Press release of the BCT Executive Board meeting held 26 March 2014

In the beginning of its works, the Board examined the salient facts of the international economic situation which was marked, according to the Organization for Economic Cooperation and Development (OECD) latest indicators, by a progressive ongoing recovery in advanced countries against a growth pace alteration in emerging countries’ economies. In this context, the main Central Banks have maintained their accommodating monetary policies so as to sustain the world economy recovery, while international capital markets have been affected by the geopolitical tensions taking place lately.

On the national level, the Board considered the latest trends in economic activity and in recent monetary and financial indicators, and noticed a gradual recovery of economic activity over the first two months of the year, though its pace remains below expectations. This led to a downward review of the economic growth rate expected for 2014, down from 3.5% to 2.8%, following a review of the added value’s expected growth rate mainly for the manufacturing industries and the market services sector. The Board estimates that the economic situation reflected by these figures, taking account of the modest results recorded over the previous year, remains far from the required level that can meet the country’s aspirations as regards development, job creation and global financial balances monitoring. This requires from all intervening parties an awareness of the need to multiply efforts and work together to set new adequate orientations so as to release the initiative and develop the national economy’s productive potential in order to take up these challenges.

As for the external sector, the Board noted the worsening current deficit over the first two months of the current year, posting 1.5% of GDP against 1.2% over the same period of 2013, in line with the increase in the trade deficit following exports slowdown, in contrast with imports speed up. The trade deficit worsening is mainly attributable to the energy balance and that of foodstuff. Meanwhile, net foreign currency assets remain at an acceptable level thanks to external resources mobilization, posting 11,475 MTD which corresponds to 103 days of imports as of 25 March of the current year, against 11,219 MTD and 105 days on the same date in 2013.

As for inflation, the consumer price general index grew at a slower pace over February 2014, posting 5.5% in annual shift, against 5.8% over the previous month. This trend is particularly attributable to fresh foodstuff’s slower growth pace and to a lesser degree, manufacturing products. This is the same for core inflation rate (excluding prices of controlled and fresh products) which had a similar trend, down from 6.3% in January to 6.2% in February 2014.

As for the latest monetary trends, the Board noted an increase in banks’ needs for liquidity over March of the current year, leading the Central Bank to intervene more on the money market, up to about 4,703 MTD, on daily average, as of 25 March, against 4,616 MTD at the end of the previous month. This brought about a higher average interest rate on this market posting 4.72% over the same period, against 4.68% over February.

Concerning trends in the banking sector activity, the Board highlighted an increase in the outstanding balance of deposits growth pace over the first two months of 2014 (2.2% vs. 0.4% a year earlier) relevant mainly to forward accounts, while financing of the economy increased, over the same period, at a slow pace compared to the one recorded over the first two months of 2013 (0.8% vs. 1%). This illustrates the investment effort weakness.

While analyzing trends in recent foreign exchange market trends, the Board pointed out the ongoing upward trend of the dinar’s value, since the beginning of 2014, against the main foreign currencies. Thus, the dinar exchange rate posted, on 25 March of the current year, 1.5808 dinar against the US dollar: a 4.2% increase and 2.1837 dinars against the euro (+3.8%).   

In light of all these trends, the Board focused on the fact that the national economy outlook requires, in the short run, a striving to offset the pressure exerted on both domestic and external financial balances, calling to consolidate all efforts to improve the business climate, to bring together conditions favorable to launching the investment activity again and to accelerating the pace of appropriate  structural reforms with a view to laying the bases of a sound and balanced economy, and decided to keep unchanged the Central Bank key interest rate.

(For more data on the economic and financial situation, please refer to the Central Bank of Tunisia website: