Press release of the BCT Executive Board meeting held on 29 August 2018

The Executive Board of the Central Bank of Tunisia held its periodic meeting on 29 August 2018 and examined the different issues scheduled in its agenda. At the beginning of its works, the Board reviewed trends in the economic, monetary and financial indicators and recorded, notably 2.8% increase in GDP in annual shift and constant prices over the second quarter of 2018 compared to 2.5% over the previous quarter and 1.7% in the second quarter of the previous year. Thus, growth rate would reach 2.6% during the first six months of the current year compared to 1.9% a year before.

On another level, the Executive Board noted the persisting inflationary pressure despite a slight easing. In fact, consumer price index went up by 7.5% in annual shift over July 2018 compared to 7.8% last June. In this context, the Board underlined that the ongoing inflationary pressure would have a negative impact on growth, requiring a close follow up of inflation sources.

The Board recorded also an ongoing widening of the trade balance deficit, attributable mainly to worsening of the energy balance, following particularly, an acceleration of energy products’ imports that went beyond tourist receipts and labour income. In this respect, the Board stressed the need to pursue coordination between the relevant parties to come out with appropriate solutions and curb these evolutions given their negative impact on the foreign current assets and the dinar exchange rate which continues to depreciate against the main foreign currencies.

As for bank liquidity, which is particularly affected by the external sector deficit, the Board was worried about the evolutions of the global volume of refinancing of banks at the Central Bank, underlining the need to take the appropriate solutions to further control the factors that have contributed to this trend.

The Board examined also deliberations of the monetary policy Committee held on 27 August 2018 and reviewed the ensuing recommendations, preconizing a deeper analysis in this respect.

After discussions and deliberations on the above-mentioned issues, the Board underlined the need to continue to closely follow up trend in the financial and monetary indicators and decided to keep unchanged the Key interest rate of the Central Bank of Tunisia.