Rami Aboul Naga, Deputy Governor of the Central Bank of Egypt (CBE), confirmed that the bank is not intervening in the foreign exchange market, stating that there is currently no benefit to such intervention. “The market is responding and correcting itself naturally, which helps prevent more severe crises in the future,” he explained.
He highlighted that Egypt’s monetary policy has evolved beyond traditional approaches and is no longer a direct reaction to immediate events. “For years, we have worked on diversifying our trade partnerships and integrating into various regional and global economic blocs. Relying on a single market is not in the best interest of any policymaker,” he added.
Aboul Naga also pointed to significant improvements in Egypt’s economic indicators. Net foreign assets have turned positive, recording a surplus of $10bn, compared to a deficit of $29bn in January 2024. Foreign currency reserves have risen from approximately $35bn to over $47bn, and external debt has decreased from $168bn to around $155bn.
“The target of selling $2bn worth of assets remains intact, although some adjustments have been made due to global developments,” he noted. “We are awaiting additional data and indicators that could support the decision to start easing monetary policy. The global uncertainty will be considered during the next Monetary Policy Committee meeting.”
He reaffirmed that inflation control remains the core priority of Egypt’s monetary policy, and the CBE will take all necessary measures to achieve this goal.
Global Economic Challenges & Egypt’s Preparedness
Aboul Naga spoke at the EFG Hermes Investment Conference in Dubai on Tuesday, an event attended by leading international investors and global financial institutions.
In his address, Aboul Naga highlighted the impact of the shifting global economic order, stating: “The changing balance of economic power is significantly affecting global markets, which are increasingly volatile and uncertain. To navigate this reality, constant preparedness, sound policies, and a robust set of economic tools capable of absorbing shocks are essential, as crises are often inevitable.”
He emphasized Egypt’s preparedness, noting: “In Egypt’s case, we had already implemented proactive policies to shield ourselves as much as possible. Positioned in a region marked by geopolitical tensions, we have remained vigilant. It has been crucial to continue enacting policies that strengthen the resilience of the Egyptian economy.”
Aboul Naga also underscored the importance of Egypt’s financial and economic reserves, which have been strategically built over the years to cushion the impact of global crises. “While the depth or scope of any crisis remains unpredictable, we continue to assess and manage its consequences. Much like during the COVID-19 pandemic, when we faced an uncertain future, today we confront a new, undefined global order. However, our focus remains on maintaining flexible, well-considered policies and pushing forward with reforms, as that is the only path to sustained economic resilience.”
Impact of Global Tariffs and Trade Dynamics on Egypt’s Economy
Aboul Naga acknowledged that global tariffs and the broader trade environment pose significant risks to Egypt’s economy.
Speaking on the issue, he explained: “The risks to global growth are evident, and Egypt will not be immune to them. One of the expected impacts is a potential decline in global trade volumes, which could further affect traffic through the Suez Canal—already experiencing a slowdown. Additionally, investor appetite may be tempered. However, due to the ongoing implementation of our economic reform program, we are confident that Egypt’s solid economic performance will continue to serve as a strong defensive factor, keeping the country on the radar of both direct and portfolio investors.”
Aboul Naga emphasized that Egypt’s monetary policy is no longer reactive or traditionally managed. “We allow the market to operate naturally. While we have witnessed some capital outflows, this is understandable given the current climate of uncertainty. However, the market has proven to be capable of absorbing shocks in real time.”
He further explained: “Our foreign exchange market has evolved into a shock absorber, rather than a source of instability as it was in the past. It is now self-correcting, preventing larger crises from developing. We are not intervening; we are allowing the market to function freely, as we see no real benefit to interference at this stage.”
Trade Relations with the United States
Aboul Naga discussed Egypt’s trade relations with the United States, noting that the US accounts for about 7% of Egypt’s total foreign trade. Exports to the US make up around 5.5% of total exports, while imports from the US represent approximately 11%. “While the relationship is significant, it is not critical to an extreme extent. That said, maintaining open communication channels with key trade partners, including the United States, is always important. However, relying on a single market is not a prudent policy, which is why we have focused on diversifying our trade relationships and expanding ties with various regional and global economic blocs,” he explained.
Aboul Naga made it clear that trade negotiations and political responses are within the purview of political authorities. “We leave those matters to the politicians. As for us, our focus remains on economic reforms and enhancing economic flexibility to navigate future challenges.”
He emphasized his pragmatic approach: “My priority is to focus on what needs to be done now. While we have made significant progress over the past few years, much more work remains. My team and I will continue building reserves and pursuing sound policies, without being distracted by speculative scenarios.”
On the unpredictable nature of global events, he added: “There are no clear guidelines for how things will unfold. Current analysis indicates that this is one of the most uncertain periods to predict. Therefore, we must stay focused, avoid distractions, and take the right steps. This is the best strategy in such uncertain times.”
Aboul Naga reaffirmed the importance of sound and sustainable policies, stating: “Starting well is important, but maintaining momentum in the face of external shocks is the real challenge. What we’ve done is persist in applying the policies we consider essential for our survival, especially in times of crisis.”
