Hassan Abdalla, Governor of the Central Bank of Egypt (CBE), said the bank has steadily navigated economic challenges through sustained and disciplined policy efforts.
In the CBE’s annual report, Abdalla noted that, at the domestic level, the bank has remained focused on achieving the ultimate objective of monetary policy—price stability. In this context, the decisions taken by the Monetary Policy Committee (MPC) during its meetings in FY 2023/2024 were fully aligned with inflation developments and forecasts of inflationary pressures.
He pointed out that risks continue to surround the expected inflation path, including the escalation of geopolitical tensions, unfavourable climatic conditions both domestically and globally, as well as the impact of fiscal consolidation measures.
Globally, the financial system witnessed improvement during FY 2023/2024, driven by rising expectations that central banks in major economies would begin cutting key interest rates in the second half of 2024 as inflationary pressures gradually subsided.
Despite widespread monetary tightening to counter inflation, the global economy demonstrated notable resilience. Preliminary estimates indicate that average global growth rose to 2.9% during FY 2023/2024, compared with 2.7% in the previous fiscal year.
Most central banks in advanced economies continued tightening their monetary policies, led by the US Federal Reserve, which raised interest rates by 25 basis points to their highest level in more than 23 years. The European Central Bank also increased interest rates across its main refinancing operations, marginal lending facility and overnight deposit facility to record highs, before cutting them again by 25 basis points in June 2024 for the first time in nearly five years. Similarly, the Bank of England raised its key interest rate to its highest level in 15 years.
Monetary policy trajectories in major emerging economies, however, diverged during the period. The People’s Bank of China continued to cut interest rates, while the Central Bank of Brazil began easing its policy stance. In contrast, the Central Bank of the Russian Federation shifted towards rapid rate hikes, and the Central Bank of Turkey continued raising rates several times to curb sharply rising inflation. Meanwhile, the Reserve Bank of India and the South African Reserve Bank maintained interest rates at elevated levels.
Following the end of the fiscal year under review, the US Federal Reserve cut the federal funds rate for the first time since 2020, reducing it by a cumulative 75 basis points in September and November 2024 to stimulate growth and support the labour market. The European Central Bank also continued to lower its key rates in September and October, while the Bank of England reduced its policy rate twice, in August and November 2024. Conversely, the Bank of Japan continued to raise the interest rate on excess reserves held by financial institutions in July 2024, reaching its highest level since the global financial crisis of 2008.
Against this backdrop, Abdalla stressed that the MPC would not hesitate to deploy all available tools to maintain tight monetary conditions, with the aim of sustainably reducing monthly inflation rates and achieving price stability over the medium term.
Accordingly, the CBE adopted a tightening monetary stance through seven MPC meetings during FY 2023/2024, resulting in a cumulative increase of 900 basis points in key policy rates.
At an extraordinary MPC meeting held on 6 March 2024, the CBE announced that it would allow the exchange rate to be determined by market forces. This move facilitated the elimination of foreign exchange backlogs following the closure of the gap between official and parallel market rates.
As a result, Egypt’s external position witnessed a marked improvement, supported by unprecedented inflows of foreign direct investment and portfolio investments. The decision also contributed to higher remittances from Egyptians working abroad, increased proceeds from non-oil merchandise exports, and stronger tourism revenues. Together, these developments helped rebuild the CBE’s foreign exchange reserves and strengthen banks’ external positions.
Abdalla said the crises and challenges faced globally over the past two years have underscored the resilience of the Egyptian banking system and the CBE’s capacity to support the national economy while fulfilling its core mandate of maintaining monetary and banking stability.
During FY 2023/2024, the aggregate financial position of banks—excluding the CBE—expanded by 40.1%, while key financial soundness indicators remained robust. The capital adequacy ratio, including the capital conservation buffer, reached 18.6% at the end of June 2024, well above the minimum requirement of 12.5%. The financial leverage ratio stood at 7.5%, compared with a mandatory minimum of 3%.
Returns on average assets and equity registered 2.0% and 32.2%, respectively, based on approved FY 2023 figures. The ratio of non-performing loans to total loans and facilities stood at 2.7% in June 2024, with provisions covering 86.2% of non-performing exposures.
Within the framework of strengthening the legislative and regulatory environment and implementing the Central Bank and Banking Sector Law No. 194 of 2020—designed to align with international best practices—the CBE issued several prudential regulations, including a comprehensive licensing and regulatory framework for digital banks. It also extended its directive requiring banks to allocate 25% of their credit facilities portfolio to financing micro, small and medium-sized enterprises (MSMEs).
The CBE, Abdalla noted, remains firmly committed to its leading role in advancing the Sustainable Development Goals and the objectives of Egypt’s Vision 2030. As a result of its financial inclusion initiatives, the inclusion rate rose to 71.5% of the population in June 2024, representing 48.1 million citizens aged 16 and above with active bank accounts.
In parallel, efforts to strengthen digital financial infrastructure led to a sharp increase in the value of instant transfer transactions executed through the Instant Payments Network (IPN), launched in March 2022, reaching approximately EGP 1.8trn in June 2024.
“Lastly, I would like to express my profound confidence in the CBE’s ability to overcome all challenges, supported by its forward-thinking cadres and diverse institutional capabilities,” Abdalla said.
“I also extend my sincere appreciation to all employees of the Central Bank of Egypt for their dedication and hard work. I look forward to continuing our efforts, driven by teamwork and cooperation, to achieve a distinguished position that sets an example for central banks at both regional and international levels.”
