Press release of the BCT executive board meeting held on 31 October 2018

The Executive Board of the Central Bank of Tunisia held its periodic meeting on 31 October 2018 and examined the different issues scheduled in its agenda. At the beginning of its works, the Board reviewed trends in the economic, financial and monetary situation, the latest economic data, the evolution of transactions on the money and the exchange markets as well as the liquidity situation and the banking sector activity.

In this respect, the Board noted in particular the persisting pressure on the external sector balance in the wake of the current deficit worsening, coming to 8.2% of GDP over the first nine months of the current year compared to 7.8% a year earlier, following trade balance deficit worsening by 23.5%; and this despite an improved level of tourist receipts and labour income, up by 47.1% et 12.3%, respectively. This situation had a negative impact on the level of net assets in foreign currency and therefore the dinar exchange rate, which continues to depreciate against the main foreign currencies, notably the US dollar and the euro. 

The Board recorded also the persisting inflationary pressures despite a slight reduction in the consumer price index increase at the end of September 2018, corresponding to 7.4% in annual shift, compared to 7.5% in August.

On another level, and with regard to the Central Bank activity, the Board examined the operational conditions relative to creation of a new refinancing instrument to allow banks to refinance investment loans.

The Board was also informed about the targets and the main features of a draft circular of the BCT to introduce new prudential norms for loans and deposits, as well as a circular on internal control mechanisms for the management of risks relative to money laundering and terrorism financing.

After discussions and deliberations on the above-mentioned issues, the Board expressed again its concern about the persisting vulnerable situation of the external sector, underlining the need to pursue coordination with the relevant parties so as to find urgent solutions to curb the ongoing deterioration of  the current deficit which is weighing on the level of net assets in foreign currencies and becoming dependent on external indebtedness for its financing, and decided to keep unchanged the Key interest rate of the Central Bank of Tunisia.