The Executive Board of the Central Bank of Tunisia (BCT) decided at its meeting Wednesday to keep the key interest rate unchanged at 6.75%.
During this periodic meeting, the BCT Board stressed the need to restore political stability in order to avoid the climate of uncertainty that worsens the economic crisis.
Indeed, this stability is an essential factor in accelerating the implementation of structural reforms, which are necessary to revive the economy and promote investment.
Net foreign exchange reserves amount to 136 days of imports
On net external capital flows, the Board indicated that these flows made it possible to cover the current deficit and consolidate the level of net foreign exchange reserves which reached 20.903 MD or 136 days of import on July 27, 2020 against 16.078 MD or 90 days of import on the same date of the previous year.
Regarding the recent developments in the external sector, the Board noted the regression of the current deficit at around 4% of GDP in the first half of the current year against 5.6% for the same period of the previous year.
This was mainly due to the contraction of economic activity at national and international levels, which affected the pace of trade and tourism activity.
With regard to economic growth, the BCT stressed that it is expected to experience a strong contraction of about 6.5% during the current year, in relation to the decline in activity in most sectors, particularly the exporting industries as well as tourism and transport and, to a lesser degree, non-manufacturing industries.
The main engines of growth are also expected to experience a marked decline in their growth rate, particularly investment in view of the uncertain outlook in relation to the COVID-19 pandemic and private consumption, in addition to the contraction in the volume of external trade.
According to the BCT, this is mainly due to the decline in demand in the Euro zone, as well as the continuing difficulties in the extractive sectors, namely oil and phosphate.
On the other hand, the Board stressed the slowing of the inflation rate to 5.8% year-on-year in June 2020, compared with 6.3% the previous month, following the deceleration in the rate of increase in manufacturing, food and service prices.
For its part, core inflation (excluding administered and fresh products) also declined in the same month, after having reached fairly high levels in recent months, to 5.6%, from 6% in May 2020.