Egyptian Economic Performance Being the most diversified economy in the Middle East, last year the Egyptian economy managed to achieve a lot of progress as a result of the government's perseverance to implement the economic reform program for the aim of achieving economic, social and human development. The major developments can be summarized as follows: 1-The rise in the economic growth rate from 5.7% to 7% in 2 years, thus recording the highest rate achieved in the last 15 years. This is mainly attributed to the growth achieved in the growth-driven sectors; namely; petroleum and natural gas, tourism, Suez Canal, industry, building and construction and CIT. 2-The continuous rise in foreign direct investment (FDI) from 407 million USD in 2003/2004 to 3.9bn USD in 2004/2005 to 6.1bn USD in 2005/2006 and is expected to reach between 7.5 and 8.5 bn USD in the coming year. This was accompanied by a structural change in FDI towards non-petroleum sectors that now account for more than 80% of the total FDI, in addition to the strong entry of new countries as foreign investors in the Egyptian market mainly China, India and Turkey, in parallel with traditional countries which have increased their FDI in Egypt including GCC countries, EU, USA, Japan, Korea, Canada and Singapore. This trend is likely to enhance the expectations of several international economic organizations that Egypt will be able to achieve the first rank in Africa in terms of FDI in 2007. 3-The increase in foreign reserves at CBE from 14 bn USD in 2002 to 26bn USD in 2006, in addition to the increase in the service account surplus to reach 8.2 bn USD as a result of the increase in the tourism revenues by 12.5% to reach 7.2bn USD, the Suez Canal revenues by 7.6% to reach 3.6 bn USD and the private remittances to reach 5bn USD comprising mainly of the remittances of the Egyptians working abroad which reached 3.7bn USD. This was accompanied by the rise in the total banking deposits by 10.3% to reach 581bn EGP, 84.7% of which are non-governmental deposits. 4-The increase in exports by 34% to reach 18.455bn USD in 2005/2006 versus 13.833bn USD in 2004/2005, of which 10.222bn USD are petroleum and gas exports and 8.232bn USD are other goods and services. Meanwhile, imports reached 30.441bn USD, thus underling the fact that the trade balance deficit of 11.985bn USD is partially attributed to the increase in capital and intermediate goods related to the increasing economic activity. 5-The value of traded assets in the capital market amounted to 500bn EGP reflecting the liberalization policies which resulted in an unprecedented interest in the publicly-owned portfolio to reach more than 15bn EGP by the end of the fiscal year 2005/2006, meanwhile these revenues reached 12.5bn EGP during the period from July to November 2006.These revenues are directed to improve the infrastructure including roads, ports, transport and sewage and water systems. 6-Regarding the banking sector, the CBE has undertaken the trend of encouraging consolidation and acquisition for the goal of creating solid banking entities to comply with the "BAZEL 2" standards. Therefore, the minimum capital for banks has been determined by 500 million EGP, thus resulting in the consolidation of several banks; namely; EAB with Arab African International Bank, MIBank with the National Bank of Egypt, Port Said National Bank with the Arab International Banking Company, Cairo Bank with Misr Bank. Additionally, the Bank of Alexandria was the first public bank to be offered for privatization in an international bid which was won by the Italian San Paolo IMI. 7-Regarding the fiscal reform, new taxing and customs systems were put into force comprising corporate tax reductions of 50% and large customs reductions. These policies had a positive effect on tax revenues which increased by 17% in addition to the effect on enhancing economic activities and encouraging investments. Moreover, new trade agreements were reached such as the free trade agreement with Turkey and the QIZ agreement. 8-There has been a significant increase in petroleum and gas exports from 3.2bn USD in 2002/2003 to 10.222bn USD in 2005/2006. Meanwhile, total petroleum production is estimated to be 700 thousand barrels per day whereas the proven natural gas reserves are estimated to be 67 TCF(trillion cubic feet). On a similar note, due to the remarkable progress in the natural gas industry, Egypt managed to acquire the 6th rank worldwide in terms of LNG exports. On the other hand, intensive exploration efforts have been undertaken taking into consideration that preliminary studies point out at the possibility of the presence of large reserves in the onshore areas. Gas reserves yet to prove is estimated to be 200TCF which still need further efforts maximizing utilization of latest technological advances in the field. Ambitious projects for gas exports (either by pipeline or LNG tanker) have been established mainly, the Arab Natural Gas Pipeline as a regional gas pipeline system extending from Egypt to Jordan, Syria, Lebanon and Turkey, in addition to the export of 114 cargos of LNG to many countries including Spain, France, USA, Korea, UK, Belgium, Japan, Italy and India. 9-The progress in the petroleum sector has been accompanied by the implementation of the Ministry of Petroleum strategy to establish the largest refinery and 4th generation-petrochemical complex in Egypt for a total investment of 9.5bn USD, aiming at producing ethylene and polyethylene, propylene, polypropylene, styrene, polystyrene, glycol, xylene and paraxylene as well as energy-generation and water desalination . This complex –which is to be established in Kafr Elsheikh- is estimated to be ready by 2012 with an overall production exceeding 10bn USD and job creating ability of about 100 thousand jobs. 10- Tourism revenues have also witnessed a significant increase from 3.8bn USD in the fiscal year 2002/2003 to 5.5bn USD in 2003/2004 to 6.6bn USD in 2004/2005 to 7.2bn USD in 2005/2006. Meanwhile, last year, the number of tourists reached 8.6 millions, representing 21% of the total number of tourists in the Middle East. According to the plan of the ministry of Tourism, Egypt should be ready to host 14 million tourists in 2011, thus there is a need for adding 15000 hotel rooms per year as Egypt owns 175000 rooms and is now establishing 129000 more rooms. On a similar note, there has been development of the tourism infrastructure as reflected in the renovation of Aswan and Luxor airports while Hurghada and Sharm Elsheikh airports are under renovation. Meanwhile, the first phase of Cairo Airport renovation project is to be inaugurated in July 2007. Alamain airport will be soon be inaugurated as well as Marsa Alam airport which is the first airport to operate by BOT system. 11-Within the framework of the government's efforts to achieve the economic reform program and attract more FDI in addition to developing dialogue with different international business circles and bodies, several economic conferences were held in Egypt in 2006, including World Economic Forum in Sharm Elsheikh during the period 20th-22nd of May, Euromoney Conference held in Cairo on 11th and 12th of September, Egypt invest on 1st and 2nd of November, WAIPA Conference in Sharm Elsheikh on 17th and 18th of November, The Global Energy Round Table on 30th of November and 1st of December and Cairo Investment Forum on 10th and 11th of December. Moreover, there have been several positive reports on the performance of the Egyptian economy issued by IMF, UNCTAD, Euromoney, JP Morgan, Oxford Business Group, Moody's and FITCH. Despite the fact that these reports elaborate on the Domestic Public Debt as 62% of GDP, the ministry of Finance underlines that according to international standards, the domestic debt has not exceeded the safety level taking into consideration that this ratio has declined from 84% in 2003, to 77% in 2004, to 62% in 2006 and is expected to decline more in the coming years through the implementation of the new tax and customs laws and the unified budget account as well as directing a portion of the privatization proceeds to cover part of this debt. 12-This presentation demonstrates some of the major economic progress that has been lately achieved, taking into consideration that the boom that the economy is witnessing is not just a bubble and is based on solid factors reflecting the government's efforts to implement the reform program, establish Public Private Partnership (PPP) and improve the investment climate. Moreover, these achievements represent a solid base for upgrading of the economy and achieving sustainable development.