreign Currencies 5061 8051 7740 7077 6367 6091 7177

Agriculture - - - - - - -

Manufacturing 4564 5614 5603 5260 3752 2611 3440

Trade 327 446 532 511 1555 880 709

Services 170 1991 1605 1306 1060 2600 3028

Source: Central Bank of Egypt.

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

- 164 -

(LE mn)

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

Public Business Sector*

End of June 2002 2003 2004 2005 2006 2007 2008Total 185078 199896 205816 205693 214665 239312 258087

In Local Currency 144408 149068 154147 152191 150485 163292 167258

Agriculture 4659 4444 4972 5756 4794 6922 5326

Manufacturing 55896 55775 58434 59099 55827 65453 62693

Trade 42266 42436 42267 39712 39110 33487 38342

Services 41587 46413 48474 47624 50754 57430 60897

In Foreign Currencies 40670 50828 51669 53502 64180 76020 90829

Agriculture 549 447 550 619 829 929 843

Manufacturing 14969 19764 19850 20388 26072 34199 43349

Trade 8848 11111 12020 11369 12337 10944 14599

Services 16304 19506 19249 21126 24942 29948 32038

Source: Central Bank of Egypt.

- 165 - (2/1/8) Bank Lending and Discount Balances to Business Sector

Private Business Sector (Contd.)(LE mn)

3Public Sector Banks

837Branches

27Private & Joint Venture Banks

1145Branches

7Off-Shore Banks

63Branches

1Industrial Development Bank of EgyptIndustrial

14Branches

1Egyptian Arab Land BankReal Estate

28Branches

1 Principal Bank for Development & Agricultural CreditAgricultural

1210BranchesOf which Agricultural Banks in: Governorates 2Village Banks 1037

329740

Specialized Banks

Total

* Excluding branches of Egyptian banks abroad, and two banks which were established under private laws and not registered with the CBE: the Arab International Bank and Nasser Social Bank .

Commercial Banks

- 166 -

(2/2/1) Structure of the Egyptian Banking System As at 30/6/ 2008*

Central Bank of Egypt

2006 2007 2008

Population (Thousands)

Number of Banking

Units

Banking Density**

Population (Thousands)*

Number of Banking

Units

Banking Density**

Population (Thousands)*

Number of Banking

Units

Banking Density**

Cairo 17602 889 19.8 18265 949 19.2 18629 1077 17.3

Alexandria 8940 376 23.8 9243 387 23.9 9444 423 22.3

Delta 16051 552 29.1 16638 558 29.8 16978 576 29.5

Qanal 7531 358 21.0 7838 377 20.8 7982 404 19.8

North Upper Egypt 8916 291 30.6 9244 293 31.5 9432 301 31.3

Asiut 3668 121 30.6 3771 123 30.7 3864 125 30.9

South Upper Egypt 8640 356 24.3 8948 369 24.2 9135 389 23.5

Total 71348 2943 24.2 73947 3056 24.2 75464 3295 22.9

* Calculated on the basis of the ratio of natural increase in accordance to the Yearbook of the Central Agency for Public Mobilization and Statistics (CAPMAS).

* * Population in thousand for each unit .

End of June

(2/2/2) Banking Density

- 167 -

Name Registration Date Address

Al-Raghi Banking & Investment Corp. 20/10/1993 19 Adly St.,2nd Floor , Apart. 59, Cairo

Bank of New York 27/10/1993 9 Abd El- Moneim Riad St., Dokki, Giza

Commerz Bank AG 31/05/1994 153 Mohamed Farid St.,(Banque Misr Tower) , 22nd Floor, Cairo

Monte dei Paschi di Siena S.P.A 5/07/1994 10 Saray Elgezira St, 2nd Floor,Flat 5,11211, Zamalek, Cairo

Union De Banques Arabes et Francaises (UBAF) 15/08/1994 4 Behlar Passage, Kasr El-Nil St., Cairo

Dresdner Bank AG. 23/08/1994 21& 23 Giza St., El-Nil Tower, Floor No.12, Giza

State Bank of India 3/10/1994 15 Kamel El-Shinnawy St., Garden City, Cairo

Deutsche Bank AG 10/11/1994 6 Bolis Hana St., El Dokki.

Intesa San Paolo SPA 13/03/1995 3 Abu El-Feda St,Zamalek, Cairo

Credit Agricole Indosuez 17/07/1995 42 Al Batal Ahmed Abdel Aziz St., Mohandeseen

Arab Islamic Bank 11/12/1995 21& 23 Giza St., Nile Tower, Giza

JP Morgan Chase Bank N/A 5/08/1996 3 Ahmed Nessim St., Giza

Bank of Tokyo Mitsubishi UFJ Ltd 4/03/1997 Nile Hilton, Commercial Center ( No.247), Cairo

UBS AG 22/10/1997 1191 Corniche El-Nil St., World Trade Center, 13th Floor, Cairo

Credit Suisse 16/03/1998 7B Ibn Shamar St., Giza

Wachovia Bank National Association. 6/05/1998 9 El-Gomhoria El-Motahida Square, Dokki, Giza

ING Bank N.V. 12/07/1999 9 Hode El-Laban St.,Garden City, Cairo

Credit Industriel et Commercial,CIC 22/07/1999 28 Sherif St., Cairo

B.H.F Bank AG 2/08/1999 8 El-Sadd El-Aley St.,Dokki , 12311,Giza

Royal Bank Of Scotland (RBS) 17/11/1999 31 Gezirat El-Arab St., Mohandeseen, Giza

Natexis 22/03/2000 50 Abd El –Khalek Sarwat St., Cairo

Den Norske Bank 27/05/2001 19 El-Gabalaya St., Zamalek, Cairo

Bank of Valletta PLC 10/07/2003 7 El- thawra Sq., 7th floor, RoomNo.71, Dokki, Giza

Sumitomo Mitsui Banking Corporation 19/01/2004 3 Ibn Kassir Corniche El-Nil St., 14 th Floor, Flat 6, Giza

Clariden Leu Ltd. 22/04/2004 4 A Hassan Sabry St., Floor 12-Flat 82, Zamalek,112211, Cairo

American Express Bank Ltd. 12/09/2005 Star Capital 2, Sheikha Fatma St., Office no. 21-22

Egyptian-Sudanese Bank 28/05/2008 4 Ahmed Basha St., Floor 15, Garden City, Cairo

Source : Central Bank of Egypt.

(on June 30, 2008) (2/2/3) Representation Offices Registered with the CBE

- 168 -

Fund Name Fund Manager Inception Date Par Value (LE) Size (LE

mn)

Net Asset Value (LE) at end June

2007

Net Asset Value (LE) at end June

2008

Cash Distribution since Date of

Inception

Total Return since Inception (%)

Open End - Balance Funds

National Bank of Egypt I El Ahly Fund Management Sep-94 10 200 2079.00 47.91 3.60 415.10Banque Misr I Concord International Investments Feb-95 100 500 113.65 118.67 100.30 118.97National Bank of Egypt II El Ahly Fund Management Oct-95 100 300 92.65 104.61 112.50 117.11Export Development Bank I (Al-Khabeer) Cairo Fund Management Oct-96 100 100 107.39 117.26 33.00 50.26Suez Canal Bank HC Securities Dec-96 500 100 382.47 484.63 20.00 0.93National Bank of Egypt III HC Securities Aug-05 100 200 123.32 126.36 12.00 38.36El Watany Bank of Egypt Hermes Fund Management Aug-06 100 135 108.77 126.09 7.00 33.09National Bank of Egypt V El Ahly Fund Management May-07 10 100 10.19 11.58 0.00 15.80Al-Masi Hermes Fund Management Apri-08 100 100 96.82 0.00 -3.18

Open End - Equity Funds

Credit Agricole Egypt I *** Hermes Fund Management Oct-94 100 300 323.21 353.31 220.25 473.56Bank of Alexandria I Hermes Fund Management Nov-94 100 200 491.89 455.47 266.00 621.47Banque Misr II Concord International Investment Sep-95 66.67 300 89.57 94.85 55.15 124.99Banque de Caire Hermes Fund Management Nov-95 10 200 109.53 120.33 0.00 1103.30Credit Agricole Egypt II *** Hermes Fund Management Apr-97 100 300 179.53 173.17 82.50 155.67Egyptian Gulf Bank Hermes Fund Management May-97 100 100 382.36 395.51 197.00 492.51Banque Misr III* HC Securities Dec-97 100 138.97 541.35 637.95 70.00 607.95Shield Fund ** Concord International Investment Feb-98 50 280 123.42 140.93 46.50 274.86Misr Iran Development Bank I HC Securities Aug-98 100 100 512.41 623.56 110.00 633.56Commercial International Bank II (Istethmar) C I Asset Management Apr-06 100 600 122.02 136.35 0.00 36.35Piraeus Bank-Egypt I Phoneix Kato Asset Management Apri-08 100 100 96.5 0.00 -3.50Housing & Development Bank(Al-Taameer) Prime Investments Funds Management Jun-08 100 100 100.22 0.00 0.22

Open End - Fixed Income Funds

Al Rabeh Fund ++ Prime Investment Fund Management Feb-99 100 50 100.27 102.19 79.35 81.54Credit Agricole Egypt III *** Egyptian Fund Management Group Jun-99 1000 150 1045.91 1039.93 869.98 90.99Commercial International Bank I (Osoul) C I Asset Management Apr-05 100 1000 121.62 131.05 0.00 31.05Misr Iran Development Bank II HC Securities Jul-05 1000 500 1000 1036.99 207.35 24.43Bank of Alexandria II Egyptian Fund Management Group May-06 10 200 11.04 11.92 0.00 19.16National Bank of Egypt IV El Ahly Fund Management Jun-06 100 145 109.92 118.11 0.00 18.11National Societe General Bank (Themar) Egyptian Fund Management Group Oct-06 100 100 106.88 115.1 0.00 15.10Export Development Bank II ABN-Amro-Delta Fund Management Nov-06 100 100 105.79 114.12 0.00 14.12

Open End - Islamic Funds

Faisal Islamic Bank Hermes Fund Management Dec-04 100 50 154.37 165.78 52.00 117.78Egyptian Saudi Finance Bank Hermes Fund Management May-06 100 50 118.41 120.62 39.32 59.94Faisal Islamic Bank - CIB (Al Amman) CI Asset Management Oct-06 100 100 111.78 120.87 0.00 20.87Banque Misr IV HC Securities Oct-06 100 200 119.60 144.91 10.00 54.91Sanabel Fund Prime Investment Fund Management Feb-07 100 100 102.53 113.01 10.00 23.01Egyptian Saudi Finance Bank -National Bank of Egypt (Bashayer) El-Ahly Fund Management Feb-08 100 200 100.12 0.00 0.12

Close End Funds

Orient Trust Egyptian Investment & Finance Co. Feb-07 1000 50 1256.50 1247.64 300.00 54.76Misr Direct Investment Fund Al Ahly Development & Investment Jul-99 1000 35 1057.30 1125 0.00 12.50Arab Land Direct Prime Investment Fund Management Feb-00 1000 70 894.22 796.43 113.75 -8.98

Asset Allocator Funds

Arab Misr Insurance Group Prime Investment Fund Management Aug-95 500 100 944.57 1076.45 237.00 162.69Societe Arab Int'l Banque I + Prime Investment Fund Management Jun-96 100 100 510.51 599.56 88.00 587.56Societe Arab Int'l Banque II Prime Investment Fund Management Oct-97 100 200 319.46 377.89 90.00 367.89

Source: Monthly Bulletin of Egyptian Stock Exchange.* The name of Misr Exterior Bank fund was changed to Banque Misr III Fund starting from 16/9/2004 after the merger of Misr Exterior Bank with Banque Misr. The price of issuing the document was changed from LE 1000 to LE100 after the amendment of Article (5) of the subscription bulletin as of 27/8/2006.** The name of Misr International Bank fund was changed to shield Fund starting from 2/4/2006 and the document was split into a ratio of 1:2 on the same date . The price of issuing the document was changed from LE 100 to LE 50.*** The name of Egyptian American Bank Funds was changed to Credit Agricole Egypt Funds starting from 03/09/2006. + The fund's document was split into a ratio of 1: 5 and the par value was also changed from LE 500 to LE100 as of 29/03/2007. ++ The fund's name was changed to Al Rabeh Fund instead of Societe Arab Int'l Banque III.

(2/2/4) Local Mutual Funds Authorized and Operating as at 30/6/2008

- 169 -

1) Insurance and Reinsurance Companies(Transacting all classes of insurance)

Misr Insurance CompanyNational Insurance Company of Egypt

(Transacting all classes of insurance)Suez Canal Insurance Co.Mohandes Insurance Co.Delta Insurance Co.(Transacting property & liability insurance)AIG Egypt Insurance Co.

ACE Insurance Co.- EgyptPrivate Sector Royal & Sun Alliance Insurance Co.

Egyptian Saudi Insurance HouseBUPA Egypt Insurance Co.

(Transacting life insurance)

ACE Life Insurance Co. - EgyptNSGB Life Insurance Co.

Misr Banks for Takaful Insurance for Life insurance

Export Credit Guarantee Co. of Egypt (ECGE)

2) Cooperative Insurance Societies Cooperative Insurance Society, Egypt

3) Private Insurance Funds (625 funds as of June 2007)

4) Government Insurance Funds

Government Fund covering hit-and-run vehicles and government vehicles within A.R.E

.5) Insurance Pools Egyptian Nuclear Insurance Pool

Insurance Pool against Train and Underground Accident Risks in the Railway

The Egyptian Pool for Third Party Civil Liability against Construction Risks

Federations and Auxiliary OrgansThe Egyptian Insurance Federation

Cargo Supervision & Surveying Office of Egypt

Insurance Studies InstituteSource: The 2006/2007 Annual Report of the Egyptian Insurance Supervisory Authority (EISA).

- 170 -

The Egyptian Insurance Supervisory Authority (EISA)

Entities which transact insurance and reinsurances

(2/2/5) Egyptian Insurance Market Structure

The General Pool for Insurance Cargo in the Railway and Transporting of Cotton

Arab Misr Insurance Group (AMIG)

The Supreme Council of Insurance

Export Credit Guarantee Co. established by virtue of

Law No. 21 for 1992.

Public Sector

Misr Banks for Takaful Insurance for Property and Liability insurance

Allianz Insurance Co. - Egypt

The Cooperative Insurance Fund for fishing boats which belong to fishing industry cooperatives and their members

Government Fund insuring postal service risks

Pharaonic American Life Insurance Co. (ALICO)Commercial International Life Insurance Co. (CIL)Allianz Life Insurance Co. - Egypt

The Government Insurance Fund carrying on fidelity insurance for the stock keepers

End of June 2002 2003 2004 2005 2006 2007 2008

Currency by Denomination+ 45427 52219 59703 67527 79017 93240 112430

PT 25 128 136 118 120 136 144 147

PT 50 225 235 203 220 241 240 252

LE 1 427 455 515 517 545 565 608

LE 5 1047 1119 1226 1279 1121 1071 1169

LE 10 5745 5728 5490 5074 4274 3470 2938

LE 20 12005 12110 11010 10329 9226 8796 7394

LE 50 15035 19381 22686 24517 27959 28152 25646

LE 100 10815 13055 18455 25471 35515 47552 54987

LE 200* - - - - - 3250 19289

Source: Central Bank of Egypt.

+ Including coins denominations of 50, 100 piasters.

* The LE 200 note has been in circulation as of May 2007.

(2/3/1) Note Issued, including Cash in CBE Vaults, by Denomination

(LE mn)

- 171 -

End of June 2002 2003 2004 2005 2006 2007 2008

Total 45377 51960 59415 67236 78604 92175 111412

Subsidiary Coins & Notes* 206 213 219 226 236 259 275

PT 25 126 135 117 118 135 142 145

PT 50 221 232 201 217 239 234 242

LE 1 422 448 510 512 540 550 591

LE 5 1034 1098 1201 1251 1095 987 1105

LE 10 5718 5690 5424 4999 4215 3323 2845

LE 20 11948 12049 10926 10246 9128 8553 7194

LE 50 14938 19270 22490 24348 27737 27967 25422

LE 100 10764 12825 18327 25319 35279 47136 54529

LE 200+ - - - - - 3024 19064

Source: Central Bank of Egypt.

* Issued by the Ministry of Finance.

+ The LE 200 note has been in circulation as of May 2007.

(LE mn)

(2/3/2) Currency in Circulation Outside CBE by Denomination

- 172 -

During FY ending June 2002 2003 2004 2005 2006 2007 20081- Cairo Branch

Number of cheques (thousands) 6737 9250 8856 8618

Value of cheques (LE mn) 232323 215703 215091 231943

2- Alexandria Branch

Number of cheques (thousands) 1037 663 626 593

Value of cheques (LE mn) 35208 26383 30652 27874

3- Port-Said Branch

Number of cheques (thousands) 144 112 109 110

Value of cheques (LE mn) 3012 2495 2481 2606

4- All Branches

Number of cheques (thousands) 7918 10025 9591 9321 9508 10481 11724

Value of cheques (LE mn) 270543 244581 248224 262423 288715 356900 483113

Source: Central Bank of Egypt.

* As of 1/1/2006, the manual Clearing Houses of Alexandria and Port-Said were cancelled,and all their activitieswere transferred to Cairo Automated Clearing House.

(2/3/3) Central Bank of Egypt: Activity of Clearing Houses *

- 173 -

End of June 2002 2003 2004 2005 2006 2007 2008Assets

Cash 4453 5557 5412 6594 6813 7705 10261Securities & investments in TBs, of which: 87726 111337 137431 170659 193965 176098 201858

CBE notes - - - - 21563 17617 -

Balances with banks in Egypt 83244 110874 116290 124986 121695 217363 278185

Balances with banks abroad 20002 29798 43290 51204 72554 124366 122792

Loan and discount balances 266100 284722 296199 308195 324041 353746 401425

Other assets 33939 35650 34814 41990 42494 58645 68790

Assets =Liabilities 495464 577938 633436 703628 761562 937923 1083311LiabilitiesCapital 12531 18155 20346 22949 27112 33037 37295

Reserves 11238 11805 11454 12419 13418 12552 16141

Provisions 35869 40099 44584 49541 54950 53469 62314

Long-term loans & bonds 14057 14866 15012 14254 17526 26351 22285

Obligations to banks in Egypt 35094 35579 29933 22671 21488 82619 98699

Obligations to banks abroad 11830 16247 10332 12262 8770 10006 13327

Total deposits 340868 403144 461697 519649 568841 649953 747199

Other liabilities 33977 38043 40078 49883 49457 69936 86051

- 174 -

Source : Central Bank of Egypt.

(2/4/1) Banks : Aggregate Financial Position

( LE mn )

End of June 2002 2003 2004 2005 2006 2007 2008Total Deposits 340868 403144 461697 519649 568841 649953 747199

Demand deposits 30913 37233 46742 51557 62431 78758 100569

Time & saving deposits and saving accounts 286953 342535 389483 445132 479805 542983 612737

Blocked or retained deposits 23002 23376 25472 22960 26605 28212 33893

First: In Local Currency 250106 278179 310870 369067 401143 463320 552079

Demand deposits 21063 22929 27168 31606 41793 50365 71971

Time & saving deposits and saving accounts 213385 242058 269505 324664 345953 396352 460285

Blocked or retained deposits 15658 13192 14197 12797 13397 16603 19823

Second: In Foreign Currencies 90762 124965 150827 150582 167698 186633 195120

Demand deposits 9850 14304 19574 19951 20638 28393 28598

Time & saving deposits and saving accounts 73568 100477 119977 120468 133852 146631 152452

Blocked or retained deposits 7344 10184 11276 10163 13208 11609 14070

- 175 -

Source : Central Bank of Egypt.

(2/4/2) Banks : Deposits by Maturity( LE mn )

End of June 2002 2003 2004 2005 2006 2007 2008Total Deposits 340868 403144 461697 519649 568841 649953 747199

In Local Currency 250106 278179 310870 369067 401143 463320 552079

Government sector 38578 46071 54120 57649 49422 37233 44789

Public business sector * 13930 13929 15414 16727 20399 23464 29434

Private business sector 31594 30087 35219 39668 41444 77504 119716

Household sector 165648 187594 205375 253865 287973 321793 354119

External sector ** 356 498 742 1158 1905 3326 4021

In Foreign Currencies 90762 124965 150827 150582 167698 186633 195120

Government sector 13328 18977 26187 27252 29290 30329 33203

Public business sector * 2194 2878 3432 4195 5668 6721 9146

Private business sector 19426 25179 29550 31337 39263 49093 57202

Household sector 54775 77111 90899 85813 92174 98331 93653

External sector ** 1039 820 759 1985 1303 2159 1916

Source : Central Bank of Egypt.

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

** Including counterpart deposits of US aid.

(2/4/3) Banks : Deposits by Sector - 176 -

( LE mn )

End of June 2002 2003 2004 2005 2006 2007 2008Total Deposits 340868 403144 461697 519649 568841 649953 747199

In Local Currency 250106 278179 310870 369067 401143 463320 552079

Agriculture 2235 2049 2480 2548 2215 2531 5673

Manufacturing 15984 15054 17325 19239 19903 23819 36169

Trade 10494 9879 10520 11740 12793 18354 23928

Services 20645 22416 28487 31915 38245 40529 59337

Unclassified sectors 200748 228781 252058 303625 327987 378087 426972

In Foreign Currencies 90762 124965 150827 150582 167698 186633 195120

Agriculture 426 558 467 831 855 467 1002

Manufacturing 9582 12193 14718 15274 18159 21208 26223

Trade 5071 5914 7258 6583 8250 11824 10263

Services 8995 12772 15306 17499 21602 23216 30202

Unclassified sectors 66688 93528 113078 110395 118832 129918 127430

Source : Central Bank of Egypt.

( LE mn )

(2/4/4) Banks : Deposits by Economic Activity

- 177 -

End of June 2002 2003 2004 2005 2006 2007 2008

Total 87726 111337 137431 170659 172402 158481 201858

In Local Currency 66982 86000 105874 139322 140840 125981 168182

Government sector 51743 69853 88438 118358 115146 96652 135129

Public business sector * 811 648 630 666 859 761 1414

Private business sector 14428 15499 16806 20298 24835 28568 31609

Household sector 0 0 0 0 0 0 0

External sector 0 0 0 0 0 0 30

In Foreign Currencies 20744 25337 31557 31337 31562 32500 33676

Government sector 12420 17465 18630 16594 16067 14636 13536

Public business sector * 3 0 0 0 0 0 0

Private business sector 3703 1703 2885 4711 3545 3474 4914

Household sector 0 0 0 0 0 0 0

External sector 4618 6169 10042 10032 11950 14390 15226

Source : Central Bank of Egypt.

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

- 178 -(2/4/5) Banks : Portfolio Securities by Sector+

( LE mn )

End of June 2002 2003 2004 2005 2006 2007 2008

Total 266100 284722 296199 308195 324041 353746 401425

In Local Currency 213008 218696 228159 233141 238926 248544 267166

Government sector 9901 9049 9963 10938 11285 10788 9698

Public business sector * 25831 26835 27690 30164 26269 18097 19475

Private business sector 144446 149118 154162 152193 150491 163292 167258

Household sector 32225 33285 35955 39354 50158 55453 69838

External sector 605 409 389 492 723 914 897

In Foreign Currencies 53092 66026 68040 75054 85115 105202 134259

Government sector 4661 4248 6240 11080 9712 15896 21460

Public business sector * 5060 8051 7740 7078 6373 6091 7177

Private business sector 40670 50827 51668 53502 64184 76020 90829

Household sector 1070 1350 1059 1913 3017 4485 8494

External sector 1631 1550 1333 1481 1829 2710 6299

Source : Central Bank of Egypt.

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

(2/4/6) Banks : Lending and Discount Balances by Sector

( LE mn )

- 179 -

End of June 2002 2003 2004 2005 2006 2007 2008 Total 353826 396059 433630 478854 496443 512227 603283

In Local Currency 279990 304696 334033 372463 379766 374525 435348

Government sector 61644 78902 98401 129296 126431 107440 144827

Public business sector * 26642 27483 28320 30830 27128 18858 20889

Private business sector 158874 164617 170968 172491 175326 191860 198867

Household sector 32225 33285 35955 39354 50158 55453 69838

External sector 605 409 389 492 723 914 927

In Foreign Currencies 73836 91363 99597 106391 116677 137702 167935

Government sector 17081 21713 24870 27674 25779 30532 34996

Public business sector * 5063 8051 7740 7078 6373 6091 7177

Private business sector 44373 52530 54553 58213 67729 79494 95743

Household sector 1070 1350 1059 1913 3017 4485 8494

External sector 6249 7719 11375 11513 13779 17100 21525

Source : Central Bank of Egypt.

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

(2/4/7) Banks : Credit by Sector( LE mn )

- 180 -

End of June 2002 2003 2004 2005 2006 2007 2008Total 266100 284722 296199 308195 324041 353746 401425

In Local Currency 213008 218696 228159 233141 238926 248544 267166

Agriculture 5167 4521 5015 5822 4902 6986 5758Manufacturing 73179 74269 77722 81844 77734 80497 76793Trade 47251 47530 48479 45648 43564 37476 42456Services 54325 58547 60505 59870 61679 67035 71208Unclassified sectors 33086 33829 36438 39957 51047 56550 70951

In Foreign Currencies 53092 66026 68040 75054 85115 105202 134259

Agriculture 549 447 550 619 829 929 863Manufacturing 20562 26782 28569 34957 38517 51399 67690Trade 9175 11557 12552 11893 13930 11837 15319Services 20098 24341 23941 24188 26983 33842 35594Unclassified sectors 2708 2899 2428 3397 4856 7195 14793Source : Central Bank of Egypt.

(2/4/8) Banks : Lending and Discount Balances by Economic Activity( LE mn )

- 181 -

Less than three-month deposits

Less than six-month

deposits

One year-or less deposits

Loans less thanone year

SimpleInterest

CompoundInterest

Jan-06 9.00 6.40 7.40 7.60 12.60 10.50 10.00 10.50

Feb. ,, 6.10 7.20 7.40 12.60 ,, ,, ,,

Mar. ,, 6.20 7.20 7.50 12.60 9.50 9.00 9.50

Apr. ,, 6.20 7.00 7.30 12.60 ,, ,, ,,

May ,, 5.90 7.00 7.20 12.60 ,, ,, ,,

June ,, 5.90 6.90 7.10 12.50 ,, ,, ,,

July ,, 5.90 6.80 7.10 12.60 ,, ,, ,,

Aug. ,, 5.90 6.80 7.00 12.70 ,, ,, ,,

Sept. ,, 5.90 6.80 7.00 12.60 ,, ,, ,,

Oct. ,, 5.90 6.80 7.00 12.60 ,, ,, ,,

Nov. ,, 6.00 6.80 7.10 12.60 ,, ,, ,,

Dec. ,, 5.90 6.80 6.90 12.60 ,, ,, ,,

Jan-07 ,, 6.10 6.80 6.90 12.60 ,, ,, ,,

Feb. ,, 6.20 6.90 6.90 12.70 10.00 9.50 ,,

Mar. ,, 6.20 6.90 6.90 12.70 ,, ,, ,,

Apr. ,, 6.20 6.90 6.90 12.70 ,, ,, ,,

May ,, 6.20 6.90 6.90 12.70 ,, ,, ,,

June ,, 6.10 6.90 6.90 12.60 ,, ,, ,,

July ,, 6.10 6.90 6.90 12.60 ,, ,, ,,

Aug. ,, 6.10 6.80 6.90 12.60 ,, ,, ,,

Sept. ,, 6.00 6.80 6.90 12.30 ,, ,, ,,

Oct. ,, 6.00 6.70 6.90 12.20 ,, ,, ,,

Nov. ,, 6.00 6.70 7.00 12.20 ,, ,, ,,

Dec. ,, 6.00 6.60 6.90 12.20 ,, ,, ,,

Jan-08 ,, 6.00 6.50 6.80 12.10 ,, ,, ,,

Feb. ,, 6.00 6.50 6.80 12.10 ,, ,, ,,

Mar. ,, 6.00 6.50 6.90 12.20 ,, ,, ,,

Apr. ,, 6.10 6.50 6.90 12.10 ,, ,, ,,

May ,, 6.30 6.60 7.10 12.00 ,, ,, ,,

June 10.00 6.50 6.70 7.10 12.00 ,, ,, ,,

Source: Central Bank of Egypt and the Egyptian National Post Authority.

* Calculated as additional interest of 0.25% for deposits of one year maturity.

- 182 -

(2/5/1) Discount and Interest Rates on Deposits and Loans in Egyptian Pound

(% Annually)

End of Discountrate

Average Interest Rates at Banks Interest Rate on Investment Certificates Interest Rate on

Post Office Saving Deposits *

Min. Max. Min. Max. Min. Max.

Jan-06 4.25 4.44 3.44 4.19 1.75 2.00

Feb. 4.38 4.56 3.44 4.19 1.88 2.13

Mar. 4.44 4.63 3.44 4.19 2.00 2.25

Apr. 4.63 4.81 3.56 4.31 2.06 2.31

May 4.69 4.88 3.56 4.31 2.13 2.38

June 5.00 5.19 3.63 4.38 2.31 2.56

July 5.00 5.19 3.63 4.38 2.38 2.63

Aug. 4.88 5.06 3.88 4.63 2.50 2.75

Sept. 4.88 5.06 3.94 4.69 2.63 2.88

Oct. 4.88 5.06 4.00 4.75 2.75 3.00

Nov. 4.88 5.06 4.13 4.88 2.88 3.13

Dec. 4.88 5.06 4.19 4.94 2.94 3.19

Jan-07 4.88 5.06 4.50 5.25 3.00 3.25

Feb. 4.88 5.06 4.44 5.19 3.06 3.31

Mar. 4.88 5.06 4.44 5.19 3.19 3.44

Apr. 4.88 5.06 4.56 5.31 3.25 3.50

May 4.88 5.06 4.69 5.44 3.38 3.63

June 4.88 5.06 4.81 5.56 3.44 3.69

July 4.88 5.06 4.94 5.69 3.50 3.75

Aug. 5.06 5.25 5.44 6.19 4.00 4.25

Sept. 4.69 4.88 5.19 5.94 4.00 4.25

Oct. 4.56 4.75 5.13 5.88 3.88 4.13

Nov. 4.56 4.75 5.44 6.19 4.00 4.25

Dec. 4.38 4.56 5.00 5.75 4.00 4.25

Jan-08 2.75 2.94 4.44 5.19 3.63 3.88

Feb. 2.56 2.75 4.56 5.31 3.63 3.88

Mar. 2.19 2.38 4.88 5.63 3.94 4.19

Apr. 2.42 2.62 4.63 4.88 3.82 4.07

May 2.14 2.34 4.61 4.86 3.86 4.11

June 2.46 2.66 4.70 4.95 3.96 4.21

Source: National Bank of Egypt.

