The Executive Board of the Central Bank of Tunisia (BCT) decided at its meeting Wednesday to keep by the bank’s key rate unchanged at 8%. It said in a statement after the meeting, the key rate’s current level would support an ongoing deceleration of inflation in the upcoming period. The BCT also emphasised the need to accelerate the process of implementing reforms, 3the only path towards a resumption of a healthy, sustainable and inclusive growth capable of preserving the global economic balances,’ despite the resilience demonstrated by the Tunisian economy in recent years. The bank said the recent available economic indicators improved relatively, noting this strengthening results from the renewed dynamism of the tourist sector and related activities as well as the sound performance of exporting industries. However, worsening of the persistent water scarcity continued to weigh down heavily on the economic growth trajectory. As regards the external sector, the Board highlights a remarkable reduction in the current deficit which posted TND 3,461 million (or 2.2% of GDP), at the end of September 2023, compared with a TND 10,387 million deficit (or 7.2% of GDP) a year before. This attenuation marks the ongoing deceleration of the trade deficit (FOB-FOB), which posted 11.6 billion dinars, at the end of September 2023, against 17 billion at the end of September 2022. Likewise, the current operations’ balance benefited from the sound performance of tourist receipts and worker remittances. This dynamic favoured firmed-up foreign currency reserves, which posted TND 26.6 billion (or 119 days of imports), as of October 2023 against TND 22.9 billion at the end of 2022. Concerning consumer prices, and after posting a recovery in August, inflation carried on with its downward trend initiated since March 2023, posting 9.0% (in annual shift). This trend reflects the ongoing gradual easing of the growth pace of core inflation ‘excluding fresh foodstuff and controlled-price products’ (8.8% against 8.9% in August). Recent projections from the Central Bank account for an ongoing gradual deceleration of inflation, in 2023 or even beyond. However, several inflationary risk factors would remain active and could hamper the disinflationary process. They could arise, in particular, from an excessive rise in international prices and accentuation of water scarcity. On the international level, the gradual easing of consumer prices continues in major economies, said the BCT. The slowdown in demand attenuated pressure on price formation and favoured a decelerated inflation. However, risks surrounding a resumption of tensions on international prices, resulting from the worsening of geopolitical crises, could hamper the disinflationary process on a global scale. Financial conditions’ tightening could continue for a prolonged period in order to support the return of inflation to Central Bank targets.
Source: Agence Tunis Afrique Presse