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Egypt
Score Rank
Financial Standards Index 34.17 out of 100 63
Business Indicator Index 8.15 out of 12 56

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Overall Standards Summary

Egypt achieves low overall compliance with international standards and codes, with a score of 34.2 out of 100 in our Standards Compliance Index. Egypt's compliance in all three broad categories -- macroeconomic fundamentals, market infrastructure and financial supervision -- is low, with only data dissemination coming close to international standards. A voluntary Code of Corporate Governance has been published and a number of other major reforms have been undertaken. However, implementation remains weak or untested. Egypt has declared its intent to bring its payment systems and anti-money laundering framework in line with international best practices. There has also been progress in adopting international standards for accounting and auditing. No assessments are publicly available of Egypt's compliance in the areas of insolvency framework, banking supervision, or insurance supervision. There are, however, reports of some progress in adopting international supervisory standards.

Choose a standard for a detailed compliance report:
12 Key Standards for Sound Financial Systems

Compliance Level
Special Data Dissemination Standard
CP
Code of Good Practices on Transparency in Monetary Policy
ID
Code of Good Practices on Transparency in Fiscal Policy
EN
Effective Insolvency and Creditor Rights Systems
II
International Financial Reporting Standards
ID
Principles of Corporate Governance
EN
International Standards on Auditing
EN
Anti-Money Laundering/Combating Terrorist Financing Standard
ID
Core Principles for Systemically Important Payment Systems
ID
Core Principles for Effective Banking Supervision
II
Objectives and Principles of Securities Regulation
ID
Insurance Core Principles
II
II = Insufficient Information | NC = No Compliance | ID = Intent Declared | EN = Enacted | CP = Compliance in Process | FC = Full Compliance

Macroeconomic Policy and Data Transparency

CPSpecial Data Dissemination Standard

Egypt has been a subscriber to the International Monetary Fund's (IMF) Special Data Dissemination Standard (SDDS) since January 31, 2005. A 2005 Report on the Observance of Standards and Codes covering data dissemination noted that the Egyptian authorities had expressed their commitment to improving data quality and dissemination practices in line with international standards. Subsequent IMF Article IV Consultation reports have found Egypt's data to be adequate for surveillance purposes, but note that improvements are still needed. The 2007 Annual Report on Observance, available on the IMF SDDS website, discloses that although Egypt is technically compliant with timeliness, periodicity, and coverage specifications, this is achieved by a relatively heavy reliance on periodicity and timeliness flexibility options, particularly in the areas of wage, unemployment, and central government operations data. Advance release calendars are issued for all relevant datasets, but the SDDS Bulletin Board offers no information regarding Egypt's performance in simultaneous release of fiscal data to all interested parties. Advance notice of methodological changes is provided only for merchandise trade data. Summary methodologies are available for all datasets. Finally, there is no documentation regarding sources and methods for either national accounts data or the consumer price index.

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IDCode of Good Practices on Transparency in Monetary Policy

In 2006, Oxford Analytica (OA) published a Report on Monetary Policy Transparency in Egypt in which it ranked Egypt's overall transparency as "Intent Declared." The report applauded Egypt's continued, albeit gradual progress toward greater monetary policy transparency. On January 31, 2005, Egypt became a subscriber to the SDDS of the IMF, and since that date has continued to meet SDDS specifications regarding timeliness, periodicity, and coverage with regard to its monetary data. The Central Bank of Egypt (CBE) maintains a website on which the public can gain access to a great deal of monetary policy data and related information. OA has noted that Egypt remains committed to reform, and has undertaken restructuring and consolidation within the banking sector. It has also upgraded its training and staffing procedures and policies. The CBE created a dedicated Monetary Policy Unit in 2005. Since its inception the Unit has issued a Monetary Policy Statement that explains to the public its policy objectives, the framework and instruments used to carry out those policies, and the processes by which monetary decisions are made. This statement is published on the CBE website and is included in a variety of publications dealing with monetary policy. The Unit is also charged with the task of developing an inflation targeting framework for implementation. The Unit plans to publicize the minutes of its meetings and details of its votes once explicit inflation targeting is implemented. According to the IMF's 2007 Article IV consultations, inflation targeting should be achieved in the medium-term.

