Factbox: Hassan Abdalla's monetary policy as head of CBE

Asmaa Mostafa,Tuesday 28 Nov 2023

Egyptian President Abdel-Fattah El-Sisi recently decreed the formation of a new board of directors for the Central Bank of Egypt (CBE) under Hassan Abdalla, who has served as acting governor of the bank since August 2023.

CBE Acting Governor Hassan Abdullah.
CBE Acting Governor Hassan Abdullah.


Appointed on 27 November, Abdalla's tenure will last one year, extending his appointment as acting governor in August.

Here are some key facts from Abdalla's governorship of the CBE so far:

His appointment came while Egypt grappled with an economic crisis exacerbated by the war in Ukraine and a scarcity of foreign currency, combined with a global rise in interest rates.

* During Abdalla's tenure, several significant changes occurred concerning interest rates, inflation, and the value of the Egyptian pound.

  • Interest rates increased four-fold, surging during Abdalla's governorship by 8 percent from 11.75 percent in August last year to 19.75 percent currently.

* Overnight deposit and lending rates, as well as the CBE's main operation rate, witnessed similar increases, each rising by 8 percent during Abdalla's tenure.

  • During this time, the Egyptian pound depreciated against the US dollar, falling from EGP 19.23 to EGP 30.89 per $1; a 37.7 percent loss in value. The parallel market exchange rate exceeded EGP 55 per $1.
  • This depreciation, accompanied by economic turbulence, led to a surge in the country's annual core inflation rate by 21.4 percent during Abdullah’s tenure, rising from 16.7 percent in August 2022 to a record 38.1 percent in October 2023.

This huge rise comes despite Abdalla’s statement in April that “The bank’s primary focus in the current period is curbing inflation. We are targeting a seven percent (±2 percent) inflation rate by the fourth quarter of 2026.”

  • Furthermore, in October 2022, the International Monetary Fund (IMF) approved a 46-month $3 billion loan deal under the Extended Fund Facility (EFF) for Egypt, stipulating the country's adherence to flexible exchange rates, and use of monetary policy tools, namely interest rates, to contain inflation.
  • Despite these challenges, the Central Bank's international reserves increased, reaching $35.102 billion in October 2023 compared to $33.14 billion in August 2022, amounting to $1.96 billion in growth during this period.
  • Kuwait has also prolonged the tenor of a $4 billion deposit at the bank to support the country’s international reserves.
  • The bank also announced in March the extension of an Emirati deposit worth $658.5 million, until August 2027.

  • In November last year, Saudi Arabia renewed a $5 billion deposit in the bank.

  • In December 2022, the bank ceased requiring importers to obtain letters of credit (LCs) for purchases and returned to the cash-against-documents system for imports, in response to objections from importers.
  • To alleviate Egypt's foreign currency shortage, the bank contributed to the signing of currency exchange agreements and debt swap agreements. It also opened barter trade discussions with a number of countries, such as India and Russia.

Additionally, in August, the CBE signed a trade agreement with the Central Bank of the UAE (CBUAE), involving the exchange of EGP 42 billion for AED 5 billion.

Notably, the bank secured ¥7 billion ($956.61 million) from the state-run China Development Bank under a loan agreement in late October.

Abdalla's tenure also saw regulation updates in May, governing the licensing, operations, supervision, and closure of foreign exchange companies.

In late October, the CBE eased restrictions on credit card usage abroad, enabling clients to make unlimited hard currency withdrawals while traveling.

To promote financial inclusion, the bank increased daily and monthly transaction limits on financial inclusion accounts, prepaid cards, and mobile banking by 100 percent in mid-November.

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