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CONTENTS Egypt  Economic AnalysisLegal Information Info-Prod Country Guide  
JUDICIARY   BUSINESS FORMS & STRUCTURES   CURRENCY & BANKING   INTELLECTUAL PROPERTY
TAXATION   INVESTMENT & TRADE   PUBLIC PROCURMENT   ENVIRONMENTAL LAW  

Currency and Banking

Foreign Currency Control

In February 1991, Egypt removed most foreign exchange controls, allowing rates to reflect market forces. Soon thereafter, Egypt fully unified its two-tier exchange system and opened the exchange market to non-bank dealers.

Law No. 38 of 1994 enables the free transfer of foreign currency into or out of Egypt and from one person to another within the country. The only foreign exchange restriction provides that the proceeds from sale of real estate in Egypt that is owned by foreigners residing outside of Egypt may not be transferred abroad for a five year period following the sale. The Egyptian pound remains non-convertible and may not be taken outside the country.

Banking

There are over 100 banks in Egypt, including thirty-eight commercial banks that are controlled by four government-owned banks (Banque Misr, National Bank of Egypt, Bank of Alexandria, and Banque du Cairo) and numerous joint ventures and specialized banks. These four government-owned banks hold two-thirds of the banking community's assets. There are also twenty-one foreign banks with branches in Egypt which, since early 1993, have been permitted by law to deal in Egyptian pounds as well as in foreign currency.

Presently, some major international investment banking institutions are entering the Egyptian market, including HSBC Investment Banking, ING Barings, Credit Suisse and Morgan Stanley.

The Egyptian Government has revised many of the banking laws and practices. Egypt's banks have benefited from the government's reforms of the exchange rate and interest rate systems, and many have made substantial gains by investing in government bills and bonds. Nonetheless, banks still suffer from low capitalization and heavy debt burden from the former socialist period.

Generally, Egyptian banks are considered overly conservative. They often demand a counter guarantee equal to the amount borrowed as a condition to granting a loan. Short-term lending makes up about 80 percent of the major banks' portfolios.


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