The Central Bank of Tunisia (BCT) has finally published its annual report for 2023. The report was published four months late, but after checking, the BCT was not responsible for the delay. The 2023 edition is signed by the current governor, Fethi Zouhair Nouri!
Before leaving to attend the annual meetings of the World Bank and the IMF, whose growth calculations for Tunisia were questioned by Kais Saïed, Nouri signed the annual report for one year during the previous governor’s term. This is undoubtedly a matter of administrative continuity, but above all it affects the quality, methodology and pedagogy of the preamble to the report, commonly known as “a word from the governor”. Analysis:
Hallelujah!
As usual, each report begins with the so-called ‘message from the Governor’. A ‘word’, in theory written by Fethi Zouhair Nouri, which is over two thousand words long and sounds more like a eulogy than an economic and financial pamphlet, repeats the term ‘resilience’ like a piece of language.
Resilience, no doubt, dear friend, because we are still standing. But without the appropriate reforms and the profound changes recommended by Tunisian experts since the summer of 2022, resilience will quickly turn into recession and the reforms will be painful’, says Mustapha Boubaya, an expert in the procurement of projects financed by international donors, on his FB page.
A text, the governor’s message, which sums up Tunisia’s economic situation as seen through the magnifying glass of the BCT under the mandate of Marouane El Abassi, before he is replaced in February 2024. Finally, a text that looks more like one of the amorphous communiqués of the BCT’s executive board than an outline of the economic and financial situation.
In reality, this word should have informed us of the new governor’s plans for the issuing institution, his forecasts for the financial year 2025, which will indeed be his year, and his plan to turn the BCT back into the guardian of the temple that it was until July 2021.
This would involve concrete measures such as tightening up banking supervision, sanctioning certain banks that break the law by naming them, as the Competition Council has done, and ensuring that banks are no longer simply providers of credit and tax revenue to the state, but real financiers of the entire economy, public and private, of investment and not of politics.
Or by moderating bankers’ salaries through its supervisory authority, or by putting an end to the agreements signed between foreign parent banks and Tunisian subsidiaries. Or by enforcing the law on capital increases to save certain banks. And at least take a look at the OECD report, which was very critical of Tunisian banks, and try to reform them.
All in all, a basic regulatory exercise, one of the main tasks of a central bank, which has been forgotten under the leadership of the Abassi and Gamha duo!
Fethi’s ‘word’ that should have been Marouane’s
Like all the members of the government (editor’s note: Nouri has been appointed minister-governor), the head of the BCT, who loses one of his independent clothes every quarter, has fallen into line with the common narrative. This is demonstrated by this “word”, which should not have come from Governor Nouri, because it is like throwing roses to himself, repeating to anyone who will read it that “the Tunisian economy continued to show resilience in 2023” or adding that “our capacity to adapt has once again been demonstrated”. It’s almost like saying ‘Hallelujah!
He then goes on to say, like the INS before him, that ‘real economic growth has slowed to 0.2% in 2023, compared with 2. He then goes on to say that “these difficulties continue to affect the growth of the Tunisian economy and, He then goes on to say that “these difficulties continue to affect the growth of the Tunisian economy and, consequently, its capacity to absorb the supply on the labor market”, repeating to prove this, like all the BCT Board communiqués, the INS figures which put the unemployment rate at 16.4% compared to 15.2% in 2022.
And after mentioning, with the pride we can easily guess, the control of the current account deficit and the reduction of the trade deficit, thanks in particular to the fall in imports, the governor tempered his enthusiasm by admitting that “this fall in imports partly reflects a slowdown in economic activity”.
He then returned to the straight and narrow, hailing the improvement in the current account balance and the consolidation of our foreign exchange reserves to 3,371 MTD, a figure which had pleased the Head of State, not forgetting the stabilization of the “exchange rate of the Dinar against the main currencies and the support of foreign exchange reserves, despite limited access to external resources”.
The BCT, a general in the fight against inflation who is losing his stripes
And so it is with his “Word”, a balance between the good and the less good, so as not to say the bad, which would be politically incorrect for the first head of an institution that is no longer as independent as it was in the days of Chedly Ayari or Mustapha Kamel Nabli, if not the governors who preceded him.
Debt has risen, but its external component is falling. Inflation is down to 8.1%, but with an annual average of 9.3%, and the BCT remains vigilant on inflation, as if to say that Zorro will be there if needed. And then it all comes back to the BCT and its monetary policy.
In this way, it has sought to contain inflationary risks and to support a more rapid convergence of inflation towards its medium-term value, thus avoiding a shift in inflationary expectations’. And once again it’s ‘hallelujah’ to read the governor’s message!
Nouri does not criticize his predecessor’s restrictive monetary policy (he intends to continue it), that has led to weak credit growth, which he explains by the weakness of economic growth, forgetting that it is investment that drives growth and that investment is made through credit. The latter is reduced precisely by the restrictive policy to which the governor gives credit for the stability of the foreign exchange reserves. This is the squaring of the circle that the Governor does not mention in order to remain politically correct.
Resilience, but at what cost?
The only current note in this ‘Report-Communiqué’ is the statement by the governor of the BCT, now a major financier of the state budget, that ‘for the year 2024, the world economy should prove resilient and remain on the same growth path’.
However, his growth forecast (1.6%) is in line with that of the IMF. The optimism of Fethi Nouri’s BCT seems to us a little excessive for an ongoing sovereign presidential financial project that is undermining the entire financial centre through BTAs, BTCs, bondholders, rising corporate taxes and a tax system that wants to take 52% of banks’ profits.
And while the governor went so far as to say that ‘this resilience masks major disparities’, he put the blame elsewhere, ‘as the strength of the US economy and the major emerging markets contrasts with the modest prospects for the eurozone, Tunisia’s main trading partner, which could therefore affect the performance of our national economy’, he explained.
Systematically alternating between hot and cold, not to mention politically (in)correct, Nouri believes that ‘even if inflation has shown signs of easing since last year, uncertainty still hangs over future price trends and the risks of their persistence are still real’. Duly noted!
