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Press Release of the BCT Executive Board meeting held on 2 February 2022

During its meeting held on 2 February 2022, the Executive Board examined economic and financial trends and decided to keep unchanged the key interest rate of the Central Bank of Tunisia at 6.25%.

The Executive Board of the Central Bank of Tunisia met on 2 February 2022 and examined recent trends of the economic and financial spheres as well as medium-term macroeconomic prospects showing that:

At the International level, and after having recorded an unprecedented recession over 2020, the world economic activity recovered over the year 2021, notably in the Euro Zone, Tunisia's main trade partner. However, and despite achieved advances as regards vaccination in several countries, uncertainties surrounding activity for the forthcoming period exacerbated due, notably, to the recent upsurge of COVID-19 cases brought about by the new more contagious strain of the Omicron virus.

As for consumer prices, the Board noted the upturn of inflation worldwide which should take on a persistent feature, in perspective in line, notably, with the ongoing disturbances of procurement channels and maintaining of energy prices at high levels, over 2022. To this effect, and in the aftermath of a budgetary and monetary expansion phase driven by fallouts from an unprecedented health crisis on economic activity, several central banks worldwide entered, several months ago, into a monetary policy tightening cycle by raising key rates many times so as to curb inflation anticipations and manage to bring its trend back to medium-term target rates.

At the national level, the Board noted a relatively moderate resumption of economic activity which would evolve to about 2.9% for the whole year 2021, with timid recovery prospects for the year 2022.

Concerning the external sector, and despite the trade balance’s worsening in line with activity recovery, the current operations’ deficit came to 6.3% of GDP for the whole year 2021 against 6.1 % a year before, thanks to the sound performance of worker remittances which culminated to 8,600 MTD. On the other hand, the level of foreign exchange reserves proved to be resilient somehow, amounting to 23,313 MTD or 133 days of import at the end of 2021.

During its meeting, the Board noticed that as per previous forecasts, inflation carried on with its upward trend, closing for the year 2021 at 6.6% against 6.4% in November 2021 and 4.9% a year before. Inflationary pressure’s persistence was also perceivable with respect to main core inflation indicators, namely "inflation excluding fresh foodstuff and  controlled prices" and "inflation excluding food and energy" which stood at relatively high levels: 6.1% and 6.4% respectively, against 5% and 5.9% a year before.

The Board noted that consumer prices’ progress recorded at the end of 2021 will last longer than previously expected. Inflationary pressure at the level of main price components would remain particularly important and run the risk of bringing inflation to relatively high levels in the medium term, in line with international prices’ soaring, mainly imported products, orientation towards subsidy expenditure monitoring, as well as the impact of water stress.

The Executive Board, after consideration of the economic and financial situation, expressed its strong concern about the delay in mobilising the required external resources to finance the State budget for 2022. It calls upon all intervening parties to reach a consensus on the reform programme helping to initiate negotiations with the International Monetary Fund on a new programme.

The Board highlighted the importance of the Government commitment to leading the structural reforms so as to boost the economic growth and ensure sound budget management which gives access to the external resources required to finance the State budget for 2022 and avoid every recourse to monetary financing, the consequences of which would be prejudicial to monetary and financial stability.

The Board informs that it remains mindful of trends in prices over the forthcoming period and that it will make use of all available means to counter every inflation deviation. It decides to keep the Central Bank of Tunisia’s key rate unchanged at 6.25%.