International Cooperation

International Cooperation

The state's policy, in the field of international cooperation, mainly aims to develop and enhance the Egyptian economic relations with other countries of the world, as well as invest Egypt's international relations so as to serve development targets and merge them with world economy. This is achieved through signing several agreements that provide necessary finance for the various benefiting governmental bodies in order to implement their projects.

The year 2006/07 has witnessed the signature of several agreements:

- Total agreements that were concluded with our development partners during 2006/07 reached a number of (44) agreements through which a total amount of grants provided reached $ 740,033 million at a ratio of 28.5% of the total finance volume.

- The total technical aid volume reached $ 9.239 million at a ratio of 2.3% of the total finance volume.

- The total loans volume reached $ 1.8 billion at a ratio of 69.2% of the total finance volume.
Description of Total Finance Volume "Grants –Loans -Technical Aid" that were signed with our Development Partners over the Period 1-7-2006 to 30-6-2007. The Most Important Implemented Projects during the Year 2006/07: 1- The Regional and International Finance Bodies A number of (18) agreements were signed with total finance $ 1.4 billion at a ratio of 53.8% of the total finance volume ($ 2.6 billion), of which $ 2.602 million as grants, $ 9.189 million as technical aid and about $ 1.350 billion as loans. African Development Bank contributions ranked first at a ratio of 43.2%, while the International Bank for Construction and Development contributions ranked second at a ratio of 39.9%, Kuwaiti Fund for Arab Economic Development contributions came at a ratio of 13.7%, Saudi Fund contributions came at a ratio of 1.8%, International Fund For Agricultural Development came at a ratio of 1.8% and lately Arab Fund for Economic Development Contributions came at a ratio of 0.2%. All these are to finance several projects and agreements salient of which are the projects of establishing Sohag/Red Sea road, supporting small enterprises, combating the industrial pollution, extending the natural gas net, studying the development of the national net for transferring electricity, eliminating poverty and enhancing legal rights for the Egyptian women and teenagers. Description of Finance Volume During the Period (2006/07) from the (Regional and International Finance Bodies and Organizations)

The year 2005/06 has witnessed the signature of several agreements:

- Some 37 agreements were signed with development partners that contributed to $ 1.762 billion; $ 307.922 million were allocated for grants with a percent of 17.5% of the total finance and $ 1,454,171 million a percent of 82.5% of the total finance.
- The finances projects that support small and medium size enterprises; as well as graft workshops and women through several agreements that were signed in 1988,1991,1998. These projects are now gradually implemented in several governorates by a group of civil society organization registered in the Ministry of Social Affairs. These agreements are as follows:

* A $ 44 million credit agreement of for small size enterprises and craft workshops.
* A $ 35 million credit agreement of for small size enterprises.
* An agreement supporting small enterprises with a budget of $ 86.6 million. In 2005/06,9 agreement were signed with the United States of America, the total finance amount of these agreement reached almost $ 124.109 million (grants).

- Enhancing communication channels with Asian, African and Latin American Countries through their diplomatic figures present in Egypt t activate economic cooperation with such continents. The countries which have political and economic weight are given a special priority.
- On the European level, two agreements were signed with the European Union and one agreement with Finland, with total finance amount reaching $ 123.823 million (grants).
- A conference was held in Egypt about (the Challenges of Technical and Professional Training in the Middle East and North Africa). The World Bank and the European Comission Training Organization have participated in organizing it so as to implement a comprehensive strategy for reforming employment system to cope with the future developments such as activating partnership between Egypt and the European Union and preparing for the Euromediteranean free trade zone.
- Activating the joint higher committee role with several Arab and African countries and giving a push to the strategic cooperation relations with various countries; such as Sudan and Ethiopia.
- On the occasion of the 50th anniversary of establishing diplomatic relation between Egypt and China, 10 agreements were signed in different fields such as plant health, mineral resources, education, tourism, strategic cooperation and investment.
Throughout Egypt's international cooperation, Egypt has been able to provide the finance necessary for implementing the emergency plan of the Ministry of Electricity, besides establishing the great Egyptian Museum and developing Hurghada Airport plus a number of projects serving low-income brackets the majority of the state's ministries have benefited from that finance in number of social and economic development projects during 2005/06.
The most significant programs and projects implemented in 1006:
United States of America:
The most significant projects financed by the united states are upgrading the educational sector, improving the health sector, implementing a successful family planning awareness campaign, as well as protecting the environment and increasing agricultural exports; in addition to completing water and sanitary drainage projects located in several Egyptian governorates.

