Press Release of the BCT Executive Board meeting held on 26 November 2014

In the beginning of its works, the Board reviewed main international economic trends, more particularly data concerning growth forecasts worldwide published in the last economic report of the Organization for Economic Cooperation and Development (OECD). In fact, the Organization highlighted an ongoing world economy gloom, in a context still marked by disparities between different countries as well as different economic regions, while asserting the possibility of a progressive speed up of growth pace if the required measures to boost activity are implemented. On the other hand, the Board underlined the ongoing drop in world commodities prices, mainly energy ones, besides the appreciation of the dollar against the other main foreign currencies.

At the national level, the Board drew attention to the divergent trends in main economic and sectoral indicators over the last months. In fact, the agriculture and fishing sector production posted positive results overall, while industrial production declined in July 2014 (-0.6% in annual shift against 0.7% a year earlier), in line with the drop in the manufacturing and non-manufacturing sectors production, while premises of recovery in this sector rose over October 2014. As for the services sector indicators, they declined in tourism with a 1.1% drop in tourist entries at the end of last October, and in bednitghts (-2.7%), while tourist receipts in foreign currency went up by 10.5% and transfers of Tunisians living abroad grew by 6.3% from one year to another.

As for the external sector, the Board noticed, once again, the pursuit of negative trends following worsening of the current balance deficit (+29% or 1,439 MTD) over the first ten months of the year, up to 6,396 MTD, corresponding to 7.7% of GDP against 6.5% over the same period of 2013, due to trade balance deficit continuous widening (+19.1% at the end of October 2014), posting 11.8 billion dinars. Worth of note, hence, that exports grew at a slower pace (2.1% vs. 4.9% in the previous year) against an acceleration of the imports pace (7.2% vs. 3.3%), with a continuous deterioration of both the energy balance and the food balance, the deficit of which exceeded 3.2 billion and 1.2 billion dinars, respectively, up by 50.3% and 60.9%. This accounts for more than 82% of the overall trade deficit widening. It is worth mentioning, however, that foreign trade improved somehow, starting from October, especially with a higher exports pace and firmed up imports of capital goods, raw materials and semi-finished products.

Likewise, and despite the trade deficit worsening, net assets in foreign currency could be maintained at a satisfying level: 12,759 MTD or 111 days of import as of 26 November 2014, against 107 days on the same date of the previous year, thanks to an ongoing recourse to external loans mobilisation (about 5.4 billion dinars since the beginning of the year).

Concerning inflation, the Board noticed an ongoing positive trend reflected by the slower growth pace of consumer prices since July, when it reached its highest level of the current year (6%), posting 5.4% in annual shift in October 2014, against 5.6% a month earlier. As for core inflation (excluding fresh and controlled products), it continued to grow at a slower pace for the third month in a row, down to 5.7% in October 2014, against 5.8% in the previous month.

As for the banking sector activity, the Board pointed out an improvement of deposits growth pace, over the first ten months of the current year (6.1%
vs. 5% for the same period of 2013), which concerned mainly forward deposits. Besides, financing of the economy firmed up over the same period, with a 6.8% increase against 5.5% in 2013, in line with an increase in the outstanding balance of short and medium term loans after a drop recorded over the first ten months of the previous year.

As for monetary trends, the Board highlighted a certain improvement of banks liquidity situation over November. This brought about a drop in the volume of refinancing, posting 4,220 MTD on 25 November, against 5,095 MTD in last October. The money market average interest rate stood, over the same period, at 4.93% : the same rate recorded in the previous month.

At the foreign exchange markets level, the dinar stabilized against main foreign currencies over November of the current year. In fact, it posted
1.8435 dinar and 2.2892 dinars, respectively, compared to the dollar and the euro. Since the beginning of the year, the foreign exchange rate depreciated by 0.6% against the euro and 9.9% against the dollar.

In light of these trends, and given the ongoing current deficit worsening, the Board recommends the need to intensify efforts to curb the worrying deviation of the trade deficit and its growing harmful effects on the country’s financial balances. Thus, the Board insisted on the need to speed up measures targeting a better business climate so as to resume the investment and growth pace, and decided to keep unchanged the Central Bank key interest rate.

(For further data on the economic and financial situation, please refer to the Central Bank of Tunisia web site: