The Central Bank of Tunisia’s Executive Board decided, during its meeting held on 7 September 2023, to keep the BCT’s key rate unchanged at 8%. The Board considers that the current monetary policy stance would support the ongoing easing of inflation over the period ahead.
At its meeting, it reviewed recent economic and financial trends and the outlook for inflation.
At the national level, recent information on activity shows a slowdown in economic growth which posted 0.6 % in annual shift, in the second quarter of 2023, after 1.9 % in the previous quarter. This trend bears the mark of the sharp decline in the added value of the agriculture, forestry and fishing sector, which was severely affected by water stress, and which contributed negatively to economic growth. Furthermore, export-oriented activities remained relatively dynamic, thus supporting economic activity and helping to consolidate the balance of payments.
As for the external sector, the Board highlights the ongoing current deficit narrowing, which posted -2,814 MTD (or -1.8% of GDP), at end of July 2023, against -7,793 MTD (or -5.4% of GDP) a year before, supported by a decrease in the trade balance, firmed-up tourist receipts and the sound performance of worker remittances. Despite a relatively limited access to external financing resources to fund the State budget, the stock of foreign currency reserves firmed up, reaching 26.6 billion dinars, as of 5 September 2023 (or 117 days of imports) against 22.9 billion dinars at the end of 2022, owing, in particular, to the performance of foreign-currency earning sectors.
The Board took note of the new consumer prices figures which show a resumption of inflation following five months of consecutive decreases, posting 9.3 % in annual shift, over August 2023, after 9.1 % in the previous month and against 8.6 % a year before. This upward movement was carried out by the surge in prices of fresh foodstuff, in particular, the growth pace of which was strongly affected by lower supply, mainly due to the persistent water scarcity, combined with the strong demand caused from the high tourist season. On the other hand, the main measure of core inflation “excluding fresh foodstuff and controlled-price products” continued with its deceleration, initiated since May 2023, posting 8.9 % in August 2023 against 9% a month before.
Inflation outlook foreshadows an ongoing gradual easing, over the coming months, however the risks surrounding future inflation trajectory are significantly oriented upwards.
The Board considers that the persistence of inflation at high levels, over an extended period, is a source of concern, and that it stands ready to react should inflationary risks materialize in the period ahead.
The Board believes that the current level of the key rate would support a continued deceleration of inflation in the period ahead. It decides to keep the BCT’s key rate unchanged at 8%.