China:
Within the framework of maintaining economic, technical, commercial, and investment cooperation relationship between Egypt and China seeking the distinguished political relations levels, China has participated with 85% financing the project of alimunium (Almagd Complex) in Ismailia desert whose cost hits about $ 800 million. All its products will be exported to foreign markets. It will provide about 3000 direct job opportunities and about 2000 indirect ones.

The project will help to establish new urban community in Ismailia desert besides reviving the process of transferring production materials and the final products by means of the Egyptian harbours. The volume of the Chinese grants has reached about $ 38.8 million after signing the agreement on establishing a building to render services to investors.

The grants aim to finance number of projects; namely, preparing a technical training centre in Beni Sewif, sharing in financing Mubarak's project for scientific research, as well as the project of remote education system development (1st stage) besides establishing a model school for teaching the Chinese language and history in Kafr mesilha in Menoufiya, in addition to a grant estimated by Swiss Franc worth 159 million so as to finance the project of Cairo International Conference Centre besides signing 10 agreements on different fields: plant health, mineral resources, education, tourism, strategic cooperation and investment.

Japan:
The economic relationship between Egypt and Japan has witnessed a great leap throughout a number of important projects during the recent few years; salient of which is the project of Mubarak As-Salam Bridge (Peace), Children hospital in Aby er-Reesh, and the Opera House besides the project of the great Egyptian Museum (under construction); besides the projects of improving potable water in Giza, Sharqyya and Mahala al-Kobra governorates and projects of improving wheat production plus a number of projects related to the environment reaching34 ones.

The Japanese side is interested in financing projects of clean and renewable energies such as wind energy in Za'afarana with a finance reaching about 13.497 billion Yen (a loan) and generating electricity in Kuraymat with a finance reaching about Yen 10.665 billion (a loan).
Preparations have begun for establishing the Egyptian-Japanese University for Sciences and Technology. The year 2005/06 has witnessed the biggest budget for official aid from the Japanese government to Egypt as US Dollar 41 million allocated for the project of combating environment pollution (stage 2) in number of districts with high pollution rates located between Greater Cairo and Alexandria.

The European Investment Bank
The Bank contributed to a number of vital projects. Arround 250 million euros will go to finance the project of establishing power stations in al-'Atef and Sidi Krir. It also participated in financing the power station in North Cairo with about 150 million euros.

Canada
Within the framework of encouraging Canadian investments in Egypt, number of joint investment projects between both countries have increased from 28 in 1998 to 112 in 2005. Volume of Canadian shares in direct internal investment companies reaches about LE 442 million, representing 17% in the fields of contracting, infrastructure, financial and touristic services, spinning and texture, nutrition substances, land reclamation and chemicals.

There are also ten projects in the free-zone areas exceeding $ 4 billion; besides the Canadian investments in the field of petroleum reaching about 300 million canadian dollar. Within the field of petrochemicals, a contract was signed for granting about $ 2 billion and this is considered the biggest Canadian project in Egypt.

During the last 2 years, the trade exchange between both countries have been increasing mounting to 452.8 million canadian dollar in 2005. In 2006, an agreement was signed so as to allocate $ 100 million to finance education program in early childhood.

