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Home News Tunisia: IMF calls urges authorities to avoid future monetary financing of government

Tunisia: IMF calls urges authorities to avoid future monetary financing of government

An International Monetary Fund (IMF) staff team conducted a remote mission from December 9 to 18, 2020 and January 4 to 13, 2021 in the context of the 2020 Article IV consultation with Tunisia.

According to the IMF report published at the end of the mission and on the issue of direct financing of the government budget deficit by the Central Bank of Tunisia (BCT), IMF staff

urged the authorities to avoid future monetary financing of the government.

“This risks reversing the gains achieved in terms of lowering inflation, could weaken the exchange rate and international reserves, and undermine financial stability, said the IMF.

It added that the BCT’s policy should continue to “focus on inflation by steering policy rates, while preserving two-sided exchange rate flexibility.

The BCT should closely monitor the financial sector, as the full impact of the pandemic on the financial sector is yet to be observed, the IMF emphasized.

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