Egypt: New Central Banker Brings Continuity

Hassan Abdalla'smain challenge will be to contain soaring inflation and balance foreign exchange rates.

Late August, banker Hassan Abdalla stepped in to replace Tarek Amer as acting governor of the Central Bank of Egypt. Abdalla’s main challenge will be to contain soaring inflation and balance foreign exchange rates as Egypt struggles with the fallout from the war in Ukraine. In May 2022, the CBE hiked the overnight interest rate by 200 bps, raising the deposit rate to 11.25% and the lending rate to 12.25%—some of the highest in the world. The CBE had already increased policy rates by 100 bps in March and allowed the Egyptian pound to depreciate 16%.

President Sisi stressed “the need to develop monetary policies in line with global economic variables and work to provide various sources of foreign currencies” in a statement following the nomination. Yet industry experts expect the CBE’s new top man to maintain a monetary policy and overall strategy similar to his predecessor’s. Prior to his nomination, Abdalla was chairman of the United Media Services group, a state-owned conglomerate that runs popular Egyptian television channels and newspapers.

Born in 1960, most of his career was spent in the banking sector. In 1982, he joined the Arab African International Bank (AAIB)—a joint venture between the central bank of Egypt and the Kuwait Investment Authority—where he held different positions until he became CEO from 2002 to 2018.

Abdalla was among the first bankers to look into mergers and acquisitions as a means to boost the Egyptian banking sector starting in 2005 when AAIB acquired Misr America International Bank, followed by the acquisition of Canadian Bank Nova Scotia’s Egyptian operations in 2015. He also teaches finance at the American University of Cairo and founded Panther Associates, a financial consultancy firm.

Hisham Ezz al-Arab, former chairman of Commercial International Bank, characterized Abdalla to Reuters as “rational” and someone who “understands the international market.” Abdallah sits on the board of several cross-border financial institutions and has a reputation for enjoying good relations with his foreign counterparts. These soft skills could prove handy as Egypt negotiates a new bailout with the IMF.