Press release of the BCT Executive Board meeting held 5 August 2014

In the beginning of its works, the Board reviewed the world economy growth outlook, while considering the latest International monetary Fund (IMF) forecasts published at end of last the July, pointing out an economic growth moderate pace especially in industrialized countries. This led the Fund to review its world economy growth rate forecasts for 2014, down from 3.7% to 3.4%, in a context marked by heightened geopolitical tension and risks of an increase in energy prices, while the growth rate expected for 2015 stood at 4%.

On the national level, the Board noted the agriculture and mining sectors’ good performance, while vulnerability factors are persisting in the other producing sectors. In fact, industrial production shrunk over April 2014 (-0.1% in annual shift), due mainly to the drop in non-manufacturing industries production, notably the energy sector. Likewise, tourist activity main indicators declined over last June: -3.3% in annual shift, for foreign tourists’ entries and -4.4% for tourist bed-nights, bearing in mind that the latest available data reflects an improvement of the sector’s receipts. Following these trends, the Tunisian economy’s growth rate was reviewed to 2.8% for 2014 and 3.5% for 2015.

On another level, the Board pointed out the persisting pressure at the external sector level, with an ongoing current deficit widening over the first half of the current year, posting 5.3% of GDP against 4.4% over the same period of the previous year, following the trade deficit continuous deterioration, mainly its energy and food components. This situation contributed to ongoing pressure on the level of net assets in foreign currency which firmed up, nonetheless, at the end of last July, to 12,085 MTD corresponding to 108 days of imports as of 31July against 106 days at the end of 2013, thanks to inflows of funds with respect to the bond issue worth 500 million dollars guaranteed by the American government.

As for trends in prices, the Board drew attention to the upward trend of inflation since last April, coming to 6% in annual shift over July against 5.7 % a month earlier, following mainly the increase in fresh foodstuff prices. This is the same for core inflation (excluding food and energy) which speeded up to 4.6% against 4.2% over June 2014. It is worth mentioning that the latest available data anticipates an ongoing pressure on prices especially with the beginning of the large-scale consumption period over the summer and tourist season.

While analyzing trends in the banking sector activity, the Board noted positive indicators related to firming up of the outstanding balance of deposits growth pace over the first half of the current year (4.3% vs. 2% over the same period of 2013). This improvement concerned, particularly, sight deposits and forward accounts, in line with firmed up growth pace of  financing of the economy over the same period (5% vs. 3.1% a year earlier), following short-term loans recovery and firmed up growth pace of medium and long term loans.

As for monetary trends, the Board underlined banks’ persisting needs for liquidity at high levels. This led the Central Bank to intervene over July 2014 so as to regulate the market up to 5,489 MTD against 5,581 a month earlier. Concurrently, the average interest rate on this market went up from 4.78% to 4.98% from one month to another, aside from the effect of the last increase in the key interest rate.

On the foreign exchange market, the Board registered the dinar’s ongoing depreciation against the dollar over July 2014, posting 1.7184 dinar on 31 July (-1.8%), with a stability against the euro (2.3031 dinars). Compared to the beginning of the year, the depreciation reached 1.6% against the euro and 4.2% against the dollar, bearing in mind that the dinar’s foreign exchange rate has recorded a positive trend recently, in line with a higher level of liquidity on the foreign exchange market.

In light of these trends, and taking account of the latest security evolutions on the domestic and regional level, the Board expressed its concern about their possible repercussions on the economic situation and the overall financial balances, calling upon all intervening parties for more watchfulness to contain them, 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: