Hassan Abdullah, Governor of the Central Bank of Egypt, spoke to Global Finance about attracting more investors and the bank’s next steps.
Global Finance: What are the main economic challenges over the past two years?
Hassan AbdullahOn the international front, we had to face an unprecedented rise in global commodity prices, which put pressure on domestic prices and strained financial situations. At the same time, major central banks raised interest rates by more than 500 basis points, triggering capital outflows from emerging markets. On top of that came increasing geopolitical tensions. The Red Sea attacks resulted in a significant reduction in our revenues from the Suez Canal, placing additional pressure on our sources of foreign exchange.
Domestically, inflation has risen to its highest levels in several decades, peaking above 35% in 2023, driven by currency depreciation and inflation of imported goods. The currency itself has also come under pressure. Successive currency devaluations between 2022 and 2024 led to currency fluctuations, restricted imports, and caused bottlenecks for the industry.
Policy uncertainty and delayed structural reforms also affected confidence. The central bank had to act. To rein in inflation, we pursued aggressive monetary tightening, raising interest rates by a cumulative 1,900 basis points between 2022 and 2024. In March 2024, exchange rate unification restored much-needed transparency in the foreign exchange market, channeling resources back into the formal system.
GF: The Central Bank of Egypt floated the currency in March 2024 – has this policy shift achieved the desired results and what are the next steps?
Abdullah: Unifying 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 adaptation to external pressures in a volatile environment. This move brought clarity to the foreign exchange market, removed distortions, eliminated the backlog of imports, allowed for a more efficient allocation of foreign currency, and restored confidence domestically and internationally.
The effects were immediate. By mid-2024, we are starting to reap the benefits of our labor. Inflation fell to 25.7%, then to 12% by August 2025, giving us room to begin our cycle, cutting interest rates by a cumulative 525 basis points since April 2025, without compromising financial stability. Banks remained resilient, and international reserves reached record levels, supported by new long-term inflows and broad investment commitments, improving the quantity and quality of external reserves.
These flows contributed to reducing the current account deficit to $13.2 billion in the first nine months of the 2024/2025 fiscal year, down from $17.1 billion in the previous year. This is mainly due to an increase in remittances, one of Egypt’s largest sources of foreign exchange, by 82% to $26.4 billion during the same period. Foreign participation in domestic debt markets resumed as inflation declined and real interest rates turned positive, boosting external liquidity and investor confidence. Net international reserves reached a record $49.25 billion, covering 6.5 months of imports.
Looking ahead, the focus is on maintaining exchange rate flexibility and developing deeper and more liquid foreign exchange markets to enhance economic resilience. As inflation declines, expectations stabilize and confidence restores, we can continue to ease our monetary policy using our data-led approach.
GF: How can the Central Bank of Egypt support efforts to make Egypt more attractive to investors?
Abdullah: At the most basic level, we aim to ensure economic stability – containing inflation and providing a reliable, liquid and transparent foreign exchange market. I think one of the most important things we can provide as a central bank is clarity. Clear communication about policy decisions is key to building investor confidence, especially in a volatile global environment.
We also focus on developing deep financial markets, expanding domestic debt and equity instruments, expanding financial instruments, and improving infrastructure. In parallel, we ensure that our financial sector remains healthy and that credit flows efficiently into the real economy, especially towards the private sector.
Another key element is the flexibility of our external position. Egypt has recently obtained significant long-term inflows through strategic partnerships and large-scale investment commitments. With new projects in the pipeline, this trend is expected to continue. Broader government initiatives, such as the privatization program and sale of state assets, play a complementary role from a monetary perspective and provide investment opportunities.
Looking to the future, we are also increasingly aligning our mandate with strategic themes ranging from ESG finance, the green transition, and digital finance ecosystems.