- 183 -

in Major Currencies ( % Annually )

(2/5/2) Domestic Interest Rates on 3- Month Deposits

EuroSterling PoundUS DollarEnd of

(%)

Average 91 days 182 days 89 days 364 days

2002/2003

Q1 7.2 7.6 .. 7.9

Q2 6.3 6.8 .. ..

Q3 8.2 8.2 .. ..

Q4 11.3 11.5 .. 8.0

2003/2004

Q1 9.2 9.2 .. 8.0

Q2 .. 7.2 7.0 ..

Q3 7.1 7.5 .. ..

Q4 10.1 10.7 .. 9.5

2004/2005

Q1 11.0 11.4 .. 11.6

Q2 10.5 10.8 .. 11.5

Q3 .. 9.8 .. 10.3

Q4 9.7 9.9 .. 10.0

2005/2006

Q1 9.0 9.3 .. 9.3

Q2 9.1 9.1 .. 9.2

Q3 8.3 8.3 .. 8.4

Q4 8.6 8.7 .. 8.7

2006/2007

Q1 9.0 9.1 .. 9.2

Q2 9.5 9.8 .. 9.9

Q3 8.9 9.1 .. 9.4

Q4 7.3 7.6 .. 8.2

2007/2008

Q1 7.3 7.7 .. 7.9

Q2 7.0 7.2 .. 7.5

Q3 8.9 9.1 .. 9.4

Q4 7.9 8.9 .. 9.4Source: Central Bank of Egypt.

(2/5/3) Interest Rates on Treasury Bills (Quarterly Weighted Averages)

-184 -

(%)

91 days 182 days 364 days

April 2008 First week :(1/4) .. 8.125 8.429

Second week :(8/4) 6.745 7.941 ..

Third week :(15/4) .. 7.770 8.16

Fourth week :(22/4) 6.724 7.387 7.985

5.943 7.099 7.581

Monthly Average 6.471 7.664 8.039

May 2008

First week :(6/5) 5.868 6.734 7.402

Second week :(13/5) .. 9.631 9.207

Third week :(20/5) 9.210 9.896 10.112

Fourth week :(27/5) .. .. 10.247

Monthly Average 7.539 8.754 9.242

June 2008

First week :(3/6) 9.660 10.409 10.697

Second week :(10/6) 9.740 .. 10.906

Third week :(17/6) 9.704 10.428 ..

Fourth week :(24/6) 9.675 .. 10.995

Monthly Average 9.695 10.419 10.866

.. No issuance during the week.

(2/5/4) Interest Rates on Treasury Bills (Weekly weighted averages)

Source: Central Bank of Egypt.

- 185-

End of June 2002 2003 2004 2005 2006 2007 2008First: Companies Listed on the Official Schedules - Number of companies (in unit) 147 152 129 132 141 147 121 - Number of shares (mn) 1533 2689 3661 4236 7881 11450 12484 - Nominal value of capital (LE mn) 10724 35906 43597 49274 58432 73403 65897 - Market value of capital (LE mn) 22705 55706 95103 250136 298478 497319 644180Second: Companies Listed on the Unofficial Schedules - Number of companies (in unit) 989 971 528 612 503 394 255 - Number of shares (mn) 3877 3244 2383 2646 2560 3534 7370 - Nominal value of capital (LE mn) 78403 63123 46491 57368 50354 47387 72027 - Market value of capital (LE mn) 95968 94508 68788 84407 78013 104055 169111Third: Companies Listed on the Temporary Schedules* - Number of companies (in unit) 146 26 12 3 1 - Number of shares (mn) 208 103 16 9 5 - Nominal value of capital (LE mn) 6439 1567 379 282 50 - Market value of capital (LE mn) 8974 2516 579 452 50Fourth: All Companies - Number of companies (in unit) 1136 1123 803 770 656 544 377 - Number of shares (mn) 5410 5933 6252 6985 10457 14993 19859 - Nominal value of capital (LE mn) 89127 99029 96527 108209 109165 121072 137974 - Market value of capital (LE mn) 118673 150214 172865 337059 377070 601826 813341Source: Monthly Bulletin of Egyptian Stock Exchange.

* Companies which have not adjusted their statuses according to the new listing rules.

- 186 -

(3/1) Companies Listed on the Stock Exchange

During FY

Number of Transactions

(Unit)

Amount(Thousand)

Market Value (mn)

Number of Transactions

(Unit)

Amount (Thousand)

Market Value(mn)

In Egyptian Pound 7427195 10159593 242992 12667587 21775522 550194

Floor Transactions 7210676 8521503 228365 12075405 18206357 495847

Over the Counter Trading 216519 1638090 14627 592182 3569165 54347

In US Dollar 279483 1082893 3260 305158 1815588 6538

Floor Transactions 270526 915966 2711 297202 1211134 4429

Over the Counter Trading 8957 166927 549 7956 604454 2109

In Euro 0 0 0 42 674 72

Floor Transactions 0 0 0 0 0 0

Over the Counter Trading 0 0 0 42 674 72

Source : Capital Market Authority (CMA).

2007/20082006/2007

(3/2) Trading in Shares on the Stock Exchange - 187 -

During FY

Number of Transactions Amount Market Value Number of

Transactions Amount Market Value

(Thousand) (Thousand)

In Egyptian Pound 923 16627995 15266118 1100 23172111 23941406

Floor Transactions 923 16627995 15266118 1100 23172111 23941406

Over the Counter Trading - - - - - -

In US Dollar 10 209527 23492 1 100 10

Floor Transactions 9 207327 21292 1 100 10

Over the Counter Trading 1 2200 2200 0 0 0

Source : Capital Market Authority.

- 188 -

2006/2007 2007/2008

(Unit) (Unit)

(3/3) Trading in Bonds on the Stock Exchange

During FY

Egyptian Pound US Dollar Egyptian Pound US Dollar

Net Number of Transactions (unit) 178688 11162 157788 2486Purchases 765591 42678 1220528 54001Sales 586903 31516 1062740 51515

Net Volume of Securities (mn) 464 -276 261 -16Purchases 1710 216 3068 354Sales 1246 492 2807 370

Net Value of Securities (mn) 21206.1 -1264.2 -4071.2 308.7Purchases 72094.9 478.8 113004.7 1281.2Sales 50888.8 1743.0 117075.9 972.5

Source : Monthly Report-Capital Market Authority (CMA).

- 189 -

(3/4) Foreign Transactions on the Stock Exchange

2007/20082006/2007

June-07 June-08 June-07 June-08

1st July-96 Bank of New York CIB 1.00 9999 10.900 15.510 60.05 81.81

2nd July-96 Bank of New York CIB 1.00 7310 10.330 8.700 57.79 49.25

NBE

3rd Oct.-97 Bank of New York CIB 3.00 6297 2.700 2.800 56.20 57.45

4th Aug.-98 Bank of New York HSBC 0.50 4324 15.750 18.000 45.92 48.00

5th June-99 Bank of New York CIB 0.33 573 28.000 32.500 54.62 80.47

6th* July-99 Bank of New York CIB 0.33 35000 0.440 0.440 - -

7th** July-00 Bank of New York CIB 0.20 11713 64.000 64.000 72.67 68.56

8th Aug.-02 Bank of New York CIB 0.50 50 132.000 137.000 372.49 360.66

9th Nov.-04 Bank of New York CIB 1.00 8796 10.150 14.000 63.30 70.30

10th Dec.-05 Bank of New York CIB 0.20 8522 15.500 15.750 17.34 16.07

11th Feb-08 Bank of New York CIB 0.25 5625 - - 1.84 $ 1.81 $

12th May-08 Bank of New York CIB 0.20 5436 - - 100.00 17.65

Source: Monthly Bulletin of Egyptian Stock Exchange.

* The price of this certificate represents the closing price on 3/3/2005. ** The conversion ratio has changed to be 5 Local shares:1 GDR, effective as of 12 April 2007.

Depository BankSub-

Custodian Bank

Volume on Offering Date

(000s)

Price ($) at end of

- 190 -

Price (LE) at end of Conversion

Ratio

(3/5) Global Depository Receipts (GDRs)

GDRs Listed on Global Exchanges Corporate Stocks Issuedon the Egyptian Exchange

Order and Date ofOffering

( LE mn )

End of June

Grand Total 18710 243438 16629 278777 21258 252318 18305 291881

First : Real Estates 497 0 261 758 624 0 207 831

Second : Securities 11100 2000 11698 24798 12345 204316 13125 229786

Government bonds, notes and bills 5774 2000 11228 19002 6278 204316 12659 223253

Securities available for sale 1975 0 454 2429 3179 0 450 3629

Securities held-to-maturity 3351 0 16 3367 2888 0 16 2904

Third : Deposits with the National Investment Bank 0 241438 0 241438 0 48002 0 48002

Fourth : Loans 233 0 198 431 245 0 202 447

To the government 0 0 0 0 0 0 0 0

With other guarantees 233 0 198 431 245 0 202 447

Fifth :Banks Fixed Deposits 6880 0 4363 11243 8044 0 4492 12536

Deposits at banks 4156 0 4363 8519 4750 0 4492 9242

Saving certificates 2724 0 0 2724 3294 0 0 3294

Sixth : Other Investments 0 0 109 109 0 0 279 279

Source: Yearbook of the Egyptian Insurance Supervisory Authority (EISA) , National Investment Bank (NIB), and the Ministry of Finance.* Including the Government Insurance Fund for Insurance on Cashiers.

