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Recent Developments in the
Egyptian Economy
Ministry of Investment
Sep 2009
Growth & Investment
Investment and Economic Growth
EGP Billion
Private Investment
6.9
150
100
3.4
3.2
3.2
4.6
4.1
66
50
32
10.986
10.055
10.722
8.658
7.693
6.202
5.548
6
46
37
34
32
Per Capita Income
Real Economic Growth
7.2
7.1
12
8
134 114 10
6
97
8
4
4.7
7.069
5.742
2
4
Percent
0
0
2
2000/2001 2001/2002 2002/2003 2003/2004 2004/2005 2005/2006 2006/2007 2007/2008 2008/2009
1
2
3
4
5
6
7
8
9
00
00
00
00
00
00
00
00
00
0 /2
1 /2
2 /2
3 /2
4 /2
5 /2
6 /2
7 /2
8 /2
0
0
0
0
0
0
0
0
0
20
20
20
20
20
20
20
20
20
Source: Ministry of Economic Development
Unemployment Rate
12
9.6
9.2
9.4
9.1
10.9
11.1
9.8
9
8
6
9.2
8.2
8.8
9.8
8
10.5
10.5
10
10
9
4
2
0
2008/09
2007/08
2006/07
2005/06
2004/05
2003/04
2002/03
2001/02
2000/01
1999/00
1998/99
1997/98
1996/97
1995/96
1994/95
1993/94
1992/93
Source: CAPMAS
2
Growth & Investment
Comparative Sectoral Growth Rates (Semi annual)
2008/2009
30
2007/2008
27.9
25
18.35
20
14.9
15
10
6.85
5
6.05
7.95
7.85
9.4
4.8
4
2.15
1.35
0
Petrol
gas Extraction
Oil&and
Gas
Transportaion
Transportation
Transformation
Manufacturing
Manufacturing
Source: Ministry of Economic Development
9
8
7
6
5
4
3
2
1
0
construction
& Building
Construction
Suez
Canal
Receipts
Suez
Canal
Receipts
Tourism
Tourism
Quarterly Growth Rates
%
7.7
7.4
6.5
Jul y -s ept
07/08
6.7
5.8
Oct - Dec
07/08
Source: Ministry of Economic Development
Jan - Mar
07/08
Apr - Jun
07/08
Jul y -s ept
08/09
4.1
4.3
4.6
Oct - Dec
08/09
j an - Mar
08/09
Apr - Jun
08/09
3
Public vs. Private Investments
Private Investment / Total Investment
80.0%
66.8%
70.0%
57.3%
60.0%
49.4%
50.0%
62.6%
46.6%
56.8%
48.0%
40.0%
30.0%
20.0%
10.0%
0.0%
2002/2003
2003/2004
2004/2005
Private vs Public Investment
160
2005/2006
2007/2008
2008/2009
Private investment as percentage of GDP
Public Investment
Private Investment
EGP Billion
134
140
114
87
80
66
60
34 34
42
50 46
49
58
14.0%
11.4%
12.0%
97
100
15.0%
16.0%
120
40
2006/2007
67
37
10.0%
8.0%
8.6%
8.1%
13.1%
10.9%
9.2%
6.0%
4.0%
2.0%
20
0.0%
0
2002/2003 2003/2004 2004/2005 2005/2006 2006/2007 2007/2008 2008/2009
Source: Ministry of Economic Development
2002/2003 2003/2004 2004/2005 2005/2006 2006/2007 2007/2008 2008/2009
4
120
60
0
Average Establishment 2002- 2004
Average Establishment 2005- 2007
Average Establishment 2008
30/12/2007 - 3/1/2008
6/1/2008 - 10/1/2008
13/1/2008 - 17/1/2008
20/1/2008 - 24/1/2008
27/1/2008 - 31/1/2008
3/2/2008 - 7/2/2008
10/2/2008 - 14/2/2008
17/2/2008 - 21/2/2008
24/2/2008 - 28/2/2008
2/3/2008 - 6/3/2008
9/3/2008 - 13/3/2008
16/3/2008 - 19/3/2008
23/3/2008 - 27/3/2008
30/ 3 / 2008 - 3/4/2008
6/4/2008 - 10/4/2008
13/4/2008 - 17/4/2008
20/4/2008 - 24/4/2008
27/4/2008 - 1/5/2008
4/5/2008 - 8/5/2008
11/5/2008 - 15/5/2008