Italy:
Italian investments in Egypt have excelled $ 1.8 billion in various sector. On the European level, Italy is considered the first commercial partner to Egypt. In 2005, Egypt's exports to Italy reached about 1.265 billion euros and Italy's exports to Egypt about 1.384 billion euros. In 2006, volume of trade exchange has mounted to 886.5 million euros resulting a surplus for Egypt estimated at 251.3 million euros.
The Italian aid to Egypt reached about 355 million euros (grants), and 855 million euros (soft loans); as well as trade facilities mounting to about 140 million euros.

Kuwait:
A loan agreement was signed by Egypt and the Kuwaiti Fund for Arab Economic development reaching about 30 million dinar so as to share in financing the project of West Cairo power station.

Saudi Arabia:
An agreement was signed between Egypt and the Saudi development Fund so as to finance the project of constructing grains silos in order to develop storage methods and decrease losses amounts. The grant is estimated to reach about Saudi riyal 90 million. About 55% of the finance is a grant from Saudi Arabia while the rest is paid on 25 years with only 5 years grace period.

Bahrain:
As regards volume of investments in Egypt, Bahrain ranks third after Kuwait and Saudi Arabia with total amount of investments in the Egyptian market reaching about $ 500 million. Three projects were signed in natural gas, ready-made clothes and tourism, costing about $ 100 million. Some 21 agreements between both countries were signed so as to cover all bilateral fields of cooperation. Volume of trade exchange between both countries has reached about $ 25 million.

France:
In 2006, the percentage of French exports to Egypt has reached about 70% and that of the Egyptian exports rose to 82%. An agreement was signed between Egypt and France so as to renew the program of Emoteb that strengthens cooperation between both countries in science field as well as activating cooperation in the field of human sciences. Moreover, a specialized French institute was inaugurated so as to qualify Egyptian professors.

Egypt and the European Partnership

Egypt and the European Partnership

The Egyptian Government allotted special attention to the economic tools in the framework of activating the implementation of foreign policy tools and employing them in attaining strategic benefits on the political, economic and social levels and ensuring luxurious life for the Egyptian people. Among these tools lies the partnership between Egypt and the European Community which started in the mid seventies by concluding the Co-operation Agreement.

The Agreement included provisions on the liberalization of services, the free movement of capital, competition rules, strengthening economic co-operation on the widest possible basis, co-operation on social matters, as well as cultural co-operation. In addition, the Agreement confirms the existence of free trade in manufactured goods and reinforces arrangements for free trade in industrial products. The Agreement has come in the context of the Egyptian implementation of an economic reform program.

The Co-operation Agreement has governed the bilateral relations between Egypt and the EU and contributed in defining the economic cooperation between the two parties. In accordance with this Agreement, Egyptian imports enjoyed free access to EU; as for the EU industrial exports to Egypt had obtained the special treatment of the most-favored-nation. After signing the Protocol in 1987, the Egyptian agricultural products gained a preferential treatment in their access to the EU markets; this special treatment is represented in customs tariffs and exports schedules.

Objectives of Egyptian-European Partnership

Article one in the Agreement stipulated the following objectives:

1. Providing appropriate atmosphere to open a political dialogue allows for developing strong relations between the two parties.

2. Preparing the conditions for liberalization of goods, services and capital trade.

3. Providing support for promoting balanced economic and social relations between the two parties through maintaining dialogue and cooperation.

4. Contribution in economic and social development in Egypt.

5. Encouraging regional cooperation for establishing peaceful coexistence as well as economic and political stability.

6. Developing cooperation in the fields enjoying of common interest. e relations between the involved parties.presented in the

Validity of the Agreement

Egypt – Europe Cooperation Agreement is considered to be valid until one of the parties terminates it. The terminator has to notify the other party and the Agreement becomes invalid after 12 months off the notification date.

Political and security File

This file is considered part of the political and security framework which is stipulated by Barcelona Declaration in 1995. This Declaration is an ambitious and far-reaching document which will remain in modern history as the first attempt to create durable and strong bonds between the shores of the Mediterranean. It is based upon the mechanism of the political dialogue mentioned in Article 2 of the Agreement to attain the following:

1. Strengthening traditional ties as well as common values, UN principles, democracy, and human rights in accordance with the international declaration.