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ENCode of Good Practices on Transparency in Fiscal Policy

OA produced its last report on fiscal policy transparency in 2006, in which it accorded Egypt an overall rating of "Enacted." According to OA, since 2002 Egypt has been moving steadily forward with reforms that have had a significant positive impact on fiscal policy and transparency. With the advent of a new Prime Minister in 2004, the pace of these reforms has increased in most areas, although there has been some slow-down in the government's privatization and restructuring initiatives, particularly in economic sectors deemed "politically sensitive." Egypt has adopted the 2001 Government Financial Statistics Manual and the 1993 System of National Accounts. Within the Ministry of Finance, a dedicated Fiscal Unit has been created to develop a medium-term budget framework and to produce analyses of fiscal risk and sustainability. The budget process has been modernized with the introduction of electronic reporting, tax reforms are ongoing, and a single, consolidated Treasury account has replaced approximately 42,000 individual agency accounts that had been maintained in the past. All of these reforms have contributed to greater transparency and, in the case of tax reform, has simplified the system and improved revenue collections. Egypt became a subscriber to the IMF's SDDS in January 2005, at which time it met SDDS specifications with regard to its data. However, improvements are still required in the areas of fiscal data quality and timeliness, and public confidence in the reliability of fiscal and budget data remains low. The IMF's 2008 Article IV Consultations report notes that Egypt's reform efforts are likely to be slowed by current global economic conditions, but the IMF urges that those efforts continue, particularly citing the need to move forward with plans to introduce a true value-added tax and subsidy reforms. In addition, the IMF observes that continuing weaknesses in Egypt's coverage, periodicity, and timeliness in the reporting of fiscal data impose constraints of surveillance and informed policy making.

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Institutional and Market Infrastructure

IIEffective Insolvency and Creditor Rights Systems

The World Bank's Global Insolvency Law Database website discloses that Egypt's insolvency regime is governed by Articles 550 through 772 of Title 5 of the Commercial Code, which took effect on October 1, 1999. This law replaced the prior Commercial Code of 1883. The insolvency regime allows for simple liquidation or for a variety of reorganization plans. A survey done jointly by the International Bank for Reconstruction and Development and the World Bank states that Egyptian insolvency procedures are both lengthy and costly when compared to the experience of other economies in the region or with the results achieved by member states of the Organization for Economic Cooperation and Development. It ranks 128th out of the 181 economies included in the survey. However, there is insufficient information publicly available regarding Egypt's compliance with the Principles and Guidelines for Effective Insolvency and Creditor Rights Systems developed by the World Bank.

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IDInternational Financial Reporting Standards

Financial reforms in Egypt have positively impacted efforts to encourage adoption of International Financial Reporting Standards (IFRSs). In 2002, the World Bank concluded that significant progress had been made in eliminating differences between Egyptian Accounting Standards (EASs) and IFRSs, although concerns were expressed about insufficient institutional knowledge of IFRSs, lack of implementation guidelines, and weak enforcement. In 2008, UNCTAD issued a report which noted the progress that Egypt had made since the 2002 World Bank report, including the issuance of 35 EASs, which were mostly prepared on the basis of the 2005 IFRSs. The UNCTAD report did caution that translation into Arabic has been lengthy; as a result there existed a potential gap between the set of EASs that is currently in effect and the most recent IFRSs. The EASs are applicable to all listed joint stock companies regulated by the Capital Markets Authority (CMA). Banks fall under the jurisdiction of the Central Bank, which at the time of the UNCTAD report had not yet realized new regulations for the banking sector. Thus, banks are still required to file their reports using the old set of EASs, which is based on the 2002 IASs. The UNCTAD report notes that a draft amendment to the Company Act, which regulates all Egyptian companies, is under discussion that would require all companies to observe the CMA accounting standards. In a 2008 self assessment by the Egyptian Society of Accountants &Auditors (ESAA) an action plan was identified to further the adoption of IFRSs in Egypt.

