Geert Bekaert and Campbell R. Harvey's


Chronology of Economic, Political and Financial Events in Emerging Markets




Major Political and Economic Events




Banking crises (1981-1983): Government closed several large investment companies.a2


The commercial banks were authorized to use a portion of their available foreign exchange receipts each month to settle debt-serving obligations falling due after this date on private sector debt denominated in foreign currencies owed to banks operating in Egypt. This drawdown requirement would not apply to free accounts. Priority would be given to settlements of private debt obligations related to imports, and the Central Bank would determine the max foreign exchange allocation for each commercial bank for this purpose. Debt secured by deposits in foreign exchange or similar guarantees were excluded, and no other transactions were permitted under this arrangement.a3(first entry)


Emigrants of Egyptian nationality were allowed to export personal effects and furniture up to LE 1,200 a person and LE 3,000 a family. A woman of Egyptian nationality who is married to a foreigner and holding a "Departure Form A" was authorized to export up to LE 6,000 when leaving the country permanently.a3


The commercial banks were allowed to use a portion of the resources of the new bank market for the settlement of private sector debt obligations in foreign currencies regardless of the date on which the debt became due. The commercial banks were allowed to sell their foreign exchange earnings to their indebted private sector customers for the purpose of settlement of debt denominated in foreign exchange at the prevailing new bank market rate.a3


Banking crises (1990-1991).a2


Interest rates and foreign exchange controls were lifted. Ceilings on credit to private sector were lifted too. Mehrez and Kaufmann Liberalization date. a1


Foreign banks were permitted to conduct business in foreign currency. Mehrez and Kaufmann's second Liberalization date. a1


The Capital Market Law 95 grants foreign investors full access to capital markets. There are no restrictions on foreign investment in the stock exchange.pp


The introduction of the Insider Trading Laws.a4


The limit on nonbank foreign exchange dealers' open positions was raised to $200,000 from $150,000 for each LE 1 million of capital.a3


The ceiling was raised again to $225,000 per LE 1 million of capital.a3


The regulation that the difference between a bank's foreign currency denominated assets and foreign currency denominated liabilities be limited to 15% of the bank's capital was replaced by a new regulation that each bank's currency exposure in any single foreign currency may not be more than 10% of capital and that exposure in all currencies combined may be no more than 20% of capital.a3


A number of restrictions on the purchases of assets were eliminated. In addition, the regulation governing the transfers of proceeds from sales of real estate by nonresidents was modified.a3


Nonbank foreign exchange dealers may maintain foreign exchange working balances of up to $225,000 for the first LE 1 million of paid-up capital and up to $295,000 for each LE 1 million after the first LE 1 million of paid-up capital.a3


Restrictions affecting the timing of the transfer abroad by nonresidents of the proceeds of sales of Egyptian real estate were eliminated.a3


The government planned to privatize 91 firms worth LE 285 million ($83.8 million) by June 1998. Moody's assigned a sovereign ceiling of Ba2 for ratings on long-tern foreign currency-denominated bank deposits and Not Prime ceilings for short-term obligations.


The Central Bank of Egypt cut its discount rate to 13.25% from 13.5%, the first rate cut since November 1995.


ADR effective date. (Company=SUEZ CEMENT COMPANY S.A.E. - REG S)a11


The Cairo Stock Exchange had registered an inflow of foreign funds amounting to about $600 million in the six months ending in November.


Investment Incentives and Guarantees Law 8 of 1997 allows 100% foreign ownership and guarantees the right to remit income earned in Egypt and to repatriate capital and profits, and equal treatment regardless of nationality.pp


S&P's investment grade rating of the country's long term debt help boost the stock market 25.9% in dollar terms during the month.


Central Bank officials indicated that the government would sell between 40% and 60% of one of the big four public sectors banks to a strategic investor by the end of the year.


Abdelghani Gamea, a new chairman of the Cairo and Alexandria stock exchanges, stated that improving corporate disclosure and resolving problems of the dealing, clearing, and central depository systems would be his main priorities.


The government announced it planned to partially privatize six engineering companies, worth $382 million) and up to 4.2 million shares of Suez Cement. The Capital Markets Authority intended to lift the 5% daily stock price limit.


A new method to calculate bourse closing priced based on the weighted average of trades throughout the day went into effect.


Egyptian government planed to privatize the tourism industry.


The attack at Luxor by a militant group.


The government announced that progress on the privatization program was moving along, with 47 companies being readied for sale. The Cairo and Alexandria stock markets signed agreements to establish an electronic trading system.


The final version of Tax-Law #5/98 was released.


The state was reported to create three investment funds that would inject nearly LE900 million into the Egyptian Stock Exchange. 


The Egyptian government announced its plans to sell further stakes in partially privatized firms including Cairo Electricity and possibly the Egyptian Telecommunication Co.


