Since 2004, reforms introduced to Egypt's banking system, tax structures, fiscal policy and business-establishment procedures have won international recognition and favorably positioned the country to continue on its path of growth in the face of a decelerating global economy.
Egypt topped the World Bank's list of reformers in its Doing Business 2008 report, and has been among the World Bank's top ten reformers for three of the past four years. Egypt also won the Outsourcing Destination of the Year Award from the London-based National Outsourcing Association.
In banking, the Central Bank of Egypt's creation of an inter-bank foreign currency exchange system has helped stabilize the value of the Egyptian pound and increase liquidity of foreign currencies in the local market. Other reforms included the privatization of state-owned assets, including the landmark sale of the Bank of Alexandria in 2006, and raising the minimum capital requirements of existing banks in order to consolidate underperforming ones into larger, more stable institutions.
Today, the primary problems in the banking sector are not flagging demand or sub-prime debt, but rather coping with growing demand for banking services while countering bankers' innate caution, which has translated into a low deposit-utilization rate.
In 2006, new legislation saw Egypt's tax rates drop to among the lowest among investment-seeking countries. Corporate and personal income tax rates now top off at 20 percent, lower than many FDI competitors including China, India, Turkey and South Africa.
In order to accommodate the rapidly expanding economy, the government implemented a plan to overhaul its fiscal policies. The plan has been slowly reducing market-distorting subsidies on food and energy products while increasing infrastructure and public services spending. Combined with other reforms, the result has been the reduction of the budget deficit from 10.5 percent of GDP in 2004 to 7.5 percent in 2007, on track to reach the target of 3.5 percent by 2011.
New business registration can now be completed at the Ministry of Investment's one-stop shops in as little as 72 hours, while the minimum capital requirement has been reduced to EGP 200, down from EGP 50,000 in 2006.