2. Promoting regional security and stability, encouraging common initiatives and supporting the ME Peace Process.

3. Opening a political dialogue between the Egyptian People's Assembly and the European Parliament.

4. Enabling each party to consider the other's stances and interests.

5. Maintaining a political dialogue around issues of common interests.

6. Taking into consideration the variance in levels of development between Egypt and the EU.

Egypt and the Euro – Mediterranean Dialogue

Mediterranean Forum (Barcelona)

The Egyptian Political Thought within the Mediterranean Approach

The Mediterranean, through which the European culture is transferred to the Arabian land, has played a significant role in the Egyptian history. That is why Egypt looks forward to take a crucial part in the region. This could be attributed to some facts which state that the Egyptian and the Mediterranean cultures are almost the same, hence their ties are inevitable. In addition, Egypt's stability leads to trade refreshment and prosperity in the Mediterranean harbors. These so-called facts necessitate the presence of the Mediterranean dimension to help in establishing Egypt's regional role as well as its international cultural message. On the other hand, the Mediterranean area is the heart of the world, the witness of the nascence of divine religions, and the cradle of ancient cultures. Thus, Egypt's concern to adopt the Mediterranean dimension in its Foreign Policy is considered a push forward for a better future to the Egyptian people.

The Mediterranean Approach in the Egyptian National Security:

Despite the fact that the Mediterranean dimension, according to Egypt, comes next to other dimensions, the most important is the Arab dimension, it enables Egypt to establish a network of economical, political and cultural relations with Europe as well as promoting Egypt's role in the Arab region to form Euro-Arab alliance through the Mediterranean to achieve unification (on the European level).

This approach is considered as a contributor in promoting Egypt National Security which faces threats after Egypt's unique status has been altered in the field of international communication – as Egypt is considered a conjunction especially after the opening of Suez Canal. According to the fact that his change may affect the National Security of the country, Egypt adopted this Mediterranean approach by giving an intense heed to sea and not restricting it to land only to attain the National Security which in return will establish Arab National Security.

Egypt's Mediterranean Foreign Policy:

The Egyptian foreign policy relies upon many basics:

1. Egypt's position in the heart of the Arab world has given it the priority of leadership.

2. The leading role played by Egypt in the Islamic world.

3. Its unique position in the African continent that made Egypt exceeds the concept of just belonging to Africa.

Egypt has good relations with the Maghreb countries (Algeria, Morocco, Tunisia, Libya, and Mauritania) and this is attributed to the fact that Egypt is the most closest to Europe and being in good coordination with the European economic committee.

Egyptian Efforts towards convening the Mediterranean Forum:

The idea of convening this forum goes back to the date 20 November 1994 in Strasbourg when President Mubarak suggested establishing an assembly gathers the Mediterranean countries on the condition that it includes all the European countries as well as those of the Mediterranean. This forum is intended to serve as an assembly provides concepts of dialogue, cooperation and integration in all social sectors in Europe, Mediterranean and ME region to solve conflicts of common interest.

Egypt's initiative to establish this forum had the following objectives:

Achieving a comprehensive as well as objective cooperation between the countries in the region. This cooperation has to include all the political, scientific, cultural, and social fields and to be on official and non-official levels.

Gaining benefits from previous cooperation activities which resulted in good relations to contribute in making better common future. So, Egypt's well-defined discourse contributed highly in the establishment of this forum and the discussions resulted in agreeing upon convening a meeting gathers the French, Italian, Spanish, Moroccan, Greek, Portuguese, Algerian, Turkish, and Tunisian foreign ministers, in addition to Malta that joined them afterwards. This group is referred to as “nucleus group” and it's concluded that the meeting would be convened in Alexandria.

Alexandria meeting and its results:

What gives importance to this meeting is that it is considered the first ministerial meeting in which the basics of establishing the Mediterranean forum are discussed.

Alexandria meeting resulted in several issues such as:

a) Agreeing upon the necessity of convening such forum in a kind of a framework that guarantees continuous cooperation in the Mediterranean.

b) Agreeing upon convening a series of consultations and discussions in different fields in order to deepen communications and create appropriate conditions for periodic meetings.

c) Agreeing upon convening ministerial meeting at the beginning of the year 1995 in France to discuss consultations' results.

d) Inviting the closer countries to participate in the “nucleus group” to reach the concept of inclusive regionalism.

As for the second meeting, it was concluded that it would take place on November 1995 in Barcelona, Spain.

The Egyptian participation in Barcelona Conference and other Conferences:

Barcelona Conference:

Despite the differences occurred between the European and Non-European parties concerning each ones' priorities, the key purpose of this conference was to create general economical and cultural partnership in a new context of relations between the countries of the union. This difference represented in the different issues the two parties focused upon; in the time the Arab countries focused on issues as development, upgrading economy, opening the chance for foreign investments, establishing Euro-Mediterranean free trade area and improving the trade sector, the European countries focused on other issues such as terrorism, migration, human rights, and democracy.

The conference wrapped up its proceedings on November 28^th 1995 and concluded that the necessity of an inclusive cooperation between Mediterranean countries to face the common challenges that require comprehensive and coordinated solutions is essential.

The participants agreed upon:

a) Strengthening cooperation to fight terrorism in every possible way.

b) Fighting against organized crime and combating drugs with all its biological forms; in addition to the prohibition of owning large military capabilities represented in traditional weapons and sticking to international and regional systems as well as disarmament agreements.

c) Showing respect to human rights and freedom, working in accordance with UN charter, confessing each party's freedom in choosing and setting its political, economical, social, and justice apparatus, combating racism and hatred towards foreigners

Foreign Trade

Foreign Trade

Cooperating with Arab countries
Egypt seeks to promote cooperation with the countries of the Arab world by developing economic ties at both the bilateral and multi-lateral levels. In 1997 Egypt signed the Agreement to Facilitate and Develop Inter-Arab Trade with a view to establishing a pan-Arab Free Trade Area and creating a customs union by 2007. While committed to implementing all articles of the above agreement, Egypt also signed the Agadir Agreement for the Establishment of a Free Trade Zone between the Arab Mediterranean Nations with Morocco, Tunisia and Jordan.

Cooperating with African countries
Egypt strives to deepen cooperation with the Common Market for Eastern and Southern Africa (COMESA) along with establishing trade preferential ties with other African groups. In addition, Egypt is keen on implementing the New Partnership for Africa's Development (NEPAD) as a new umbrella for united African action.

Cooperating with Asian countries
Egypt seeks to deepen ties of cooperation with Asian countries in all fields, especially that of promoting economic development.

Cooperating with the EU
Egypt has capitalized on its good relations with EU countries in order to achieve gains in the area of economic growth and development; an example of this the Egypt-EU Partnership Agreement.

Cooperating with the USA
The USA is one of Egypt's major trade partners, second in place to the EU. On December 14, 2004, Egypt signed the Qualifying Industrial Zones (QIZ) Protocol with the US and Israel. The protocol secures new openings in the US market for Egyptian textile and clothing exports.

The Central Bank of Egypt ( CBE )

The Central Bank of Egypt ( CBE )

The CBE

Established in 1960, the CBE is an autonomous public legal person, assuming the authorities and powers vested therein by Law No. 88 for 2003, and the Presidential Decree No. 64 for 2001961.4, Issuing the Statute of the Central Bank .

The Paid-up Capital is 1000 million Egyptian pounds ( LE). The funds of the Central Bank are considered private funds.

The CBE is committed to achieving, over the medium term, low rates of inflation which it believes are essential for maintaining confidence and for sustaining high rates of investment and economic with price stability being the primary and growth. The Government's endorsement of the objective of price stability and its commitment to fiscal consolidation is quite important for achieving this objective.

The Banking Sector in Egypt

The Banking Sector in Egypt

Banking Reform and Liberalization

The banking sector plays a crucial role in the development process of Egypt. The banking sector consists of commercial banks, which are local banks and non-local banks. It also includes specialized banks and financial institutions operating in the fields of investment and credit for industry, agriculture, housing and rural development. In addition, there are branches affiliated to these banks and institutions. Deepening this sector and its reform would lead to higher rates of economic growth. This mechanism is achieved mainly through the role of the banking sector in mobilizing more savings and channelling them to better investment allocation. This, in turn, would lead to higher productivity and more capital accumulation. To achieve these results, an efficient banking system, prudential controls and a friendly, non-distorted macroeconomic framework are required.

The Banking industry in Egypt is amongst the oldest and largest in the region.

Banking reform started as part of the open door policies in the mid seventies when foreign banks were allowed to operate in Egypt. Later in the nineties, as part of Egypt's economic and financial reform program, the banking sector was completely liberalized, while banking supervision was further strengthened in accordance to international standards .

The Government of Egypt has been currently undertaking a comprehensive reform strategy for the financial sector as a whole and the banking system in specific. The goal of banking reform was creating an efficient banking sector which offers better quality services .The financial reform measures taken in the early 1990s emphasised reform of the monetary and fiscal policies, not the revamping of financial institutions.

Egypt is currently moving steadily towards becoming the biggest financial center in the region. Owing to the flourishing privatization program and the prospering domestic bond market, banks have encountered new investment fields which helped them diversify their portfolios and lower their financial risks. Meanwhile, most banks expanded on providing non traditional services such as brokerage, investment consultations, asset valuation and sales, and mutual fund operations which also helped improving capital market services.

Banking reform was primarily based on promoting transparency and use of adequate accounting and supervision standards. According to the Law, banks are required to publish their financial statements on quarterly basis in compliance with the Accounting Standards (IAS). In addition, the Law requires all banks to be audited by two different independenl auditors, with auditors changing every two years
In addition, Laws are periodically reviewed with the aim of refining legislation to foster competitiveness in the sector. To this effect, the new income tax law No. 5/1998 closed a chronic loophole which provided banks and financial institutions with a double tax exemption through deducting interest income from the tax base and use the proceeds in purchasing tax free securities. The provisions of the new law aim to spur innovation and healthy competition among banks to engage in productive activities and extend loans to customers and smaller businesses.

In June 1998, major amendments to the Banking Law which permitted private ownership in public banks were ratified by the Parliament. Individual banks invited international financial houses for internal valuations and ratings. Later in mid 1999, the Central Bank of Egypt and the General Assembly of the two real estate banks approved the first bank mergering in Egypt by merging the "Credit Foncier Egyptien" and the "Arab Land Bank" into one financial entity.

With a view to strengthening the Central bank role and independence, the Ministry of Economy in cooperation with CBE drafted a new Central Bank Law which aims towards institutionalizing the Central Bank independence and defining its role in determining the monetary policy.

Government efforts to reform monetary and fiscal policies have gained momentum in 2001 when the cabinet agreed to prioritise the modification of laws governing the performance of the banking sector. In addition, drafts of two key banking laws -- the Central Bank and National Investment Bank laws -- were endorsed.

The first of these was an amendment to the law governing the performance of the Central Bank of Egypt (CBE). Under the amendment, the CBE would have full independence in drawing up monetary policies and greater supervisory powers over the banking system in Egypt.

The second bill aimed to alter the role of the state- owned National Investment Bank (NIB) in boosting development and fighting recession.

The cabinet's decision to amend the CBE law has been widely hailed as a progressive step in Egypt's economic history.

The year 2007 witnessed the operation of the first credit information company by the participation of more than 32 banks. Besides, the first release of stocks presented by the Egyptian Pound succeeded, as the coverage volume reached 250% in the world money markets which reflects their confidence in the Egyptian economy.
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