Sherif Raafat, who has been widely credited for his reforms, announced that he would resign as chairman of the Cairo and Alexandria stock exchanges in December 1998.


LaFarge Ciment acquired the state-owned Beni Suef Cement at LE1.3 billion ($382 million). The Privatization Committee announced it had decided to offer stakes in additional six companies.


Foreign exchange conversion had been delayed for weeks.


Private-vector oriented Atef Ebeid was appointed as Egypt's new prime minister. Government stakes in Assuit Cement and Alexandria Cement were sold successfully.


In the first quarter, Hard currency earnings from oil and remittances had been hit by the downturn in oil prices and recession in the Gulf economies. The government tried to curb credit growth, tight trade financing, restrict imports and ration the supply of foreign exchange. The central bank depleted foreign exchange reserves when it tried to protect the overvalued pound.


The government decided to repay US$7.5 billion of accumulated state arrears to local companies.


The budget recommended targeted increases in wages and subsidies designed to benefit the lower income groups that needed relief the most.


S&P downgraded its outlook on Egypt from stable to negative. MSCI announced Egypt would be graduated into its emerging markets index. The US$320 million IPO of Orascom Telecom, the largest in Egypt, failed to lift the markets.


Exchange-rate volatility plunged the Cairo bourse to four-year lows.


The government decided to back down on its plans to limit cash withdrawals from banks. Investors poured funds back into the market when the government postponed the IPO of Telecom Egypt. The ruling National Democratic Party remained in control of Parliament after the elections, but its margin was reduced a lot.


The Central Bank returned to a managed-peg system, with the exchange rate fixed much below the prevailing market level This, and three subsequent devaluations, led to a rush to buy U.S. dollas, an increase in black-market activities, and fears of a liquidity crunch.


In the second quarter, the ruling National Democratic party won the election to the advisory Shura Council Parliament. S&P gave Egypt an investment-grade debt rating.


Exchange instability forced the central bank to devalue the pound successively in July and August.


The government imposed import restrictions in response to the fall in oil prices and slump in tourism.


The pound was devalued by 7.8%, the biggest drop in 10 years.


The Central Bank of Egypt has reported a US$276m depletion in its foreign currency reserves. b1


Egypt downgrades relations with Israel - restricting contacts to those which "serve the Palestinian cause" - after Israel's crackdown on Palestinian leader Yasser Arafat.


New Law, setting up a fund to provide credit facilities to export-oriented businesses, Passed to Boost Exports. b1


Central Bank announced a new profit-repatriation system for foreigners investing in the Egyptian stock market. Sub-custodian banks are now required to open foreign and local currency accounts for foreign investors. b7


President Hosni Mubarak has been overwhelmingly re-elected chairman of Egypt's ruling National Democratic Party (NDP) at the party's first convention in a decade


The Bank of Egypt moved yesterday to cut its leading interest rate by 100 basis points.


Prime Minister Atef Ebeid announced the adoption of a free-market exchange-rate system b7


The World Bank, together with the African Development Bank, is putting a US$1bn easy loan at Egypt's disposal to help shore up the country's economic reforms. b1


The government has imposed a three-month suspension of state imports, excluding basic food items, amid an ongoing shortage of hard currency and a weakened exchange rate. b1


Capital Controls Introduced in Egypt to Prevent Currency Flight, mandating the resale of 75% of hard-currency earnings to state banks.


The National Assembly has passed draft laws to abolish state security courts


The new Labor law passed, providing comprehensive guidelines for the recruitment, hiring, compensation and termination of employees, and also established a limited right of employees to strike.


The Egyptian authorities are set to clear a backlog of demand for foreign currency worth around US$70 million.


President Hosni Mubarak's ruling National Democratic Party has opened talks with legal opposition parties following the government's recent promises of political reform.


US-Egyptian relations are in a state of flux, with the US having suspended talks aimed at a free trade agreement and US congressmen currently debating a bill to cut military aid while increasing pressure for domestic political and economic reform.


The Financial Action Task Force (FATF), an international body tasked with fighting money laundering and terrorist financing, has announced the removal of Egypt from its list of non-co-operative countries


Parliament Approves New Incentives for Foreign Companies Investing in Egypt


Full Implementation of EU-Egyptian Association Agreement


Regulations on Foreign Investors


Restrictions: All foreign ownership restrictions have been removed.

Taxation: Dividends do not suffer a withholding tax, but corporations are subject to a profit tax. Capital gains on listed shares is 2%.a6


No change.a7


Restrictions: Foreign investors may own up to 100 percent of businesses within the scope of this legislation. protection against expropriation

Taxation: 10% of sales tax is imposed. b1


Restrictions: 1. Sub-custodian banks are required to open foreign and local currency accounts for foreign investors (global custodians), which will be exclusively maintained for stock exchange transactions.