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ENPrinciples of Corporate Governance

In 2004, the World Bank Report on the Observance of Standards and Codes on Corporate Governance in Egypt concluded that while there had been a number of major reforms undertaken in the past, mostly incorporated in the 2002 reform of listing rules, the implementation and enforcement of the corporate governance rules remained weak. In this regard, the report recommended building institutional capacity in order to ensure effective regulation of the market and strong enforcement of rules. Legislative reform is also needed in order to bring the policy framework into greater conformity with the Organization for Economic Co-operation and Development Principles. Following the World Bank's recommendations, the Egyptian Code of Corporate Governance was published in 2005 by the Egyptian Institute of Directors. This voluntary code is an addition to the corporate-related provisions stated under various laws, mainly Company Law, Capital Market Law, Central Depository Law, and listing rules. In the 2006 Article IV consultations with the IMF, staff asserted that capital market regulation in Egypt "is well advanced in adopting best practices" and that its stock market "is enforcing higher standards of corporate governance."

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ENInternational Standards on Auditing

In 2008, the United Nations Conference on Trade and Development (UNCTAD) issued a report which concluded that Egypt has made significant efforts to align corporate financial reporting requirements with the International Standards on Auditing (ISAs) and to close the compliance gap in both accounting and auditing practice. According to the report, the Capital Markets Authority (CMA), which regulates listed companies, in cooperation with the Egyptian Society of Accountants and Auditors (ESAA) prepared Egyptian Standards on Auditing (ESAs) that comply in form and content with ISAs effective as of 2007. Following extensive public consultations, the final set of standards was issued in Arabic on June 30, 2008, effective for all audit engagements starting from January 1, 2009. The new set of standards will replace the old set dating to 2000, which as explained in the 2002 World Bank report, differed from ISAs. UNCTAD further reported that the ESAA has prepared a draft law to regulate practice of the accounting and auditing profession in Egypt, as an amendment of the Accounting Practice Law, but as of the time of the report it had only been forwarded to People's Assembly for approval. The UNCTAD report also noted that the ESAA has drafted a new code of conduct that complies with all the aspects of the Code of Ethics for Professional Accountants of the International Federation for Accountants (IFAC). The ESAA and the Ministry of Finance plan to issue this code and apply it to all the members of the Central Auditing Organization, which is the agency responsible for auditing the public sector, including state-owned enterprises.

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IDAnti-Money Laundering/Combating Terrorist Financing Standard

The United Nations Office of Drugs and Crimes (UNODC) in its 2005 country profile report states that the Financial Action Task Force (FATF) removed Egypt from its non-cooperating countries or territories list in 2004 owing to Egypt's continued efforts toward developing an effective anti-money laundering (AML) and terrorist financing regime which the authorities indicated will incorporate the FATF recommendations. In 2005, a World Bank report found that, subsequent to the IMF's 2002 Financial Sector Assessment Program of Egypt (the report remains unpublished), the country implemented several reform measures that included the incorporation of legal and institutional measures required under the Financial Action Task Force's (FATF) recommendations. Further, Egypt is in the process of replacing its old counterterrorism law with a new one with more specific and comprehensive measures against terrorist financing, per information in a 2008 U.S. Department of State report. The report also notes that Egypt is a founding member of the Middle East and North Africa Financial Action Task Force (MENAFATF) and follows that organization's recommendations on AML and counterterrorism financing measures. However, the MENAFATF has not conducted a mutual evaluation of Egypt.

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IDCore Principles for Systemically Important Payment Systems

The FIRST Initiative website notes that there are three payment systems in the country, namely: (1) the High Value Gross Settlement System (FinCopy); (2) the Automated Clearing House System (ACH); and (3) the Government T-Bills Registry System. According to a 2004 World Bank report, the Check Clearing system and the Gross Settlement system - both owned and operated by the Central Bank of Egypt (CBE) - largely comply with the Committee on Payment and Settlement Systems' Core Principles for Systemically Important Payment Systems (CPSIPS). However, besides this statement from the World Bank, there is little information relating to Egypt's compliance with the CPSIPS. Egypt is, nevertheless, in the process of reforming its payment system with the assistance of the World Bank and IMF, and according to a 2003 CBE report, the authorities intend to bring the country's payment systems it in line with the CPSIPS. In this regard, a Central Bank Law that clarifies the roles and responsibilities of the CBE in owning, operating, and overseeing the payment system has been enacted. Furthermore, according to the CBE's 2006 Annual Report, a legal framework for the National Payment System (which will include the establishment of a Real Time Gross Settlement (RTGS) system) was expected to be completed by the end of 2007 and to be in line with international practices. A 2007 joint report by the CBE, the European Union, and an Italian technology provider, SIA-SSB, states in this context, that the services of the latter have been enlisted by the CBE to launch an RTGS system and its infrastructure in Egypt that will link the CBE and 40 Egyptian banks for high-value inter-bank transfers.

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Financial Regulation and Supervision

IICore Principles for Effective Banking Supervision

A 2004 report by Creane, S., et al. and published by the IMF noted that, at the time, Egyptian legislation concerning banking supervision largely complied with the Basel Core Principles (BCPs) for Effective Banking Supervision. Apart from this statement, however, the report does not provide a detailed assessment of the country's compliance with the BCPs. There is also no further publicly available information assessing Egypt's compliance with the BCPs. Per a 2006 IMF report, the Egyptian authorities continue to make efforts to bring banking supervision in Egypt in line with international best practices. Furthermore, the 2006 Global Survey by the Institute of International Bankers notes that the government of Egypt in 2006 continued to pursue the Banking Sector Restructuring Plan for which the country receives assistance from the European Central Bank. A 2007 IMF report also commends Egypt for making considerable progress in implementing financial sector reforms and in establishing a more efficient banking system. It, however, calls for further strengthening and modernization of banking supervision by enhancing supervisory data collection and analysis, moving from compliance-based to risk-based supervision, and addressing the conflict of interest arising from the composition of the Central Bank of Egypt's Board and its management and supervisory functions. The IMF also states that the Egyptian authorities are committed to implementing reforms that are in line with the key Financial Sector Assessment Program Update recommendations of 2007.

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IDObjectives and Principles of Securities Regulation

Egypt has been hailed by a 2007 IMF report as one of the best performing markets in the Middle East and North Africa region. The market is regulated by the Capital Market Authority (CMA) and the key securities sector law is the Capital Market Law. Regarding Egypt's compliance with the Principles of Effective Securities Regulation developed by the International Organization of Securities Commissions (IOSCO) publicly available information indicates that Egypt is advancing in adopting international best practices. Most specifically, a 2008 United Nations Conference on Trade and Development report asserts that the CMA is fully committed to bringing the Egyptian capital market framework in line with IOSCO principles. Underlining this commitment, a 2006 IMF report finds that regulation of the capital markets in Egypt is at the forefront in adopting best practices. A similar sentiment is voiced by the IMF's 2007 report that finds Egypt making considerable progress in implementing its 2002 recommendations for securities regulation under the aegis of comprehensive financial sector reforms initiated in 2004. The country, per the report, is emphasizing increased privatization, foreign participation, and regulatory reform in the capital markets. In the interest of further strengthening its capital markets, the IMF advises Egypt to remove cumbersome legal procedures for securities issuance, promote privatization and more initial public offerings, enhance the role of the stock exchange, and build an institutional investor base.

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IIInsurance Core Principles

In December 2002, the World Bank and the IMF completed the Financial Sector Assessment Program (FSAP) for Egypt. The final report is not publicly available. However, a number of publications refer to the assessment, and state that Egypt's overall compliance with the international standards in different sectors of the economy was positive. A 2006 report by the IMF also noted that the Egyptian authorities aim to make insurance supervision compatible with international standards and that they requested an FSAP update in 2007 to evaluate the results of the ongoing reform of the financial sector. The 2007 FSAP Update by the IMF-World Bank team - as discussed in the IMF's 2007 Article IV report for Egypt - found that the country has made considerable progress in implementing the reforms initiated in 2004 and that it is now focusing on the non-bank financial sector, including insurance. The IMF commends Egypt for implementing these reforms in line with the 2002 FSAP recommendations. It, however, advises Egypt to gradually privatize the large state-owned insurance enterprises, enact important legislation for the sector, and move from compliance-based to risk-based supervision. It also calls for the unification of non-bank supervisory agencies to enable a coordinated risk-based supervisory approach. The 2007 Country Strategy Report prepared by the African Development Bank also points out that the reform of the financial system has been successful; however, important shortcomings still remain. Nevertheless, the sources of assessment do not directly address Egypt's compliance with the Insurance Core Principles promulgated by the International Association of Insurance Supervisors.

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Business Indicators

With an overall score of 8.15/12, Egypt is progressing toward standard on the economic, legal, and political indicators that make up our Business Index. Egypt has a market-based mixed economy, in which total government expenditure, including consumption and transfer payments, is moderate. Government spending in the most recent year was 33.6% of GDP. Egypt encourages foreign investment, but foreign investments often require approval by the relevant government ministry, and most foreign ownership of land is prohibited. Egypt does not provide specific tax incentives for foreign investment, but has lowered all taxes to promote overall investment. Property rights and local contracts are typically protected, but the processes for real-estate ownership and the acquisition of property titles are complex. The judicial process is lengthy, costly, and may be subject to political pressures. Corruption is extensive, as reflected in Egypt's ranking of 115th out of 180 countries in Transparency International's 2008 Corruption Perceptions Index.

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Global Indices & Quick Facts

Egypt is ranked in the 3rd and 4th quintiles in the global indices benchmarking political, economic, business, and human capital climates, as shown below. Despite rhetorical commitments to political openness, Egypt's political environment is tainted by extended emergency rule and cosmetic legislation regarding political and civil freedoms. Even as Egypt pursues market reforms, there remain significant practical business and legal barriers, such as the time required to establish or liquidate a business and the protection of property rights. Although the banking sector is expanding, state-owned banks still dominate the landscape. Another major issue is the level of actual and perceived corruption in Egypt, as reflected in its low score in the Transparency International Corruption Perceptions Index.

Name Year Rank Score Quintile
Bertelsmann Transformation Status Index 2010 87/128 4.82/10 4
Heritage Foundation Economic Freedom Index 2010 94/179 59.0% 3
Economic Freedom of the World Index 2009 79/141 6.68/10 3
World Economic Forum Global Competitiveness Index 2009 70/133 4.04/7 3
Milken Institute Capital Access Index 2009 54/122 4.85/10 3
World Bank Ease of Doing Business Index 2009 106/183 N/A 3
UNDP Human Development Index 2009 123/177 0.70/1 4
Transparency International Corruption Perceptions Index 2009 111/180 2.8/12 4
Freedom House Index 2009 Not Free 5.5/7

Credit Ratings

BB+/Stable Fitch

Ba1/Stable Moody's

BB+/Stable Standard & Poor's

Macroeconomic Data

2009 GDP (Current Prices): 188.1 billion USD (IMF)

2009 GDP (Per Capita): 2,457 USD (IMF)

2010 GDP (Growth Forecast): 4.5% (IMF)


2009 Inflation (CPI): 16.2% (IMF)

2008 Unemployment: 8.4% (CIA)


2008 Foreign Direct Investment

FDI (Inward): 9.5 billion USD (UNCTAD)

FDI (Outward): 1.90 billion USD (UNCTAD)


2007 Official Development Assistance

ODA (Received): 1,083 million USD (OECD)

ODA (Disbursed): N/A million USD (OECD)

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