Press Release of the BCT Executive Board meeting held on 2 February 2015

In the beginning of its works, the Board reviewed recent trends in the international economic situation, particularly the world economy growth forecasts updated by the World Bank and the IMF in their respective reports on the world economic outlook, published over last January. Both of these institutions pointed out an expected slight improvement of the world economic situation in 2015, despite persisting risks inherent to divergent paths of the economic activity between the main zones of the world, due to the gloomy economies of the Euro Zone and certain emerging countries, besides oil-exporting countries which may be hit by the drop in this product’s prices.
On the national level, the Board noted the Tunisian authorities’ success in achieving the debenture loan issue worth 1 billion dollars for ten-year duration (2015-2025). This is likely to help cover an important part of the State budget’s financial needs, with respect to the current year, and firm up the Central Bank’s reserves in foreign currency. In the meanwhile, the Board welcomed international capital markets’ renewal of confidence in the country especially with better prospects for Tunisia’s financial rating at the relevant international agencies, in line with the political situation detente. This should boost its capacity, in the future, to raise the external financial resources needed for financing of the economy.

The Board has also taken note of the latest economic growth rates updates for the whole year 2014, which was slightly reviewed over the previous month, from 2.4% to 2.5%, bearing in mind that the growth rate expected for 2015 should be limited to 3%: a rate that remains modest taking account of major challenges as regards investment and employment recovery.
On the sectoral level, the Board noticed the ongoing slowdown of trends in the industrial production general index, over the first ten months of 2014 (+0.3% vs. 2.1% over the same period of the previous year), in line with the decline in non-manufacturing production, on the one hand, and manufacturing production slowdown, on the other hand.
However, an increase in exports was recorded in main export-oriented sectors, over December, mainly for mechanical and electrical industries and textile/clothing/leather and footwear industries, concurrently with a recovery of raw materials and semi-finished products imports and faster growth pace of imports of capital goods. This augurs for future positive growth prospects.
Yet, the Board expressed its concern as regards the services sector situation, the main activity indicators of which continued to drop over last December, mainly in tourism and air transport.
As for the external sector, the Board drew attention to the persisting negative trend, illustrated by a higher current deficit in 2014 than in 2013, up to 7,385MTD, corresponding to 8.9% of GDP, against 6,302 MTD and 8.3% in 2013. Particularly, the Board considered the continuous slippage of the trade deficit which posted a record level (13.6 billion dinars), while it could only be covered at about 23% by the surplus balance of services. However, and despite these trends, the level of net reserves in foreign currency firmed up, posting 15,055 MTD corresponding to 129 days of import at the end of  January  2015, against 112 days at the end of the previous year, thanks to intensified efforts to mobilise external financing, where net foreign capital inflows amounted to 9 billion dinars over 2014.
As for trends in prices, the Board noticed an ongoing positive trend reflected by the ongoing slowdown of trends in the consumer prices index since the beginning of last July, posting 5% in annual shift, in December 2014. Consequently, the inflation rate dropped sharply over the whole year 2014: 5.5% on annual average, against 6.1% in 2013. This trend concerned prices of freely- set products as well as those of controlled products.
While analysing recent trends in the banking sector activity, the Board noted an improvement in deposits trends over 2014 (8.2% vs. 7.4%), in line mainly with sight deposits firming up. Financing of the economy recorded the same trend as well over the same period (9.4% vs. 6.8%), following notably the accelerated evolution of short term loans with a rate of 18.3%: the highest pace for four years.
On the monetary level, the Board noted an ongoing downward trend in banks’ needs for liquidity over January 2015, where the Central Bank’s monetary policy operations went down to 3,418 MTD on daily average, against 4,352 MTD in December 2014. The money market average interest rate virtually stabilized, posting 4.89% at the end of January.
At the foreign exchange markets level, the dinar appreciated by 3.3% against the euro, and depreciated by about 4% against the dollar, on 29 January of the current year and compared to the end of 2014, posting 2.1908 dinars and 1.9384dinars respectively.
In light of these trends, the Board decided to keep unchanged the Central Bank key interest rate.
Likewise, the Board was informed about the Central Bank’s decision related to the reserve requirement elimination at the rate of 30% on consumer loans granted by banks, so as to reduce pressure on banking liquidity.
Finally, the Board focuses on the importance of challenges that are facing up the national economy and which require from all intervening parties valorisation of a political climate favourable to implementing the structural reforms needed to giving impetus to growth and employment. This requires, in addition, monitoring of the risks weighing down on overall financial balances, of which , in the first place, the external sector balance, and intensifying efforts to rationalize consumption and import, to reinforce producing sectors and to improve their competitiveness by providing them with the required back up to ensure exports pace recovery.

(For further data on the economic and financial situation, please refer to the Central Bank of Tunisia web site: