At A Turning Level, Stability Restored

Hassan Abdalla, governor of the Central Financial institution of Egypt, speaks to International Finance about attracting extra traders and concerning the financial institution’s subsequent steps.

International Finance: What have been the important thing financial challenges over the previous two years?

Hassan Abdalla: On the worldwide entrance, we needed to navigate an unprecedented surge in world commodity costs, which put stress on home costs and strained fiscal positions. On the identical time, main central banks raised rates of interest by greater than 500 foundation factors resulting in capital outflows from rising markets. On high of that got here the heightened geopolitical tensions. The Pink Sea assaults considerably lowered our Suez Canal revenues, putting further stress on our international foreign money (FX) sources.

Domestically, inflation surged to multi-decade highs, peaking above 35% in 2023 pushed by foreign money depreciation and imported commodity inflation. The foreign money itself additionally got here beneath stress. Successive devaluations between 2022 and 2024 created FX volatility, constrained imports, and brought about bottlenecks for business.

Uncertainty over insurance policies and delayed structural reforms additional weighed on confidence. The Central Financial institution needed to act. To rein in inflation, we pursued robust financial tightening, elevating charges by a cumulative 1,900 foundation factors between 2022 and 2024. And in March 2024, the unification of the trade price introduced again much-needed transparency within the FX market, channeling sources again into the official system.

GF: The CBE floated the foreign money in March 2024—has this coverage shift delivered the meant outcomes and what are the subsequent steps?

Abdalla: The unification of the trade price was a turning level for Egypt’s economic system. It was a daring however obligatory step. The versatile FX price acted as a shock absorber, enabling real-time adjustment to exterior pressures in a risky setting. The transfer introduced readability to the FX market, eradicated distortions, cleared import backlogs, and allowed for extra environment friendly allocation of international foreign money, restoring confidence domestically and internationally.

The consequences have been speedy. By mid-2024, we began reaping the fruits of our actions. Inflation fell to 25.7%, and to 12% by August 2025, giving us house to begin on our cycle, slashing charges by a cumulative 525 foundation factors since April 2025, with out compromising monetary stability. Banks remained resilient, and worldwide reserves reached document ranges, strengthened by new long-term inflows and large-scale funding commitments, enhancing each amount and high quality of exterior buffers.

These inflows contributed to a narrowing of the present account deficit to $13.2 billion within the first 9 months of the fiscal 12 months 2024/2025, down from $17.1 billion the 12 months earlier than. This was primarily pushed by the surge in remittances, one in every of Egypt’s largest sources of FX, growing by 82% to $26.4 billion throughout the identical interval. International participation in native debt markets resumed as inflation eased and actual charges turned optimistic, reinforcing exterior liquidity and investor belief. Internet worldwide reserves reached a document $49.25 billion, protecting 6.5 months of imports.

Trying forward, the main target is on sustaining trade price flexibility and growing deeper, extra liquid FX markets to strengthen financial resilience. And with inflation easing, expectations being anchored and confidence being restored, we may proceed loosening our financial coverage utilizing our data-driven strategy.

GF: How can the CBE assist efforts to make Egypt extra engaging to traders?

Abdalla: On the most simple stage, we purpose to make sure financial stability—containing inflation and offering a reputable international trade market that’s liquid and clear. I consider that probably the most worthwhile issues we are able to provide as a central financial institution is readability. Clear communication of coverage choices is essential to constructing investor confidence, particularly in a risky world setting.

We additionally concentrate on growing deep monetary markets, increasing native debt and fairness devices, broadening monetary devices and enhancing infrastructure. In parallel, we guarantee our monetary sector stays wholesome and that credit score flows effectively to the actual economic system, significantly in the direction of the personal sector.

One other key factor is the resilience of our exterior place. Egypt has lately secured important long-term inflows by means of strategic partnerships and large-scale funding commitments. With new initiatives within the pipeline, this development is anticipated to proceed. Broader authorities initiatives, such because the privatization and sale-of-state-assets program, play a complementary function from a financial perspective and current funding alternatives.

Trying forward, we’re additionally more and more aligning our mandate with strategic themes starting from ESG-linked finance, inexperienced transition and digital finance ecosystems.