October 2008
Press Release of the BCT Executive Board Meeting held on 28 October 2008.

    The Board meeting focussed on the evolution of the financial crisis and its repercussions while recalling in this framework the Board's  previous press releases which noted the risks of this crisis and its possible fallouts.
    At the international level, if undertaken measures up to now seem, when put in concrete forms, to curb risks on the banking sector, the capital markets are still marked by sharp volatility and shrinking international stock markets, under the effect of multiplied indicators that confirm the coming into recession for several economies of the industrialised countries, difficulties that a number of major emerging countries start to face as well as negative results posted by several international corporates. These evolutions brought about a widespread climate of mistrust of the different interveners and a drop in household consumption, which intensified  disruption on the money markets and the foreign exchange markets.
    At the national level, the Board notices the faster pace of actions that were led facing this crisis when the first tokens appeared in July 2007 and the importance of measures undertaken at the financial level to ensure an ongoing normal functioning of the money market and transactions between banks and with customers as well as to guarantee foreign trade settlements and a securised management of assets in foreign currency on the international markets.
    While stressing the need to watch over and follow up with particular attention the trend in the international environment, the Board considers that the operating framework for the banking sector , notably, with respect to granting mortgage loans, the setting of strict norms with respect to securitisation of claims, the reduction the non-strategic shareholdings of foreigners on the stock market as well as Tunisia?s gradual approach with regard to the dinar convertibility are likely to caution the financial sector against this crisis.
    On the other hand, the Board considers that the deep reforms introduced in the banking sector helped to reinforce soundness of this sector and boost its financial bases as shown in the evolution of the banks? core funds, the improved quality of their credit portfolio and the achievement of a risk coverage ratio of some 10% in average , helping thus to save Tunisia the fallouts of this crisis on the financial sector.
    The Board notes in this framework the pursuit of the banking activity as of the beginning of the year at a sustained pace, as shown in the progress of net banking proceed by 13.2%, over the first half of 2008 compared to the same period of last year , the increase in financing to the economy by 13.1% and bank deposits by 11.3% between September  2007 and September 2008.
    On the money market, excess liquidity was pursued in September 2008 and for the seventh month in a row, leading the Central Bank to mop up an average amount of 1,196 MTD.
    Furthermore, the Board examined the trend in the national climate that was marked by ongoing pace of activity in most of the sectors as reflected in foreign trade progress , with export and import rise in productive sectors, exclusive of energy, up by 21.7% et 21.6% respectively over the first 20 days of October 2008.
    Thus, the Board highlights the need to ensure an ongoing follow up of the world economic climate and its possible fallouts on activity of the different sectors, notably, export-oriented ones and stressed the importance of the national commission created upon recommendations of his excellency Mr. the President of the Republic to follow up the economic climate and suggest appropriate measures to curb the risks that might be brought by this crisis, with a view to ensuring an optimal use of production capacities and mobilising energies to safeguard and boost the economy's competitiveness.
    In considering the surplus liquidity situation that persists on the money market, the Board decides to maintain the same key interest rate of the Central Bank of Tunisia and to follow up closely the financing conditions of corporate activity.

The aide-mémoire relating to preliminary conclusions of staff visit respect to the IMF Article VI held in Tunis from 14 to 28 May 2007.