Mohamed Souilem, former Director General of Monetary Policy at the Central Bank of Tunisia (BCT), pointed out that the BCT’s policy is coherent and that the national economy has shown its resilience to the various crises it has faced in recent years, with numerous indicators confirming that economic recovery is underway.
In a statement to Africanmanager ar on Wednesday, October 9, he pointed out that the inflation rate had stabilized at 6.7% in September 2024. In August 2024, the inflation rate had fallen to 6.7%, compared to 7% in July and 7.3% in June.
In this context, he explained that the data from the National Institute of Statistics were accurate and reflected the trend in prices for industry and services as a whole.
Souilem was of the opinion that the fall in inflation rates was continuing and that it was likely that prices would continue to decrease in the coming months, especially in view of the fall in inflation rates in most countries around the world.
When asked why the Central Bank had not taken the decision to reduce the key interest rate, which had not been changed since December 2022, he explained that this decision had been considered and was based on certain fears that still existed, particularly those relating to Russia and the war in Ukraine, geopolitical unrest and the instability of energy prices.
He added that the decision to reduce the prime rate in Europe and the United States was due to the fact that the inflation rate was approaching the 2% level that these countries were aiming for and that Tunisia had not yet reached it.
With regard to the positive indicators related to inflation, he explained that they are found in the international fall in the prices of grain and industrial materials, in addition to the return of production in Tunisia to its normal rhythm in many sectors, such as agriculture, following the recent rains recorded in various governorates, and these signs are also due to the fall in the prices of certain food products.
A basic interest rate for savings
He stressed that the Central Bank of Tunisia is still working to ensure that inflationary risks are kept under control, in addition to seeking to achieve a positive real interest rate that will encourage savings, which are the mainstay of investment rather than consumption.
Souilem assured that the Central Bank is responsible for banking supervision and that it is acting prudently and without taking risks.
Regarding the economic situation, Souilem pointed out that the national economy has shown resilience in the face of external and internal shocks.
Many indicators confirm that the Tunisian economy is recovering. This is reflected in the increase in foreign exchange reserves, the reduction in the state budget deficit and the decrease in the country’s trade and current account deficits, the balance of payments and inflation rates that are falling at a steady pace, in addition to the semi-stability of the Tunisian dinar,’ he said.
He added: “Public debt has remained stable at 80% of GDP in recent years and the country has also been able to meet its external obligations without recourse to global financial markets and the International Monetary Fund.
In this context, he referred to the revision of Tunisia’s rating by Fitch Ratings last September, which upgraded the country’s rating by two notches to CCC+, reflecting the positive economic and financial indicators recorded recently.
He concluded that despite the many difficulties and all the negative expectations that have affected the economy, it has demonstrated its strength thanks to its diversity and its dependence on several sectors such as industry, tourism, technology, agriculture and others, as well as Tunisia’s strategic geographical location.
On another front, the former official at the Central Bank of Tunisia acknowledged the existence of weaknesses in the economy related to the quality of services provided in many sectors and in banking and administrative services, in addition to the urgent need to review labor law and prepare infrastructures.
He also believed that overcoming these negative points would strengthen the country’s investment capacity and attract more foreign investment.