stability

Hassan Abdalla, governor of the Central Bank of Egypt, speaks to Global Finance about attracting more investors and about the bank’s next steps.

Global Finance: What have been the key economic challenges over the past two years?

Hassan Abdalla: On the international front, we had to navigate an unprecedented surge in global commodity prices, which put pressure on domestic prices and strained fiscal positions. At the same time, major central banks raised interest rates by more than 500 basis points leading to capital outflows from emerging markets. On top of that came the heightened geopolitical tensions. The Red Sea attacks significantly reduced our Suez Canal revenues, placing additional pressure on our foreign currency (FX) sources.

Domestically, inflation surged to multi-decade highs, peaking above 35% in 2023 driven by currency depreciation and imported commodity inflation. The currency itself also came under pressure. Successive devaluations between 2022 and 2024 created FX volatility, constrained imports, and caused bottlenecks for industry.

Uncertainty over policies and delayed structural reforms further weighed on confidence. The Central Bank had to act. To rein in inflation, we pursued strong monetary tightening, raising rates by a cumulative 1,900 basis points between 2022 and 2024. And in March 2024, the unification of the exchange rate brought back much-needed transparency in the FX market, channeling resources back into the official system.

GF: The CBE floated the currency in March 2024—has this policy shift delivered the intended results and what are the next steps?

Abdalla: The unification of the exchange rate was a turning point for Egypt’s economy. It was a bold but necessary step. The flexible FX rate acted as a shock absorber, enabling real-time adjustment to external pressures in a volatile environment. The move brought clarity to the FX market, eliminated distortions, cleared import backlogs, and allowed for more efficient allocation of foreign currency, restoring confidence domestically and internationally.

The effects were immediate. By mid-2024, we started reaping the fruits of our actions. Inflation fell to 25.7%, and to 12% by August 2025, giving us space to commence on our cycle, slashing rates by a cumulative 525 basis points since April 2025, without compromising financial stability. Banks remained resilient, and international reserves reached record levels, strengthened by new long-term inflows and large-scale investment commitments, improving both quantity and quality of external buffers.

These inflows contributed to a narrowing of the current account deficit to $13.2 billion in the first nine months of the fiscal year 2024/2025, down from $17.1 billion the year before. This was mainly driven by the surge in remittances, one of Egypt’s largest sources of FX, increasing by 82% to $26.4 billion during the same period. Foreign participation in local debt markets resumed as inflation eased and real rates turned positive, reinforcing external liquidity and investor trust. Net international reserves reached a record $49.25 billion, covering 6.5 months of imports.

Looking ahead, the focus is on maintaining exchange rate flexibility and developing deeper, more liquid FX markets to strengthen economic resilience. And with inflation easing, expectations being anchored and confidence being restored, we could continue loosening our monetary policy using our data-driven approach.

GF: How can the CBE support efforts to make Egypt more attractive to investors?

Abdalla: At the most basic level, we aim to ensure economic stability—containing inflation and providing a credible foreign exchange market that is liquid and transparent. I believe that one of the most valuable things we can offer as a central bank is clarity. Clear communication of policy decisions is key to building investor confidence, especially in a volatile global environment.

We also focus on developing deep financial markets, expanding local debt and equity instruments, broadening financial instruments and improving infrastructure. In parallel, we ensure our financial sector remains healthy and that credit flows efficiently to the real economy, particularly towards the private sector.

Another key element is the resilience of our external position. Egypt has recently secured significant long-term inflows through strategic partnerships and large-scale investment commitments. With new projects in the pipeline, this trend is expected to continue. Broader government initiatives, such as the privatization and sale-of-state-assets program, play a complementary role from a monetary perspective and present investment opportunities.

Looking ahead, we are also increasingly aligning our mandate with strategic themes ranging from ESG-linked finance, green transition and digital finance ecosystems. 

The first female governor of the National Bank of Cambodia is upbeat about its ability to navigate global and internal uncertainties and capitalize on pending reforms.

Global Finance: What is the outlook for growth and inflation for the remainder of 2025?

Chea Serey: Cambodia’s economy is projected to grow around 5% in 2025 based on the government’s latest projection. During the first seven months, economic growth expanded robustly, although uneven across sectors. Garment exports surged 21.3% due to front-loading orders ahead of US tariffs, while non-garment exports rose 14%, benefiting from diversification policies, but this momentum may ease later this year. Simultaneously, tourism recovered steadily before the Cambodia-Thailand border conflict, though modest growth is expected going forward.

Inflation is forecast at 2.4% in 2025, driven by the softening of oil and food prices. Despite the border closure disrupting Cambodia-Thailand trade, the impact on inflation has been marginal. Price stability is also attributed to the stable exchange rate.

GF: The second and third sub-programs of the “Inclusive and Sustainable Financial Development Program” run until 2029. How will they effect change in Cambodia’s financial system?

Serey: The second and third sub-programs will strengthen Cambodia’s financial system by improving stability, expanding access, and supporting sustainable growth. We are focusing on financial literacy, consumer protection, and wider access to digital and non-bank services—especially for women and underserved groups. At the same time, we’re introducing sustainable finance tools and enhancing oversight to ensure long-term resilience. New financial products and market developments will help channel investment, increase liquidity, and promote use of the riel. These reforms are key to building a modern, inclusive, and sustainable financial system for Cambodia’s future.

