The Central Bank of Egypt (CBE) has announced that local currency loans to the private sector grew by an average of 10.1% in the first quarter (Q1) of 2025, a sharp turnaround from the -8.7% contraction recorded during the same period in 2024.
In a recent report, the CBE attributed this rebound primarily to stronger demand from private businesses, supported by a significant decline in the annual headline inflation rate in February 2025. The Bank noted that these developments signal a recovery in real economic activity across the private sector, a trend expected to continue in the coming months.
On the monetary side, the CBE projects a slowdown in the growth of local liquidity, expecting it to ease to 23.2% by the end of June 2025—down from 28.7% a year earlier. Liquidity growth is forecast to stabilise at 22.8% by the end of June 2026.
This anticipated deceleration reflects the diminishing impact of the March 2024 exchange rate unification, which had previously triggered a surge in the banking sector’s net foreign assets and created a strong base effect beginning in March 2025.
Looking ahead, the Central Bank expects headline inflation to average between 14% and 15% in 2025 and decline further to a range of 10% to 12.5% in 2026. This compares to an average of around 28.4% in 2024.
While inflation is projected to continue falling throughout 2025 and 2026, the CBE cautions that the pace of decline will moderate following the sharp drop observed in early 2025. This more gradual disinflation is attributed to ongoing fiscal consolidation efforts and the slower retreat in non-food commodity prices.
The Bank reiterated its commitment to achieving its inflation target of 7% (± 2%) by the fourth quarter of 2026. It affirmed that current monetary conditions remain appropriate to support this path, adding that it will maintain a positive real interest rate to help secure a sustained decline in core inflation and anchor inflation expectations.
In a separate update, the CBE disclosed that the net foreign assets (NFAs) of the banking system—which includes both the Central Bank and commercial banks—turned positive as of May 2024, reaching a surplus of $15.1bn by March 2025.
This improvement was largely driven by inflows from the Ras El-Hekma deal and renewed foreign investment in Egyptian debt instruments, buoyed by increased investor confidence following the exchange rate unification. Additional support came from a recovery in remittances from Egyptians abroad and continued backing from international financial institutions.
