Central Bank takes steps to overcome economic impact of COVID-19, war in Ukraine

Governor of Egypt's Central Bank Hassan Abdullah has announced that Egypt has taken significant measures to alleviate the impact of the COVID-19 pandemic and the Russian military operation in Ukraine on the country's economy, adding that "we are ready to take further measures."

Speaking at the annual spring meetings of the International Monetary Fund and the World Bank in Washington, Abdullah stated that the central focus of the Egyptian Central Bank at present is to curb inflation to a range between 5% and 9% by the fourth quarter of 2026.

Since the escalation of the Russian-Ukrainian crisis in the spring of 2022, inflation has remained in the double digits, reaching its highest level in five years at 32% in March of last year. However, the core inflation rate dropped to less than 40% last month, according to the latest figures released by the central bank.

Abdullah explained that the central bank has been analyzing various models to understand the drivers behind inflation numbers, and the analysis has shown that inflation in Egypt was not driven solely by commodity prices, but also due to supply-side issues such as recent accumulation of imports resulting from previous policies.

He emphasized that the central bank would not hesitate to use monetary policy to confront inflation. The Central Bank Governor pointed out that since March 2022, Egypt has raised key interest rates and lowered the value of the local currency, "which are significant steps."

Abdullah also noted that the Central Bank and the Ministry of Finance have daily coordination between monetary and fiscal policies to confront ongoing economic challenges, adding that "we work closely with the Cabinet and have all the support from the political leadership."

Additionally, the Egyptian government has announced a series of measures to support small and medium-sized enterprises and increase exports, which are expected to boost economic activity and create jobs.