GF: How has the use of the Bakong altered Cambodia’s financial landscape?

Serey: Launched in October 2020, the blockchain-based Bakong system has transformed Cambodia’s financial sector by addressing payment platform interoperability, promoting financial inclusion, enhancing efficiency in payment systems, and strengthening payment in local currency. By July 2025, it had 70 banking and financial member institutions, reaching over 34 million accounts. As of 2024, Bakong processed 600 million transactions worth $147 billion, some three times the value of Cambodia’s GDP. The National Bank of Cambodia (NBC) continues its efforts to promote the usage of the Bakong system by partnering with regional countries like Malaysia, Thailand, Vietnam, Lao PDR, Korea, China, as well as Japan, and facilitating convenient digital payments for tourists via the new Bakong Tourists App.

GF: Is the threat of debt distress when the forbearance regime is lifted in December of great concern?

Serey: To ease debt burdens, loan restructuring has been provided to vulnerable groups and businesses impacted by the Covid-19 pandemic and ongoing border conflict. Non-performing loans (NPL) reached 8% as of Q2 2025; this number is partly due to the sharp slowdown in credit growth to 2% when faced with global and internal uncertainties. The NBC is monitoring closely the adequate provisioning and the overall performance of financial institutions because of this high NPL. On the systemic level, financial institutions’ capital adequacy ratios remain strong with ample liquidity. The NBC will continue to monitor debt overhang and maintain flexibility in its macroprudential policies. It is especially important for us to be a strong guardian of financial stability and support economic activity during challenging and uncertain times like right now. 

Despite uncertainty in the international environment, Róger Madrigal López expects stable growth for the Costa Rican economy.

Global Finance: What is your view about the Costa Rican economy in the next 12 months?

Róger Madrigal López: Costa Rica is a small, open economy, exposed to the global political and economic environment. Despite the geopolitical conflicts and the challenges arising from the slowdown in international economic activity, projections from international organizations and the Central Bank of Costa Rica (BCCR) indicate that the Costa Rican economy is on a path of moderate and stable growth over the next 12 months.

The BCCR anticipates GDP growth of 3.8% in 2025, driven primarily by domestic demand and the robust performance of goods exports, particularly in medical devices and agricultural products such as pineapples. Although a slowdown in economic activity is anticipated for 2026, the projected growth remains above the global average, reflecting the resilience of the national economy in an uncertain international environment marked by trade and geopolitical tensions.

Regarding inflation, prices have remained low and stable, with general inflation averaging 0% and core inflation at 0.8% during the first half of 2025. Inflation expectations are anchored within the target of 3% and its tolerance range of ±1 %. Inflation is expected to return to the tolerance range by mid-2026, reinforcing confidence in the BCCR’s ability to keep down inflationary pressures originating from monetary forces.

Labor market conditions continue to improve, with the unemployment rate dropping to 7.4%. Real incomes have risen, particularly in the private sector and among women, and formal employment has expanded.

The central government will continue to show primary surpluses and a gradual reduction in the debt-to-GDP ratio, contributing to fiscal sustainability and improving the country’s risk perception.

GF: Did you see progress in reforms that support long-term growth, including improving human capital, enhancing infrastructure, and fostering competition? If so, which ones in particular?

Madrigal López: Costa Rica needs additional efforts to improve the educational level of the population in vulnerable areas, further promote tourism, and consolidate infrastructure provision models based on public-private partnerships; however, in recent years, the country has made meaningful strides in implementing reforms that support long-term growth, particularly in areas critical to investors and policymakers. For example, in human capital development, the country’s authorities have focused on reducing informal employment, expanding bilingualism, and improving access to early education and care.

On the infrastructure and competitiveness front, Costa Rica is advancing climate-resilient public investment through partnerships, such as the IMF’s Resilience and Sustainability Facility. This not only supports sustainable development but also opens opportunities for green finance.

The country is also working to institutionalize the autonomy of its central bank, a move that reinforces macroeconomic stability and investor confidence. Meanwhile, regulatory reforms are underway to reduce barriers to formal business creation and enhance competition. These reforms collectively position Costa Rica as a more attractive and stable destination for long-term investment.

GF: A year ago, you explained how an amendment of Article 188 of the Costa Rican Constitution would grant the BCCR administrative and governance autonomy. Any progress on that?

Madrigal López: The reform enjoys broad support from international partners such as the IMF and OECD, which view it as a milestone for safeguarding price stability and strengthening investor confidence. While approval is still pending, the IMF has urged Costa Rican authorities to move forward without delay, recognizing the reform as a cornerstone of the country’s medium-term institutional agenda. This proposed amendment was part of the agenda during extraordinary sessions in May-July of 2025, but made little progress.

GF: What keeps you up at night?

Madrigal López: As a central banker, my main concern is the commitment to maintaining low and stable inflation, as established by our Organic Law. In this way, the entity that I represent can contribute to the country’s macroeconomic stability, facilitate efficient economic decision-making by various stakeholders, and, in turn, preserve the central bank’s institutional credibility.