Egypt’s Central Bank Sets Five-Year Goal for Wider Use of the Pound

Ahmed Kamel – Egypt Daily News

Egypt News

Central Bank of Egypt Governor Hassan Abdalla has outlined a five-year ambition to make the Egyptian pound legally convertible and more readily tradable in international markets, including by enabling accounts denominated in the currency abroad. He presented the goal as part of a broader effort to strengthen confidence in Egypt’s financial system and expand the role of private businesses in the economy.

Speaking at Egypt Forum 2026, Abdalla said monetary and banking stability were essential to restoring confidence in the “real economy.” He defended a flexible exchange-rate system, under which the pound can rise or fall in response to market conditions, describing it as a first line of protection against external shocks. By contrast, he argued, fixed exchange rates had not suited Egypt and had previously contributed to foreign-currency shortages, parallel-market trading and economic distortions.

The governor said the Central Bank’s immediate priorities had included unifying exchange rates, eliminating the parallel market and bringing down inflation. Inflation, which he said had approached 38% at its peak and exceeded 73% for some food categories had since fallen to about 13. He set a target of 7%, with a margin of two percentage points, in the second half of 2027, followed by a 5% target in 2029. He said the bank would rely on forward-looking monetary policy and forecasting models to guide its decisions.

Abdalla also reported that Egypt’s international reserves had reached $57.3 billion. He said the reserves were sufficient to cover 102% of external obligations falling due over the coming year, compared with coverage of around 70% to 80% in earlier periods. Rather than focusing only on the headline total, he said, the Central Bank was paying attention to the reserves’ quality, immediate availability and composition, including the currencies and gold held.

The proposed plan for the pound’s international convertibility is a longer-term objective, not an immediate change to the currency’s status. Abdalla said it would be pursued over the next five years, following what he described as Egypt’s adoption of a fully flexible exchange-rate system and recognition of that framework by international financial institutions. The aim, he said, is to permit legal conversion and trading outside Egypt and make it possible to open pound-denominated accounts in international markets.

His remarks came as the Egyptian pound faced renewed pressure against the US dollar. During the same forum, Abdalla defended exchange-rate flexibility as a way for the economy to adjust to changing conditions rather than maintain a rate that no longer reflects them. The dollar’s rise above EGP 55 illustrated the immediate challenge confronting the policy: flexibility can help address imbalances, but currency movements also affect prices, businesses and household budgets.

Abdalla said the banking sector was positioned to absorb shocks. He put the capital adequacy ratio at 19%, above the stated international benchmark, and said returns on average assets stood at 2.6%. Non-performing loans represented 1.8% of lending, while provisions covered more than 87% of those loans. He also disputed the view that banks were focused mainly on financing government debt, saying credit directed toward economic activity had risen to about 69%.

The governor pointed to digital services as another element of the financial-sector agenda. He said Egypt was nearing the launch of its first two digital banks and completing work on a digital financial-identity system designed to let customers open accounts remotely. He also cited plans to strengthen InstaPay services for Egyptians abroad, including to support remittance flows.

The Central Bank’s stated financial-inclusion target is 82.5% by 2030. Abdalla’s remarks linked that goal to a broader transformation: expanding access to banking, building confidence in the pound and increasing the economy’s capacity to generate foreign currency. The five-year convertibility ambition, if achieved, would depend not only on formal exchange-rate rules but also on sustained market confidence, reliable access to foreign currency and continued stability in the banking system.

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