18/5/2008 - 22 /5/2008
25/5 /2008 - 29/5/2008
1/ 6 / 2008 - 5 / 6 / 2008
8 / 6 / 2008 - 12/ 6 / 2008
15/ 6 / 2008 - 19/ 6 / 2008
22/ 6 / 2008 - 26/ 6 / 2008
29/ 6 / 2008 - 3/ 7 / 2008
6/7/2008 - 10/7/2008
13/7/2008 - 17/7/2008
20 /7 /2008 24 / 7 /2008
27 /7 /2008 31 / 7 /2008
03/08/2008 07/08/2008
10/08/2008 - 14/08/2008
17/08/2008 - 21/08/2008
24/08/2008 - 28/08/2008
31/08/2008 - 4/09/2008
07/09/2008 - 11/09/2008
14/09/2008 - 18/09/2008
21/09/2008 - 25/09/2008
28/09/2008 - 02/10/2008
05/10/2008 - 09/10/2008
12/10/2008 - 16/10/2008
19/10/2008 - 23/10/2008
26/10/2008 - 30/10/2008
02/11/2008 - 06/11/2008
09/11/2008 - 13/11/2008
16/11/2008 - 20/11/2008
23/11/2008 - 27/11/2008
30/11/2008 - 04/12/2008
14/12/2008 - 18/12/2008
21/12/2008 - 25/12/2008
28/12/2008 - 1/1/2008
04/01/2009 - 08/01/2009
11/01/2009 - 15/01/2009
18/01/2009 - 22/01/2009
25/01/2009 - 29/01/2009
01/02/2009 - 05/02/2009
08/02/2009 - 12/2/2009
15/2/2009 - 19/2/2009
22/2/2009 - 26/2/2009
01/03/2009 - 05/03/2009
08/03/2009 - 12/03/2009
15/03/2009 - 19/03/2009
22/03/2009 - 26/03/2009
29/03/2009 - 02/04/2009
05/04/2009 - 09/04/2009
12/04/2009 - 16/04/2009
19/04/2009 - 23/04/2009
26/04/2009 - 30/04/2009
03/05/2009 - 07/05/2009
10/05/2009 - 14/05/2009
17/05/2009 - 21/05/2009
24/05/2009 - 28/05/2009
31/05/2009 - 04/06/2009
07/06/2009 - 11/06/2009
14/06/2009 - 18/06/2009
21/06/2009 - 25/06/2009
28/06/2009 - 02/07/2009
05/07/2009 - 09/07/2009
12/07/2009 - 16/07/2009
19/07/2009 - 23/07/2009
26/07/2009 - 30/07/2009
02/08/2009 - 06/08/2009
09/08/2009 - 13/08/2009
16/08/2009 - 20/08/2009
23/08/2009 - 27/08/2009
Establishment of Corporations (Weekly)
200
180
168
160
140
139136
136
103
40
172170
169 167
187
148
142
152
167
165
174 173
169
153
152
141
147
110
100
80
Source: GAFI – Ministry of Investment
165
181
146145
148
137
133
131
121
120
115
114
111
154
115114
108 105
103
95
77
153
167
138
134133
134
133
128
115
134 130
128 128 132
123 124
114
94
84
139 140
134
144
128
118
113
118
162
151
141
140 143
135 136
120
112
124
125
94
111
107
55
72
40
43
20
5
300
304
306
505
584
624
585
594
574
514
503
479
429
466
551
554
683
663
613
676
660
783
744
701
702
683
632
603
553
542
685
700
576
540
800
2009 / 8
2009 / 7
2009 / 6
2009 / 5
2009 / 4
2009 / 3
2009 / 2
2009 / 1
2008 / 12
2008 / 11
2008 / 10
2008 / 09
2008 / 08
2008 / 07
2008 / 06
2008 / 05
2008 / 04
2008 / 03
2008 / 02
2008 / 01
2007 / 12
2007 / 11
2007 / 10
2007 / 09
2007 / 08
2007 / 07
2007 / 06
2007 / 05
2007 / 04
2007 / 03
2007 / 02
2007 / 01
2006 / 12
2006 / 11
2006 / 10
2006 / 09
2006 / 08
2006 / 07
2006 / 06
6
Source: GAFI – Ministry of Investment
505
504
600
420
430
376
452
397
433
387
382
500
2006 / 05
2006 / 04
2006 / 03
2006 / 02
2006 / 01
0
331
400
293
Establishment of Corporations (Monthly)
900
200
100
Foreign Direct Investment
14
13.2
12
11.1
10
8.1
8
6.1
6
3.9
4
2.1
2
0.5
0.4
2000/2001
2001/2002
0.7
0
Source: Central Bank of Egypt
2002/2003
2003/2004
2004/2005
2005/2006
2006/2007
2007/2008
2008/2009
7
Fiscal and Monetary Policies
Fiscal Deficit/ GDP
15.0%
9.5%
10.0%
10.4%
8.2%
9.6%
7.3%
8.00%
6.6%
8.0%
5.0%
0.0%
2002/03 2003/04 2004/05 2005/06
2006/07 2007/08 2008/09b 2009/10
Interbank Rates
Net International Reserves
Lending Rate
Source: Ministry of Finance
May-09
Apr-09
Mar-09
Feb-09
Jan-09
2008
2007
9
15.1 14.2 14.1 14.8 14.8
2006
14/08/2008
14/06/2008
14/04/2008
14/02/2008
14/12/2007
14/10/2007
14/08/2007
14/06/2007
14/04/2007
14/02/2007
14/12/2006
14/10/2006
14/08/2006
14/06/2006
14/04/2006
14/02/2006
14/12/2005
14/10/2005
14/08/2005
7.65
22.9
2005
9.5%
9
14/02/2009
8.65
34.6 33.43
33.05 32.17
31.18 31.2
19.3
2004
1
28.6
2003
9.65
11 11.
10.5%
10.
14/12/2008
10.25% 10%
10.75%
10.65
11
10.75%
10.5%
14/10/2008
Interest Rate %
11.65
12.5%
2002
12.
1
11.5%
12.65
2001
13
40
35
30
25
20
15
10
5
0
13.
2000
13.65
Deposit Rate
8
Fiscal and Monetary Policies
14.0%
15%
11.70%
10%
April 09
June 09
9.00%
4.70%
5%
6.80%
jun09
Oct-08
Jul-08
Apr-08
Jan-08
Oct-07
Jul-07
Apr-07
Jan-07
Oct-06
Jul-06
0%
Apr-06
4.2%
16.40%
14.30%
11.80% 12.82%
Jan-06
3.8%
3.2%
3.1% 2.8%
2.4%
2.4%
17%
Oct-05
7.3%
6.2%
Jul-05
0.0%
20%
Apr-05
2.0%
23.60%
9.3%
4.9%
4.0%
10.9%
Jan-05
6.0%
11.4%
Aug 08
YoY change in CPI
Oct-04
8.0%
11.1%
9.1%
25%
Jul-04
10.0%
11.7%
Annual inflation Rate
12.0%
9
External Sector
Exports
USD Million
40000
29,356
25,169
30000
13,833 18,455 22,018
20000
7,078 7,121 8,205 10,453
10000
0
1
2
3
4
5
6
7
8
9
0 0 /2 0 0 /2 0 0 /2 0 0 /2 0 0 /2 0 0 /2 0 0 /2 0 0 /2 0 0
2
/
00
01 002
03
04 005
06 007
08
20
20
2
20
20
2
20
2
20
USD Million
Imports
52,771 50,342
60000
50000
30,441 37,834
14,637 18,286
40000
24,193
30000 16,441 14,820
20000
10000
0
01
02
03
04
05
06
07
08
09
/20 1/20 2/20 3/20 4/20 5/20 6/20 7/20 8/20
0
0
0
0
0
0
0
0
0
0
20
20
20
20
20
20
20
20
20
Current Account
3418.1
4000
3000
-33.4
2910.6
1943
2695.6
1751.9
2000
888.3
614.2
1000
2008/2009
2007/2008
2006/2007
2005/2006
2004/2005
2003/2004
-3000
2002/2003
-2000
2001/2002
-1000
2000/2001
0
-4000
-5000
-4424.3
10
Source: Central Bank of Egypt
External Sector
Source: Ministry of Finance
Source: Ministry of Finance
Source: Central Bank of Egypt
Source: Central Bank of Egypt
11
Trading Indicators 2004 - 2008
Volume of Trading
Value of Trading
Billion
Security
EGP Billion
600
500
400
300
200
100
0
530
42
2004
161
2005
287
363
130
2006
2007
2008
2009
Jan - May
30
25
20
15
10
5
0
25.56
16.79
15.09
5.31
2.43
2004
2005
9.08
2006
2007
2008
2009
Jan - May
Average Daily Trading Value
EGP Million
1800
1600
1400
1200
1000
800
600
400
200
0
1,569
1,111
1,318
1,111
609
146
2004
2005
2006
2007
2008
2009
Jan - May
12
Risk & Return analysis for S&P Board Market Index- BMI
Risk & Return analysis for S&P Board
Market Index- BMI (2004-2009)
Average Standard Deviation
04-09
42%
41%
40%
39%
38%
37%
36%
35%
34%
33%
32%
31%
30%
29%
28%
27%
26%
25%
24%
23%
22%
21%
20%
19%
18%
17%
16%
15%
Turkey
Hungary
Russia
Poland
Argentina
India
South Africa
Thailand
Mexico
Chile
Peru
Brazil
Czech Republic
China
Taiwan
Egypt
Indonesia
Morocco
Phillipines
Malaysia
Israel
0%
5%
10%
Average Rate of Return
04-09
15%
20%
25%
30%
35%
40%
45%
50%
13
Egyptian Market since 2004
Annual Return
200%
146%
150%
122%
100%
51%
50%
32%
10%
0%
-50%
-56%
-100%
14000
12000
10000
8000
6000
4000
2000
0
EGX30 Returns:
January 2004:425.28%
15 July 2004:295.17%
January 2005:136.36%
January 2006-2.97%
January 2007-12.96%
January 2008-42.47%
January 2009:32.05%
EGX30 Index
11786.51
6069.62
3559.09
14
P/E Ratio & Market Capitalization
Trailing P/ E Ratio for Liquid Stocks
Times
24
19.60
19.72
19
16.30
14
31/5/2009
11.65
9.45
9
4
Market Capitalization
EGP Billion
910
810
710
610
510
410
310
210
110
10
55.60%
33.87%
182
343
69.04%
426
Market Capitalization
70.37%
Percentage
84.81%
52.56%
631
760
471
As percent of GDP
130%
110%
90%
70%
50%
30%
10%
15
Net Portfolio Investments and Foreigners & Arabs Trading
US$ Million
4000
2000
0
-2000
-4000
-6000
-8000
-10000
2,764
Net Portfolio Investments
831
-937
-1,374
-8,890
2004/05
2005/06
2006/07
2007/08
Jul - Mar
2008/09
Net Trading of Foreigners and Arabs in The Egyptian Market
US$ Million
2000
1500
1,475
1,114
1000
1,095
954
500
0
-500
-1000
-1,025
-1500
2004/05
2005/06
2006/07
2007/08
July - Mar
2009
16
The Asset Management Program
35,000
Settling SOEs Debt
31,483
30,000
25,000
20,000
24,524
19,514
15,000
10,000
9,659
9,659
5,000
0
Proceeds of the Program
EGP Million
14612
16000
13607
14000
12000
10000
8000
5643
6000
3983
4000
1541
543
2000
0
2003/04 2004/05 2005/06 2006/07 2007/08 2008/09
to date
17
Financial Sector Reform Program
Phase I: 2005-2008
Reform
Objective
Main Components
of the Reform
Program
Time Frame
Improve the soundness and efficiency of the financial
sector through comprehensive structural and financial
reform, which would ultimately boost economic growth
and development as well as enhancing competitiveness,
and financial innovation.
1.
Reforming the Banking Sector
2.
Restructuring the Insurance Sector
3.
Deepening the Capital Market
4.
Developing a well-functioning Mortgage Market
5.
Activating other Financial Services
2005-2008
18
Financial Sector Reform Program
Main Implemented Reforms of Phase I: 2005-2008
1- Reforming the Banking Sector
- Merging six banks.
- Settling 65% of public sector NPLs.
- Privatizing Bank of Alexandria
- Divesting 13 cases of public sector banks holdings
in JV banks.
3- Deepening the Capital Markets
- Establishing a special registrar for qualified auditors at the
CMA.
- Introducing Margin Trading, Short Selling, Same Day
Trading, Market Making Activity, and Securitization.
- Issuing the legislative framework for organizing
Acquisitions.
- Issuing the new Egyptian Accounting Standards in
compliance with the International Accounting Standards.
- Issuing the legislative framework for combating insider
trading.
- Issuing regulations to organize and introduce investment
funds, and organize exchange traded funds, money market
funds and real estate funds.
- Establish the Nile Stock Exchange (Nilex) for SMEs.
2- Restructuring the Insurance Sector
- Merging Al-Shark and Egypt Re in Misr Insurance.
- Establishing the Holding Company for Insurance.
- Restructuring the boards of public insurance
companies.
- Establishing a State Fund for compensation
- Amending the insurance law and allowing corporation
to act as insurance brokers.
- Raising the minimum issued capital to EGP 60 million
for life and non-life insurance companies.
- Reducing stamp duties on insurance policies for life,
property and casualty insurance.
4- Developing a well functioning Mortgage Finance
- Introducing more flexibility to income recognition rules and
regulations.
- Reducing the registration fee to a maximum of EGP 2000 .
- Establishing the Egyptian Mortgage Refinance Company.
- Raising the maximum subsidy obtained from the Mortgage
Finance Subsidy and Guarantee fund from EGP 10,000 to
EGP 15,000.
- Activating the role of insurance in mortgage finance activity.
- Standardizing contracts of mortgage finance to facilitate the
securitization process.
19
Financial Sector Reform Program
Impact of Reforms of Phase I: 2005-2008
Insurance
2004/2005
2007/2008
2 Companies
and 2 Banks
10 companies
and 2 banks
Mortgage finance
16 Million
2.6 billion
Evaluation experts
75
117
4.2
Intermediaries
203
234
0.6
1.1
Auditors
23
45
70%
49%
Investors
3
4371
2004/2005
2007/2008
0.8%
1.1%
20
33.4
Investments
16.3
29
Equity
3.8
8.5
Volume of Premiums
4.3
7.4
Paid Claims
2.4
Net profits
Premiums/GDP
Assets
Public Companies
Market Share
Capital Market
Mortgage Finance
Institutions
2004/2005
2007/2008
Value traded
83.7 Billion
553.2 Billion
Monthly Average value of trade
0.6 Billion
46.1 Billion
3 Billion Paper
19.9 Billion Paper
270.9 Billion Paper
1659.3 Billion Paper
3.64 Billion
123.8 Billion
875 Thousand
1.6 Billion
Volume
Monthly Average volume of trade
Total acquisitions
The number of registered investors
Financial Sector Reform Program
Phase II: 2009 - 2012
Phase II of the program comprises generic and sector specific
reform measures.
The generic reform measures aim at:
1. Increasing the efficiency of regulation and shifting it from a
rule-based to a risk-based regulation to ensure the soundness of
the financial system.
2. Improving access to finance.
3. Developing the financial culture.
4. Developing and deepening the markets through introducing
new instruments and encouraging financial innovation.
Main Pillars of the
Reform Program
The sector specific reform measures aim at:
1.
2.
3.
4.
5.
Improving bank’s Efficiency for financing economic growth.
Developing and deepening the Insurance Market
Deepening and improving the efficiency of Capital Markets on
both the equity and fixed income sides.
Further activation to, and increasing the efficiency of the
Mortgage Market
21
Activating Financial Leasing and Factoring activities
GOE’s Stimulus Package
Measures aiming at boosting economic growth amid the international financial crisis and its negative
implications on developing and emerging countries.
1.
-
Availing and lowering the cost of credit
Reducing interest rates.
Exempting credit extended to SMEs from the reserve requirement.
2.
-
Increasing public spending and subsidies
Investing EGP 30 bn in infrastructure projects (budget and PPP)
Sales tax exemptions of a magnitude of EGP 1 bn on capital goods.
Full Tariff exemptions on imported capital and 250 items of intermediate goods.
Increasing Export subsidies by EGP 2.6 bn.
3.
-
Promoting investments
Revising measures that had an adverse impact on investments.
Intensifying promotional campaigns.
4.
-
Supporting the Capital Markets
More flexibility on dealing on treasury stocks and tender offers
More flexibility in reporting financial investments by companies via amendment of the Egyptian
Accounting Standard (in compliance with IAS).
5.
Legislative reforms
22