Recent Developments in the Egyptian Economy

1. Recent Developments in theEgyptian Economy Ministry of Investment Sep 2009

2. Growth & Investment Source: Ministry of Economic Development Unemployment Rate Source: CAPMAS 2

3. Growth & Investment Comparative Sectoral Growth Rates (Semi annual) Source: Ministry of Economic Development Quarterly Growth Rates 3 Source: Ministry of Economic Development

4. Public vs. Private Investments Private Investment / Total Investment Private investment as percentage of GDP Private vs Public Investment EGP Billion 4 Source: Ministry of Economic Development

5. Establishment of Corporations (Weekly) Source: GAFI – Ministry of Investment

6. Establishment of Corporations (Monthly) 6 6 Source: GAFI – Ministry of Investment

7. Foreign Direct Investment Source: Central Bank of Egypt 7 7

8. Fiscal and Monetary Policies Fiscal Deficit/ GDP Net International Reserves 8 Source: Ministry of Finance

9. Fiscal and Monetary Policies YoY change in CPI June 09

10. External Sector Current Account 10 Source: Central Bank of Egypt

11. External Sector Source: Ministry of Finance Source: Central Bank of Egypt 11 Source: Ministry of Finance Source: Central Bank of Egypt

12. Trading Indicators 2004 - 2008 Volume of Trading Value of Trading

13. Risk & Return analysis for S&P Board Market Index- BMI 13

14. Egyptian Market since 2004 Annual Return EGX30 Index 14

15. P/E Ratio & Market Capitalization

16. Net Portfolio Investments and Foreigners & Arabs Trading

17. The Asset Management Program 17

18. Financial Sector Reform Program Phase I: 2005-2008 Reform Objective 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. Main Components of the Reform Program • Reforming the Banking Sector • Restructuring the Insurance Sector • Deepening the Capital Market • Developing a well-functioning Mortgage Market • Activating other Financial Services Time Frame 2005-2008

19. Financial Sector Reform Program Main Implemented Reforms of Phase I: 2005-2008 1- Reforming the Banking Sector 2- Restructuring the Insurance 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. • 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. • 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. 3- Deepening the Capital Markets 4- Developing a well functioning Mortgage Finance • 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.

20. Financial Sector Reform Program Impact of Reforms of Phase I: 2005-2008

21. Financial Sector Reform Program Phase II: 2009 - 2012 Main Pillars of the Reform Program • Phase II of the program comprises generic and sector specific reform measures. • The generic reform measures aim at: • 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. • Improving access to finance. • Developing the financial culture. • Developing and deepening the markets through introducing new instruments and encouraging financial innovation. • The sector specific reform measures aim at: • 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 • Activating Financial Leasing and Factoring activities

22. GOE’s Stimulus Package • Measures aiming at boosting economic growth amid the international financial crisis and its negative implications on developing and emerging countries. • Availing and lowering the cost of credit • Reducing interest rates. • Exempting credit extended to SMEs from the reserve requirement. • 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. • Promoting investments • Revising measures that had an adverse impact on investments. • Intensifying promotional campaigns. • 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