- 191 -

(3/6) Investments of the Insurance Sector

2006 2007

Local Insurance & Reinsurance Companies

National Authority for

Social Insurance

Private Insurance

Funds*Total

Local Insurance & Reinsurance Companies

National Authority for

Social Insurance

Private Insurance

Funds*Total

(LE mn)End of 91 days 182 days 89 days 364 days Total

2000March 5558.2 8675.8 - 11145.4 25379.4June 5585.3 8675.9 - 11131.9 25393.1Sept. 5773.3 8637.9 - 14457.4 28868.6Dec. 5714.9 8666.5 - 14457.4 28838.82001March 6195.9 8271.3 - 14457.4 28924.6June 5762.5 9113.9 - 14457.4 29333.8Sept. 7687.7 8564.1 - 14457.4 30709.2Dec. 11451.6 9502.5 - 14457.4 35411.52002March 10864.0 10240.5 - 14457.4 35561.9June 11183.2 14366.7 - 14457.4 40007.3Sept. 14575.7 18411.5 - 14457.4 47444.6Dec. 15897.1 22908.0 - 14457.4 53262.52003March 15250.8 24259.7 - 14457.4 53967.9June 16235.7 24625.2 - 14457.4 55318.3Sept. 14975.2 26776.5 - 14457.4 56209.1Dec. 6272.9 28066.3 13001.4 14457.4 61798.02004March 15294.0 30476.8 4081.4 14457.4 64309.6June 18462.7 38852.7 - 26458.2 83773.6Sept. 11000.0 48196.3 - 48958.2 108154.5Dec. 8600.0 45466.8 - 66558.2 120625.02005March 0.0 34550.0 - 82358.2 116908.2June 2750.0 23900.0 - 98257.4 124907.4Sept. 8900.0 22350.0 - 71725.6 102975.6Dec. 5500.0 22600.0 - 67815.6 95915.62006March 6000.0 24100.0 - 69015.6 99115.6June 7100.0 26500.0 - 69543.6 103143.6Sept. 9900.0 27500.0 - 69957.4 107357.4Dec. 8200.0 27000.0 - 71157.4 106357.42007March 11000.0 26000.0 - 73657.4 110657.4June 9000.0 27500.0 - 82157.4 118657.4Sept. 8500.0 31500.0 - 90657.4 130657.4Dec. 12000.0 33000.0 - 100957.4 145957.42008March 10500.0 32500.0 - 106457.0 149457.0June 6800.0 33000.0 - 106639.1 146439.1

(3/7) Outstanding Balance of Treasury Bills (Quarterly)

Source : Central Bank of Egypt.

- 192-

(LE mn)

91 days 182 days 364 days Total

April 2008

First week :(1/4) 10000.0 32500.0 107457.4 149957.4 Second week :(8/4) 10000.0 32500.0 105457.4 147957.4 Third week :(15/4) 10000.0 33000.0 106957.4 149957.4 Fourth week :(22/4) 10000.0 33500.0 106957.4 150457.4

End of month 9500.0 33500.0 107457.4 150457.4

May 2008

First week :(6/5) 9000.0 34000.0 107457.4 150457.4 Second week :(13/5) 8000.0 34500.0 107957.4 150457.4 Third week :(20/5) 8500.0 35000.0 107957.4 151457.4 Fourth week :(27/5) 8000.0 33500.0 107957.4 149457.4 End of month 8000.0 33500.0 107957.4 149457.4

June 2008

First week :(3/6) 8500.0 34000.0 108457.4 150957.4 Second week :(10/6) 9000.0 33500.0 108957.4 151457.4 Third week :(17/6) 7900.0 34000.0 106897.9 148797.9 Fourth week :(24/6) 6800.0 33000.0 106639.1 146439.1

End of month 6800.0 33000.0 106639.1 146439.1Source: Central Bank of Egypt.

(3/8) Outstanding Balance of Treasury Bills (Weekly)

- 193 -

Date of Value Interest Maturity & Issue (LE mn) Rate Due Date

Seventh Tranche 3/1/1999 2000 9.500% 10 years, 01/03/2009

Eighth Tranche 16/4/1999 2000 10.000% 10 years, 16/04/2009

Bonds under the Primary Dealers System **

Eleventh Tranche 26/10/2004 5000 11.500% 7 years,26/10/2011Twelveth Tranche 16/11/2004 5000 11.625% 10 years,16/11/2014 Thirteenth Tranche 12/7/2004 3000 10.938% 4 years,07/12/2008 Fourteenth Tranche 1/18/2005 1000 11.400% 20 years,18/01/2025

Fifteenth Tranche 7/12/2005 2000 9.100% 5 years,12/07/2010

Sixteenth Tranche (1 ) 8/2/2005 4000 9.250% 4 years,02/08/2009

Seventeenth Tranche 16/8/2005 2000 9.350% 5 years,16/08/2010

Eighteenth Tranche (2) 20/9/2005 6000 9.100% 7 years,20/09/2012

Ninteenth Tranche 10/4/2005 2000 9.063% 3 years, 04/10/2008

Twentieth Tranche 18/10/2005 2000 9.100% 5 years,18/10/2010

Twenty First Tranche (3) 15/11/2005 5000 9.300% 10 years, 15/11/2015

Twenty Second Tranche 1/3/2006 2000 9.050% 4 years,03/01/2010

Twenty Third Tranche (4) 1/24/2006 6000 8.850% 7 years 24/01/2013

Twenty Fifth Tranche (5) 2/28/2006 4000 8.600% 5 years,28/02/2011

Twenty Sixth Tranche 5/2/2006 2000 8.950% 4 years,02/05/2010

Twenty Seventh Tranche 5/29/2007 2000 9.450% 7 years,29/05/2014

Twenty Eighth Tranche 9/25/2007 2000 8.450% 7 years,25/09/2014

Twenty Ninth Tranche 10/23/2007 2000 8.600% 8 years,25/10/2015

Thirtieth Tranche (6) 11/13/2007 5000 8.550% 6 years,13/11/2013

Thirty First Tranche 22/01/2008 3000 8.700% 8 years,22/01/2016

Thirty Second Tranche 12/02/2008 1500 9.150% 10 years,12/02/2018

Thirty Third Tranche 19/02/2008 3000 9.200% 6 years,19/02/2014

Thirty Fourth Tranche 27/05/2008 3000 10.650% 7 years,27/05/2015

Thirty Fifth Tranche 10/06/2008 2000 10.950% 8 years,10/06/2016

Total 78500Source : Central Bank of Egypt.

* Issued by Law No. 4 /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 Article (7) of Law No. 92 for 2004.

( 1 ) Increased by LE 2.0 billion, due to their re-opening on 08/11/2005 on the same conditions.

( 2 ) Increased by LE 2.0 billion, due to their re-opening on 13/12/2005 on the same conditions, and by LE 2.0 billion due to their re-opening

on 27/3/2007 on the same conditions.

the same conditions.

( 4 ) Increased by LE 2.0 billion, due to their re-opening on 17/04/2006 on the same conditions, and by LE 2.0 billion due to their re-opening

on 17/4/2007 on the same conditions .

( 5 ) Increased by LE 2.0 billion, due to their re-opening on 11/12/2007 on the same conditions.

( 6 ) Increased by LE 3.0 billion, due to their re-opening on 4/3/2008 on the same conditions.

( 3 ) Increased by LE 2.0 billion, due to their re-opening on 13/03/2006 on the same conditions, and by LE 1.0 billion due to their re-opening on 13/6/2006 on

(3/9) Outstanding Balance of Treasury Bonds*

End of June 2008

- 194 -

(LE mn)

Total Expenditures 161611 170790 207811 223625Compensation of Employees 41546 42012 46719 47258

Salaries and wages 32673 33080 37676 38150

Social contributions 4560 4619 5094 5157

Other 4313 4313 3949 3951

Purchases of Goods and Services 12613 12714 14428 14493Goods 7417 7429 5773 5786

Services 4874 4920 6030 6077

Other 322 365 2625 2630

Interests 32780 29805 36815 34812Foreign interests 3002 3002 2823 2823

Domestic interests: 29778 26803 33992 31989

To NIB 10000 0 8752 0To others 19778 26803 25240 31989

Subsidies, Grants and Social Benefits 29705 41223 68897 86056Subsidies 13765 13765 54245 54245

To GASC 11203 11203 9407 9407To petroleum 0 0 41778 41778To others 2562 2562 3060 3060

Grants 1846 1846 2174 2174Social Benefits 14092 25610 12336 29495Contribution to SIFs 13185 0 11000 0Other 907 25610 1336 29495Other 2 2 142 142

Other Expenditures 21692 21738 19740 19762Defense 14592 14592 15770 15770Other 7100 7146 3970 3992

Purchases of Non-Financial Assets(Investments) 23275 23298 21212 21244

Fixed assets 19930 19953 17608 17640Others 3345 3345 3604 3604

Source : The Ministry of Finance

* A new budget classification was prepared in accordance with the IMF 2001 GFS (Government Finance Statistics) Manual.

The Budget Sector,NIB &

SIFs

The Budget Sector

- 195 -

2004/2005

(4/1) Consolidated Fiscal Operations of the General Government*(The Budget Sector, NIB and SIFs)

2005/2006

(Total Expenditures)

During The Budget Sector,NIB &

SIFs

The Budget Sector

(LE mn)

Total Expenditures 222029 244018 282290 305795Compensation of Employees 52153 52746 62839 63531

Salaries and wages 42399 42935 51172 51809

Social contributions 5518 5570 6165 6214

Other 4236 4241 5502 5508Purchases of Goods and Services 17028 17121 18470 18790

Goods 6539 6552 7272 7287

Services 6984 7039 7625 7698

Other 3505 3530 3573 3805

Interests 47700 38368 50528 40956

Foreign interests 3033 3033 3737 3737

Domestic interests: 44667 35335 46791 37219To NIB 17324 0 18899 9327To others 27343 35335 27892 27892

Subsidies, Grants and Social Benefits 58442 88684 92371 124249Subsidies 53959 53959 84205 84205

To GASC 9406 9406 16445 16445To petroleum 40130 40130 60249 60249To others 4423 4423 7511 7511

Grants 2599 2599 3890 3890Social Benefits 1612 31854 4050 35928Contribution to SIFs 0 0 2600 0Other 1612 31854 1450 35928Other 272 272 226 226

Other Expenditures 21208 21571 23891 23972Defense 17718 17718 19849 19849Other 3490 3853 4042 4123

Purchases of Non-Financial Assets(Investments) 25498 25528 34191 34297

Fixed assets 20928 20958 28186 28292Others 4570 4570 6005 6005

Source : The Ministry of Finance .

* A new budget classification was prepared in accordance with the IMF 2001 GFS (Government Finance Statistics) Manual.

