Tunisia keeps rates at 7 per cent as energy costs strain reserves
Tunisia’s central bank kept its policy rate at 7 per cent at its October 7 meeting. Annual inflation rose to 5.6 per cent in September, while more expensive energy imports widened the current-account deficit. Foreign-currency reserves covered 92 days of imports, below a year earlier. Slower growth accompanied these pressures, and the bank said risks to the inflation outlook remained tilted upwards.
Economics & Markets··Evening
Inflation rises as the policy rate stays unchanged
The Central Bank of Tunisia kept its policy interest rate at 7 per cent at its October 7 board meeting. The decision comes as annual inflation rises and growth slows. The board judged that risks surrounding the future path of prices remain tilted upwards and said it stood ready to take measures to contain price pressures.[1], [2]
Annual inflation reached 5.6 per cent in September, compared with 5.4 per cent in August. Fresh-food price growth accelerated from 11.7 per cent to 13 per cent. Core inflation, measured by excluding fresh food and products with administered prices, was 5.1 per cent. That measure remained at the same 5.1 per cent level for a third consecutive month.[1], [2]
Energy imports widen the external deficit
Energy imports cost 11.3 billion dinars through the end of August, up from 8.8 billion dinars in the same period last year. The central bank said higher global energy prices were adding to pressure on external balances. It also noted uncertainty about a return to normal energy supplies.[1]
The current-account deficit in the first eight months of the current year widened to 4.694 billion dinars, equivalent to 2.5 per cent of gross domestic product. In the same eight-month period of the previous year showed a deficit of 2.724 billion dinars, or 1.6 per cent of GDP. The bank linked the deterioration to the growing energy import bill and emphasised managing the energy deficit to protect external payments.[1], [2]
Reserves cover fewer days of imports
Net foreign-currency assets stood at 23.7 billion dinars on October 6, covering 92 days of imports. The corresponding foreign-currency figures for the same period a year earlier were 24.3 billion dinars and 104 days. The board stressed preserving an adequate level of reserves while energy costs remain high.[1], [2]
Annual growth slowed to 2.3 per cent in the second quarter from 2.6 per cent in the first, with weaker industrial activity among the factors cited by the central bank. It warned that persistently high global energy prices could reduce the economy’s room for manoeuvre. The board will continue monitoring prices, demand, bank liquidity and external balances.[1], [2]