Reflecting on Egypt’s recent economic performance, he noted: “Over the past year, we’ve faced several tests, and the market has been watching closely: would Egypt hold up or not? Continuity is key. We had to institutionalize these policies to prevent them from shifting with changing opinions or external pressures. We assessed Egypt’s external position, identified vulnerabilities that led to the previous crisis, and addressed them directly. A key part of our strategy was allowing the exchange rate to act as a shock absorber, rather than exacerbating the impact. We also focused on key issues such as net foreign assets and external debt.”
Aboul Naga pointed to significant progress: “In January 2024, our net foreign assets were negative, standing at $29bn. Today, we have a surplus of $10bn. Foreign currency reserves have risen from around $35bn to over $47bn, and external debt has decreased from $168bn to around $155bn. These numbers reflect tangible progress, and we believe reserves will continue to grow, as they are our best protection against future shocks.”
He also discussed Egypt’s asset sales program, clarifying that it is not merely about filling a financing gap but about improving the source and flow of financing. “While Egypt has successfully accessed capital markets, there has been a perception that we have relied more on debt to meet our needs, while our ability to attract foreign direct investment has been below its potential. However, I believe this mindset is shifting. There is now a growing consensus that Egypt holds significant assets that can be leveraged—not just for capital inflows, but also to stimulate the private sector, improve governance, and maximize the economic value of these assets.”
He continued: “We are entering a new phase in Egypt’s economic history, where foreign investment is evolving. The government is creating a favorable environment for both domestic and international investors, and we expect to see a surge in investment in the coming period. This will complement, not replace, access to debt markets. Egypt aims to position itself as a top investment destination by offering an attractive and stimulating environment.”
Aboul Naga highlighted the government’s focus on structural reforms, particularly in tax policy. “The government is determined to improve the investor experience, not just change perceptions. Efforts to broaden the tax base through incentives and reforms are already underway. Most importantly, achieving competitive neutrality—creating a fair and balanced environment for the private sector to play a larger, more integrated role in the economy—is essential and self-evident.”
Asset Sales and Economic Resilience
Aboul Naga confirmed that the $2bn asset sale target remains in place, although some adjustments have been made based on global developments. “We are still working toward this goal, but naturally, it depends on global investor appetite. The International Monetary Fund (IMF) has been very understanding of these circumstances. We successfully completed the fourth review and are preparing for the fifth, with both sides confident in our ability to achieve all objectives, including foreign direct investment targets,” he explained.
Aboul Naga highlighted the successful management of the Ras El-Hekma deal, noting that the government utilized the proceeds effectively. “The deal brought in $24bn in direct financing, with $11bn converted into local currency. The key message was clear: we must attract more investment into local assets, not only for their financial value but also to improve governance, develop asset management, and generate added value, particularly in non-real estate sectors.”
While Aboul Naga did not provide specific details on upcoming deals, he reiterated the government’s commitment to continuing the asset sales program. “The new Investment Minister is taking decisive steps to improve the investment climate. Most importantly, these operations are being managed with maximum efficiency. We have used the proceeds to strengthen our reserves. The Finance Ministry has reduced reliance on local borrowing and lowered domestic debt—positive indicators that we will continue to build on as we attract more investments,” he said.
Inflation Control and Monetary Policy
Aboul Naga addressed the ongoing challenge of inflation control, emphasizing that it remains central to the CBE’s monetary policy.
He began by acknowledging the severity of inflation in Egypt, stating: “We’ve seen record inflation rates in Egypt. In September 2023, both headline and core inflation were around 38–40%—clearly unsustainable. We have utilized all available tools, both traditional and non-traditional, to curb inflation, and are now beginning to see positive results.”
Aboul Naga highlighted recent improvements, noting: “In February, inflation stood at 12.8%, which was below our expectations—this is a very positive indicator. Our target is to bring inflation down to 7% (±2%) by the final quarter of 2026. Our main focus is on anchoring market expectations around this target, although achieving this in an environment that has experienced high inflation for over a decade remains challenging. Nonetheless, we reaffirm that inflation will remain the central focus of our monetary policy, and we will take all necessary steps to meet this goal. Our credibility as a monetary institution depends on the success of this approach—there is no room for uncertainty.”
He also discussed the potential for interest rate adjustments, stating: “There is nothing preventing us from lowering interest rates. We see no constraints. When we evaluate monetary policy, we do so based on forward-looking expectations (ex-ante), rather than past data (ex-post). While inflation may be lower today, we want to ensure we have a sufficient safety margin to guarantee continued decline in the future—something we believe is happening now.”
Aboul Naga concluded by emphasizing the importance of careful decision-making: “We are awaiting further data and indicators that will guide our decision to begin easing monetary policy. Global uncertainty will certainly be factored into the next Monetary Policy Committee meeting, which is scheduled in about two weeks. The decision will be made collectively by the independent members of the Committee. Once we are confident that easing can be implemented sustainably—not as a temporary measure—we will take action. Our goal is to avoid sharp market volatility and instead implement a gradual, well-considered approach that sends clear signals to investors and markets.”