The Budget Sector,NIB &

SIFs

- 196 -

The Budget Sector

(4/1) Consolidated Fiscal Operations of the General Government * (contd.)(The Budget Sector , NIB and SIFs)

2007/2008

(Total Expenditures)

During The Budget Sector,NIB &

SIFs

The Budget Sector

2006/2007

(LE mn)

Total Revenues 110864 132926 151266 175929Tax Revenues 75759 75759 97779 97779

Taxes on Income, Profits 31571 31571 48268 48268From EGPC 4030 4030 23620 23620

From SCA 7343 7343 7321 7321

From CBE 212 212 0 0

From other units 10671 10671 7946 7946

Payable by individuals 9315 9315 9381 9381

Taxes on Property 1034 1034 1214 1214

Taxes on Goods and Services 31430 31430 34699 34699

Taxes on International Trade 7744 7744 9654 9654Other Taxes 3980 3980 3944 3944

Grants 2853 2853 2379 2379Current 966 966 583 583Capital 1887 1887 1796 1796

Other Revenues 32252 54314 51108 75771Property Income 17758 23611 36373 43393

From EGPC 154 154 12533 12533From SCA 9651 9651 10487 10487From CBE 4999 4999 0 0From economic authorities 402 402 476 476From companies 245 397 866 866Other ( from EGPC) 0 0 6899 6899Other 2307 8008 5112 12132

Sales of Goods and Services 7197 7197 7891 7891Financing Investment 3146 3146 3705 3705Other 4151 20360 3139 20782

Source : The Ministry of Finance . * A new budget classification was prepared in accordance with the IMF 2001 GFS (Government Finance Statistics) Manual.

The Budget Sector,NIB &

SIFs

The Budget Sector

- 197 -

2004/2005

(4/2) Consolidated Fiscal Operations of the General Government *(The Budget Sector , NIB and SIFs)

2005/2006

(Total Revenues)

During The Budget Sector,NIB &

SIFs

The Budget Sector

(LE mn)

Total Revenues 180215 205654 221404 248835

Tax Revenues 114326 114326 137195 137195

Taxes on Income, Profits 58535 58535 67059 67059

From EGPC 25380 25380 29268 29268

From SCA 9144 9144 10268 10268

From CBE 0 0 0 0

From other units 14291 14291 16028 16028

Payable by individuals 9720 9720 11495 11495

Taxes on Property 1788 1788 2052 2052

Taxes on Goods and Services 39436 39436 49747 49747

Taxes on International Trade 10369 10369 14020 14020Other Taxes 4198 4198 4317 4317

Grants 3886 3886 1463 1463Current 2085 2085 436 436Capital 1801 1801 1027 1027

Other Revenues 62003 87442 82746 110177Property Income 45111 50593 52455 59308

From EGPC 11014 11014 25282 25282From SCA 11931 11931 15098 15098From CBE 0 0 32 32From economic authorities 581 581 3047 3047From companies 2222 2378 2648 2902Other (from EGPC) 16000 16000 3108 3108Other 3363 8689 3240 9839

Sales of Goods and Services 9776 9776 12038 12044Financing Investment 4376 4376 5765 5765Other 2740 22697 12488 33060

Source : The Ministry of Finance . * A new budget classification was prepared in accordance with the IMF 2001 GFS (Government Finance Statistics) Manual.

2006/2007

During The Budget Sector,NIB &

SIFs

The Budget Sector

- 198 -

The Budget Sector,NIB &

SIFs

The Budget Sector

(4/2) Consolidated Fiscal Operations of the General Government * (contd.)(The Budget Sector , NIB and SIFs)

2007/2008

(Total Revenues)

(LE mn)

Total Revenues 110864 132926 151266 175929Total Expenditures 161611 170790 207811 223625Cash Deficit 50747 37864 56545 47696

Net Acquisition of Financial Assets 896 7404 -6159 8942

Overall Fiscal Balance Finance 51643 45268 50386 56638

Financing Sources 51643 45270 50386 56637Domestic Financing 63569 53998 54381 64949

Banking Financing 31395 29462 14802 27826Central Bank 24764 24434 -11463 -9915Other Banks 6631 5028 26265 37741Non-Banking Financing 32174 24536 39579 37123

NIB 13433 7121 12599 13764SIFs 1985 0 11000 0Other 16756 16756 15980 15980NIB Borrowing 0 659 0 7379Special Accounts for Economic Authorities 0 0 0 0

Foreign Borrowing -4243 -4243 3641 3641Arrears -2477 -2477 -1777 -1777Others, of which: 1876 5074 -489 -4806

Special Accounts for Budget Entities 0 0 0 0Financing Effects for Eliminations 0 0 0 0Exchange Rate Revaluation -3935 -3935 -311 -311Net Privatization Proceeds 1012 1012 126 126Difference between Treasury Bills Face Value & Present Value -3084 -3084 -709 -709

Discrepancy -1075 -1075 -4476 -4476Cash Deficit (surplus) as a percentage of GDP 9.4% 7.0% 9.2% 7.7%Overall fiscal balance as a percentage of GDP 9.6% 8.4% 8.2% 9.2%Revenues as a percentage of GDP 20.6% 24.7% 24.5% 28.5%Expenditures as a percentage of GDP 30.0% 31.7% 33.6% 36.2%Source : The Ministry of Finance . * A new budget classification was prepared in accordance with the IMF 2001 GFS (Government Finance Statistics) Manual.

- 199 -

2004/2005

(4/3) Summary of Consolidated Fiscal Operations of the General Government *(The Budget Sector, NIB and SIFs)

2005/2006

The Budget Sector,NIB &

SIFs

The Budget Sector

The Budget Sector,NIB &

SIFs

The Budget Sector

(LE mn)

Total Revenues 180215 205654 221404 248835Total Expenditures 222029 244018 282290 305795Cash Deficit 41814 38364 60886 56960Net Acquisition of Financial Assets 12883 17849 236 10603Overall Fiscal Balance Finance 54697 56213 61122 67563Financing Sources 54697 56213 61122 67563Domestic Financing 33283 35401 527 6604Banking Financing -20926 -17662 -3187 -4701Central Bank 3146 3196 -33394 -35306Other Banks -24072 -20858 30207 30605Non-Banking Financing 54209 53063 3714 11305

NIB 143 0 2271 0SIFs 6861 0 119 0Other 28525 28525 7545 7545NIB Borrowing 0 5858 0 9981Special Accounts for Economic Authorities 18680 18680 -6221 -6221

Blocked Account Used in Amortizing Part of CBE Bonds 0 0 38970 38970Foreign Borrowing 3581 3581 11439 11439Arrears -693 -693 -56 -56Others, of which: 19922 19320 14791 15154

Special Accounts for Budget Entities 12952 12952 0 0Financing Effects for Eliminations 0 0 0 1Exchange Rate Revaluation -432 -432 -4276 -4276Net Privatization Proceeds 172 172 673 673Difference between Treasury Bills Face Value & Present Value -1168 -1168 -1149 -1149

Discrepancy 32 32 203 203Cash Deficit (surplus) as a percentage of GDP 5.7% 5.2% 6.8% 6.4%Overall fiscal balance as a percentage of GDP 7.5% 7.7% 6.8% 7.5%Revenues as a percentage of GDP 24.6% 28.1% 24.7% 27.8%

Expenditures as a percentage of GDP 30.4% 33.4% 31.5% 34.1%

Source : The Ministry of Finance . * A new budget classification was prepared in accordance with the IMF 2001 GFS (Government Finance Statistics) Manual.

- 200 -

(4/3) Consolidated Fiscal Operations of the General Government * (contd.)(The Budget Sector, NIB and SIFs)

2007/20082006/2007The Budget

Sector,NIB & SIFs

The Budget Sector

The Budget Sector,NIB &

SIFs

The Budget Sector

(LE mn)

End of June 2003 2004 2005 2006 2007 2008

Total Domestic Debt 370619 434846 510805 593493 637197 666144Government Domestic Debt 252185 292721 349169 387719 478173 478699

- Balances of Bonds & Bills 208592 272074 340898 349957 562897 568848 - Treasury bonds, of which : 137192 171809 200284 231125 230848 208628

Local currency bonds with public sector banks 4000 4000 4000 4000 4000 4000 Euro sovereign bonds (US$) offered abroad * 4612 5647 5122 5109 3868 3750

- Government notes to compensate for the actuarial deficit in social insurance funds 2000 2000 2000 2000 2000 2000

- Housing bonds 132 128 124 122 119 117 - Treasury bills 55318 83774 124907 103144 118657 146439

- Foreign currency bonds with public sector commercial banks 12610 12938 12070 12014 11886 11126 - The equivalent of the retained 5% of corporate profits to purchase government bonds 1340 1425 1513 1552 1588 1636

- Bonds of the insurance funds (against the transfer of NIB debt to the Treasury) 0 0 0 0 197799 198902 - Net Government Balances with the Banking System -80346 -113678 -135480 -104860 -89241 -92492

- Amounts Paid against Insurance Funds' Deposits with the Treasury 0 0 0 0 4517 2343

- Government Borrowing from NIB 123939 134325 143751 142622 0 0

Economic Authorities Debt 39195 40064 47176 47387 44557 50123 - Net balances of economic authorities with the banking system -10899 -13707 -11089 -2809 -7177 -1156 - Borrowing of economic authorities from NIB 50094 53771 58265 50196 51734 51279

(4/4) Government Domestic Debt & Economic Authorities Debt

Source: The Ministry of Finance, Central Bank of Egypt & National Investment Bank.

* Holdings of resident financial institutions in Egypt (the banking system and the insurance sector).

- 201 -

(LE mn)

End of June 2003 2004 2005 2006 2007 2008

Resources 262354 294550 321393 354962 169152 192492. Social Insurance Fund for Gov. Employees 95886 108991 122913 135735 27428 29076

. Social Insurance Fund for Pub. & Priv. Business Sectors Employees 78947 87166 96093 105703 20574 22632

. Proceeds from investment certificates 55218 60178 58485 64038 68485 78714

. Accumulated interest on investment certificates (category A) 6560 6737 6852 7028 7579 7509

. Proceeds from US dollar development bonds 1736 1738 1418 824 483 152

. Post office savings 22300 27776 33902 39097 43518 49257

. Others * 1707 1964 1730 2537 1085 5152

Uses 262354 294550 321393 354962 169152 192492. Government 123939 134325 143751 142622 0 0

. Economic authorities 50094 53771 58265 50196 51734 51279

. Holding companies, entities & concessional loans, and others 79239 102061 114460 158387 114467 137322

. NIB deposits 9082 4393 4917 3757 2951 3891Source: The Ministry of Finance, Central Bank of Egypt & National Investment Bank.* Including deposits of the private insurance funds, saving certificates, and loans & deposits of various entities.

