Hassan Abdalla, Governor of the Central Bank of Egypt, talks to Global Finance about how to attract more investors and the bank’s next steps.
Global finance: What have been the main economic challenges of the last two years?
Hassan Abdallah: Internationally, we have had to deal with an unprecedented surge in global commodity prices, which has put pressure on domestic prices and put budgetary situations under strain. At the same time, major central banks raised interest rates by more than 500 basis points, leading to capital outflows from emerging markets. Added to this are increased geopolitical tensions. The Red Sea attacks significantly reduced our revenues from the Suez Canal, putting additional pressure on our foreign exchange sources.
Nationally, inflation has reached multi-decade highs, peaking at more than 35% in 2023, driven by currency depreciation and inflation of imported raw materials. The currency itself has also come under pressure. Successive devaluations between 2022 and 2024 have created currency volatility, limited imports and caused bottlenecks for the industry.
Policy uncertainty and delayed structural reforms further weighed on confidence. The Central Bank had to act. To curb inflation, we carried out a strong monetary tightening, increasing rates by a cumulative 1,900 basis points between 2022 and 2024. And in March 2024, the unification of the exchange rate brought back much-needed transparency to the foreign exchange market, channeling resources into the official system.
GF: The CBE floated the currency in March 2024: has this policy change delivered the expected results and what are the next steps?
Abdullah: The unification of the exchange rate was a turning point for the Egyptian economy. It was a bold but necessary step. The flexible exchange rate acted as a shock absorber, allowing real-time adjustment to external pressures in a volatile environment. The move brought clarity to the foreign exchange market, eliminated distortions, cleared import delays and enabled more efficient allocation of foreign currencies, thereby restoring confidence domestically and internationally.
The effects were immediate. By mid-2024, we began to reap the benefits of our actions. Inflation fell to 25.7%, then to 12% in August 2025, which gives us the opportunity to start our cycle, reducing rates by 525 basis points cumulative since April 2025, without compromising financial stability. Banks remained resilient and international reserves reached record levels, bolstered by new long-term capital flows and large-scale investment commitments, improving both the quantity and quality of external reserves.
These inflows helped narrow the current account deficit to $13.2 billion in the first nine months of the 2024/2025 financial year, from $17.1 billion the previous year. This was mainly due to increased remittances, one of Egypt’s main sources of foreign exchange, which increased by 82% to $26.4 billion during the same period. Foreign participation in local debt markets resumed as inflation fell and real rates became positive, strengthening external liquidity and investor confidence. Net international reserves reached a record $49.25 billion, covering 6.5 months of imports.
Looking ahead, the focus will be on maintaining exchange rate flexibility and developing deeper and more liquid foreign exchange markets to strengthen economic resilience. And with inflation slowing, expectations anchoring and confidence restoring, we could continue to ease monetary policy using our data-driven approach.
GF: How can the CBE support efforts to make Egypt more attractive to investors?
Abdullah: At the most basic level, our goal is to ensure economic stability, by containing inflation and providing a credible, liquid and transparent foreign exchange market. I believe one of the most valuable things we can offer as a central bank is clarity. Clear communication of policy decisions is key to building investor confidence, particularly in a volatile global environment.
We also focus on developing deep financial markets, expanding local debt and equity instruments, broadening financial instruments and improving infrastructure. At the same time, we ensure that our financial sector remains healthy and that credit flows efficiently to the real economy, in particular to the private sector.
Another key element is the resilience of our external position. Egypt has recently secured significant long-term capital flows through strategic partnerships and large-scale investment commitments. With new projects underway, this trend is expected to continue. Broader government initiatives, such as the privatization and sale of state assets program, play a complementary role from a monetary perspective and present investment opportunities.
Looking ahead, we are also increasingly aligning our mandate with strategic themes ranging from ESG-related finance, green transition and digital finance ecosystems.