(4/5) National Investment Bank (Resources & Uses)

- 202 -

(US$ mn)

Change

Value % Value % (-)

Balance of Current Account 2269.0 888.3 (1380.7)

Balance of Current Account (Excluding Transfers) (4792.3) (8449.3) (3657.0)

Receipts 42473.0 100.0 56566.8 100.0 14093.8

Export proceeds** 22017.5 51.8 29355.8 51.9 7338.3

Transportation, of which 6371.3 15.0 7559.7 13.4 1188.4

Suez Canal dues (4169.6) (9.8) (5155.2) (9.1) (985.6)

Travel 8183.0 19.3 10826.5 19.1 2643.5

Investment income 3044.7 7.2 3289.4 5.8 244.7

Government receipts 253.5 0.6 188.3 0.3 (65.2)

Other receipts 2603.0 6.1 5347.1 9.5 2744.1

Payments 47265.3 100.0 65016.1 100.0 17750.8

Import payments** 38308.1 81.0 52771.2 81.2 14463.1

Transportation 1272.9 2.7 1620.1 2.5 347.2

Travel 1917.6 4.1 2895.3 4.4 977.7

Investment income, of which 1867.7 4.0 1929.7 3.0 62.0

Interest paid (608.2) (1.3) (674.9) (1.0) (66.7)

Government expenditures 1195.9 2.5 1313.8 2.0 117.9

Other payments 2703.1 5.7 4486.0 6.9 1782.9

Transfers 7061.3 100.0 9337.6 100.0 2276.3

Private (net) 6261.0 88.7 8377.1 89.7 2116.1

Official (net) 800.3 11.3 960.5 10.3 160.2

* Preliminary figures.

**Including the exports & imports of free zones.

- 203 -

(5/1) Balance of Payments

2006/2007 2007/2008*

FY

(US$ mn)

2006/2007 2007/2008*Value Value

Capital & Financial Account 853.0 7136.7

Capital Account -39.0 2.3Financial Account 892.0 7134.4 Direct Investment Abroad -535.6 -1112.7 Direct Investment in Egypt (Net) 11053.2 13236.5 Portfolio Investments Abroad (Net) -557.5 -959.5 Portfolio Investments in Egypt (Net), of which : -936.7 -1373.6 Bonds -550.7 775.0

Other Investments (Net) -8131.4 -2656.3 Net Borrowing 2039.1 757.2

Medium- and Long -Term Loans -234.3 -1158.5

Drawings 1780.4 436.9

Repayments -2014.7 -1595.4

Medium-Term Suppliers' and buyers' Credit -191.5 -463.4

Drawings 89.0 8.9

Repayments -280.5 -472.3

Short -Term Suppliers and buyers' Credit (Net) 2464.9 2379.1 Other Assets -10941.6 -4402.5 CBE -215.3 -48.1

Banks -9900.5 -2486.1

Other -825.8 -1868.3

Other Liabilities 771.1 989.0

CBE 16.0 0.2

Banks 755.1 988.8

Net Errors & Omissions 2160.3 -2604.6Overall Balance 5282.3 5420.4Change in Reserve Assets, Increase (-) -5282.3 -5420.4Source: CBE.

* Preliminary figures.

** Including foreigners' trasactions on Egyptian TBs and CDs.

- 204 -

(5/1) Balance of Payments (Contd.)

FY

**

(US$ mn)

Value % Value % Total *** 22017.5 100.0 29355.8 100.0 7338.3Fuels , Mineral Oils & Products 10266.3 46.6 14753.6 50.3 4487.3Crude oil 3128.3 14.2 4910.5 16.7 1782.2

Petroleum products **** 6979.6 31.7 9562.1 32.6 2582.5

Coal & types thereof 43.5 0.2 126.0 0.5 82.5

Other 114.9 0.5 155.0 0.5 40.1

Raw Materials 727.3 3.3 1092.5 3.7 365.2Cotton 109.8 0.5 193.6 0.7 83.8

Potatoes 17.0 0.1 32.6 0.1 15.6

Edible fruits & nuts 36.1 0.2 111.1 0.4 75.0

Oil seeds & oleaginous fruits, medicinal plants & plants for manufacturing

102.1 0.5 64.0 0.2 (38.1)

Iron, ore 51.8 0.2 68.8 0.2 17.0

Citrus fruits 32.1 0.1 32.2 0.1 0.1

Raw hides & tanned leather 39.5 0.2 46.3 0.2 6.8

Flax, raw 7.1 0.0 3.9 0.0 (3.2)

Edible vegetables roots & tubers 156.2 0.7 234.9 0.8 78.7

Other 175.6 0.8 305.1 1.0 129.5

Semi-finished Goods 1982.1 9.0 1833.6 6.3 (148.5)Carbon 26.9 0.1 74.8 0.3 47.9

Essential oils & resins 8.5 0.0 5.6 0.0 (2.9)

- 205 -(5/2) Exports by Degree of Processing *

Fiscal YearChange(-) 2007/2008 **2006/2007

(US$ mn)

Value % Value % Cotton yarn 128.9 0.6 92.7 0.3 (36.2)

Aluminium, unalloyed 330.7 1.5 52.9 0.2 (277.8)

Animal & vegetable fats, greases & oils & products 85.8 0.4 134.2 0.5 48.4

Black Honey & molasses 12.1 0.1 12.3 0.0 0.2

Organic & inorganic chemicals 344.1 1.6 371.1 1.3 27.0

Cast iron & semi-finished products & rolled iron 822.4 3.7 782.2 2.7 (40.2)

Leather, tanned 55.0 0.2 62.6 0.2 7.6

Tanning or dyeing extracts 30.8 0.2 80.5 0.3 49.7

Plastic & articles thereof 115.6 0.5 154.6 0.5 39.0

Other 21.3 0.1 10.1 0.0 (11.2)

Finished Goods 7519.1 34.2 10931.5 37.2 3412.4Milk & condensed cream 26.6 0.1 44.9 0.1 18.3

Dried onion 6.5 0.0 7.6 0.0 1.1

Rice 145.8 0.7 161.8 0.5 16.0

Vegetable & fruit preparations 25.5 0.1 36.1 0.1 10.6

Miscellaneous edible preparations 434.1 2.0 555.5 1.9 121.4

Manufactured tobacco and tobacco substitutes 60.4 0.3 58.8 0.2 (1.6)

Sugar and its products 80.0 0.4 32.1 0.1 (47.9)

Pharmaceuticals 238.0 1.1 691.5 2.4 453.5

Fertilizers 306.0 1.4 383.7 1.3 77.7

Cement 258.7 1.2 740.5 2.5 481.8

- 206 -(5/2) Exports by Degree of Processing * (Contd.)

Fiscal YearChange(-) 2006/2007 2007/2008 **

(US$ mn)

Value % Value % Extracts of essential oils & resins 116.9 0.5 80.3 0.3 (36.6)

Leather products 20.4 0.1 16.9 0.1 (3.5)

Rubber & articles 25.4 0.1 53.7 0.2 28.3

Paper, cardboard paper & articles thereof 157.8 0.7 168.3 0.6 10.5

Ceramic products 106.6 0.5 158.1 0.5 51.5

Cars, bicycles & tractors 244.9 1.1 333.3 1.1 88.4

Cotton textiles 258.9 1.2 496.3 1.7 237.4

Carpets & other floor coverings 124.5 0.6 144.8 0.5 20.3

Shoes & accessories 1.6 0.0 0.6 0.0 (1.0)

Ready-made clothes 453.6 2.1 431.0 1.5 (22.6)

Glass & glassware 220.0 1.0 292.5 1.0 72.5

Copper & articles 22.7 0.1 135.9 0.5 113.2

Aluminium articles 119.3 0.5 457.0 1.6 337.7

Articles of iron and steel 642.4 2.9 737.4 2.5 95.0

Wood & articles thereof and charcoal 47.3 0.2 17.9 0.1 (29.4)

Marble & granite 65.8 0.3 71.4 0.2 5.6

Articles of base metals 433.6 2.0 537.9 1.8 104.3Optical appliances 47.2 0.2 24.5 0.1 (22.7)

Electric machines & appliances, recorders & T.V sets and their accessories

627.3 2.8 799.8 2.7 172.5

Other 2201.3 10.0 3261.4 11.1 1060.1

Miscellaneous Goods (Undistributed) 1522.7 6.9 744.6 2.5 (778.1)Source: Central Bank of Egypt.* According to the Harmonized System.** Provisional.*** Include exports of free zones. **** Include natural gas, and bunker & jet fuel.

(5/2) Exports by Degree of Processing * (Contd.)

Fiscal YearChange(-) 2006/2007 2007/2008 **

- 207 -

(US$ mn)

Value % Value % Total *** 38308.1 100.0 52771.2 100.0 14463.1Fuels, Mineral Oils & Products 2775.8 7.3 4896.6 9.3 2120.8Petroleum products **** 2567.7 6.7 4475.0 8.5 1907.3

Coal & types thereof 94.3 0.3 87.7 0.2 (6.6)

Other 113.8 0.3 333.9 0.6 220.1

Raw Materials 5646.0 14.7 9682.3 18.3 4036.3Crude oil 1560.2 4.1 5086.0 9.6 3525.8

Wheat 1046.6 2.7 1637.5 3.1 590.9

Maize 529.6 1.4 637.3 1.2 107.7

Tobacco 267.8 0.7 337.9 0.6 70.1

Metal ores 459.8 1.2 548.9 1.0 89.1

Iron, ore 267.9 0.7 289.5 0.6 21.6

Seeds & oleaginous seeds 66.5 0.2 256.3 0.5 189.8

Cotton 132.6 0.3 57.1 0.1 (75.5)

Other 1315.0 3.4 831.8 1.6 (483.2)

Intermediate Goods 10531.0 27.5 15385.9 29.2 4854.9

Sugar, raw 63.9 0.2 143.3 0.3 79.4Animal and vegetable fats, greases & oils and products

853.2 2.2 1277.7 2.4 424.5

Cement 43.9 0.1 452.5 0.9 408.6

Organic & inorganic chemicals 1314.3 3.4 2088.9 4.0 774.6

Fertilizers 74.7 0.2 147.9 0.3 73.2

Tanning & dyeing extracts 157.5 0.4 274.1 0.5 116.6

Essential oils & resins 60.3 0.2 55.6 0.1 (4.7)

Plastic & articles thereof 911.2 2.4 1359.0 2.6 447.8

2006/2007 2007/2008 ** - 208 -

(5/3) Imports by Degree of Use *

Fiscal YearChange(-)

(US$ mn)

Value % Value % Wood & articles thereof 647.2 1.7 947.4 1.8 300.2Paper, cardboard paper & articles thereof 541.5 1.4 917.1 1.7 375.6Cotton textiles 147.8 0.4 198.8 0.4 51.0Synthetic fibers 316.1 0.8 368.5 0.7 52.4Ceramic products 184.6 0.5 273.2 0.5 88.6Glass & articles 100.5 0.3 147.6 0.3 47.1Iron & steel products 1904.1 5.0 4008.7 7.6 2104.6Copper & articles 121.9 0.3 271.0 0.5 149.1Rubber & articles 237.5 0.6 286.6 0.5 49.1Aluminium & articles 365.3 0.9 357.8 0.7 (7.5)Articles of base metals 155.3 0.4 257.2 0.5 101.9Other 2330.2 6.1 1553.0 2.9 (777.2)Investment Goods 9845.2 25.7 11870.6 22.5 2025.4Pumps, fans & parts thereof 248.2 0.6 806.8 1.5 558.6

Machines and apparatus for ginning and spinning & parts thereof

86.3 0.2 61.0 0.1 (25.3)

Computers 337.8 0.9 558.2 1.1 220.4

Motors, generators, transformers & parts thereof 272.8 0.7 555.9 1.0 283.1

Parts of railway and tramway locomotives or rolling stock equipment

46.6 0.1 50.9 0.1 4.3

Tractors 42.7 0.1 69.6 0.1 26.9Vehicles for transport of passengers 20.9 0.1 26.8 0.1 5.9Vehicles for transport of goods 30.8 0.1 50.4 0.1 19.6Parts & accessories of motor vehicles 832.8 2.2 1452.2 2.8 619.4

(5/3) Imports by Degree of Use* (Contd.)

- 209 -

2006/2007 2007/2008 **Fiscal Year

Change(-)

(US$ mn)

Value % Value % Tools, implements, cuttery & spoons 128.2 0.3 197.7 0.4 69.5Air conditioners 135.1 0.4 264.0 0.5 128.9Cranes and bulldozers & parts thereof 242.8 0.6 966.7 1.8 723.9Agricultural machinery 58.9 0.2 121.8 0.2 62.9Printing machinery & parts 55.9 0.1 73.1 0.1 17.2Electric appliances for telephones & telegraph 431.1 1.1 837.2 1.6 406.1Optical appliances 288.2 0.8 347.1 0.7 58.9Other 6586.1 17.2 5431.2 10.3 (1154.9)

Consumer Goods 5281.3 13.8 8518.4 16.1 3237.1A - Durable Goods 1326.2 3.5 2374.8 4.5 1048.6Household refrigerators & electric freezers 81.6 0.2 137.7 0.3 56.1Televisions & parts thereof 35.5 0.1 68.6 0.1 33.1Vehicles for transport of passengers 592.2 1.6 1157.1 2.2 564.9Household electric-motor appliances 182.8 0.5 372.8 0.7 190.0Other 434.1 1.1 638.6 1.2 204.5

B - Non-durable Goods 3955.1 10.3 6143.6 11.6 2188.5Meat and edible offals 472.8 1.2 498.9 0.9 26.1Fish, crustaceans, molluscs and others 125.3 0.3 170.9 0.3 45.6Dairy products, eggs, poultry and honey 188.5 0.5 318.9 0.6 130.4Edible vegetables , roots & tubers 168.0 0.4 219.0 0.4 51.0Tea 96.1 0.3 200.4 0.4 104.3

- 210 -

Fiscal Year2006/2007 2007/2008 **

(5/3) Imports by Degree of Use* (Contd.)

Change(-)

(US$ mn)

Value % Value %Miscellaneous edible preparations 301.1 0.8 657.7 1.3 356.6Pharmaceuticals 887.4 2.3 1423.6 2.7 536.2Insecticides 28.7 0.1 28.0 0.1 (0.7)Residues of foodstuff industries & animal fodder 123.7 0.3 186.5 0.4 62.8Live animals 38.8 0.1 20.3 0.0 (18.5)

Ready-made clothes 310.5 0.8 646.6 1.2 336.1Cotton textiles 119.9 0.3 167.3 0.3 47.4Sugar, refined and products 52.8 0.1 55.2 0.1 2.4Lentils 21.2 0.1 40.9 0.1 19.7Soap, detergents & artificial wax 97.6 0.3 175.3 0.3 77.7Other 922.7 2.4 1334.1 2.5 411.4

Miscellaneous Goods (Undistributed) 4228.8 11.0 2417.4 4.6 (1811.4)Source: Central Bank of Egypt.* According to the Harmonized System.** Provisional.*** Including imports of free zones, and commodity grants & loans.**** Including gas, and bunker & jet fuel.

- 211-

2006/2007 2007/2008 **Fiscal Year

(5/3) Imports by Degree of Use* (Contd.)

Change(-)

(US$ mn)

2006/2007 2007/2008 ** 2006/2007 2007/2008 ** 2006/2007 2007/2008 **

Total *** 22017.5 29355.8 38308.1 52771.2 (16290.6) (23415.4)

European Union 7440.6 9808.2 13005.5 18007.4 (5564.9) (8199.2)

Other European countries 1048.6 1343.3 3205.6 4121.8 (2157.0) (2778.5)

Russian Federation & C.I.S 151.9 158.5 685.2 1723.4 (533.3) (1564.9)

United States of America 6849.8 9279.2 8262.3 9829.9 (1412.5) (550.7)

Arab countries 2729.6 3155.9 3244.4 5473.9 (514.8) (2318.0)

Asian countries (Non Arab) 2969.0 4364.3 6027.6 9870.2 (3058.6) (5505.9)

African countries (Non Arab) 328.1 786.2 269.2 417.5 58.9 368.7

Australia 64.0 21.2 107.8 183.2 (43.8) (162.0)

Other countries & regions 435.9 439.0 3500.5 3143.9 (3064.6) (2704.9)

Source: Central Bank of Egypt

* Including commodity grants and loans.

** Provisional.*** Including exports & imports of free zones.

(5/4) Regional Distribution of Exports and Imports - 212 -

Proceeds of Exports Trade BalancePayments for Imports*

Fiscal Year

End of

Minimum

Maximum

Weighted average

Second: Market Rates Buy Sell Buy Sell

US dollar 568.92 570.73 532.36 534.92

Euro 766.17 768.72 838.74 842.82

Pound sterling 1139.09 1142.78 1059.99 1065.19

Swiss franc 463.18 464.77 521.87 524.59

100 Japanese yen 462.69 464.28 504.04 506.65

Saudi riyal 151.66 152.19 141.96 142.66

Kuwaiti dinar 1974.32 1981.30 2008.84 2020.02

UAE dirham 154.89 155.40 144.92 145.64

Chinese yuan 77.67 78.04

Source : Central Bank of Egypt

The interbank system started at 23/12/2004.

(In piasters per foreign currency unit)

(5/5) Average LE Exchange Rates

- 213 -

569.68

569.67

June 2007 June 2008

569.64 533.00

533.61

533.31

First: Interbank Rates US$

(US$ mn)

2008 +200720062005200420032002End of June

33893298982959328949298722939628661Total External Debt*

15606148471522915734163851619215337Rescheduled bilateral debt **7788739776117836805379007456 ODA7818745076187898833282927881 Non-ODA4972434642954291443343504057Other bilateral debt4130363035903530326433203405 Paris Club countries84271670576111691030652 Other countries7362681552055058508149044698International & regional institutions76479298078213331133924Suppliers' & buyers' credit265215701862614588735953Egyptian bonds & notes

00300500000Long-term deposits ***18798911585217542Private sector debt (non-guaranteed)

2519144916331855196718652150Short-term debt1048536633819126713051338 Deposits147191310001036700560812 Other short-term facilities

Source: Central Bank of Egypt.+ Provisional* The difference from World Bank data is in short-term debt .** According to the agreement signed with Paris Club countries on May 25, 1991.*** The deposit of the Arab International Bank which was transferred from short-term debt to long-term deposits as of December 2004

(5/6) External Debt Structure

- 214 -

(%)

2007/2008 *2006/2007 2005/20062004/20052003/20042002/20032001/2002FY

59.970.482.4100.3127.5157.6171.2External Debt / Exports (G & S)

2861.32936.43040.72701.82525.52257.82038.2Debt Service (Principal & Interest) (US$ mn.) *

5.16.98.59.410.812.112.2Debt Service / Exports (G & S)

4.35.97.37.99.210.19.7Debt Service / Current Receipts (including transfers)

1.31.51.62.02.63.53.9Interest / Exports (G & S)

20.122.827.631.138.142.534.0External Debt /GDP

7.44.85.56.46.66.37.5Short-term Debt / Total External Debt

7.35.17.19.613.312.615.2Short-term Debt / Net International Reserves

450.0398.5401.7402.6423.4424.7422.2External Debt per capita (US$)

* Provisional

(5/7) External Debt Indicators

- 215 -

(US$ mn)

Change(-)%Value%Value

3994.8100.033892.8100.029898.0Total647.838.713100.841.612453.0US dollar **

2.00.5169.00.5167.0Canadian dollar9.00.4148.00.5139.0Australian dollar70.01.8596.01.8526.0Swiss franc

(14.0)0.7246.00.9260.0Sterling pound401.010.63601.010.73200.0Japanese yen16.00.5162.00.5146.0Danish krone0.00.01.00.01.0Norwegian krone2.00.139.00.137.0Swedish krona

209.05.31810.05.41601.0Kuwaiti dinar(2.0)0.129.00.131.0Saudi riyal(4.0)0.137.00.141.0UAE dirham

1583.033.611376.032.89793.0Euro1106.03.31106.00.00.0Egyptian pound(31.0)4.31472.05.01503.0SDRs

Source: Loans & External Debt Department- CBE

* Provisional.

** Including other liabilities due in US dollar.

- 216 -

June 2007 End of June 2008 *

(5/8) 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

Notes: - All publications of the Central Bank of Egypt are available on the CBE's

website : www.cbe.org.eg - To obtain a hard copy of any publication by mail, please write to the

following address: Research, Development and Publishing Sector, the Central Bank of Egypt, 31 Kasr El Nil Street. Cairo, Egypt.