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Tunisia: TCB taps on foreign currency assets to cover current deficit

The Executive Board of Tunisia’s Central Bank (TCB) held, on Monday, a meeting to look at the national and international economic and financial situation.

Focusing on the world juncture, the Executive Board pointed out that the International Monetary Fund reviewed upward its world growth forecasts for 2010: 4.8% compared to previous forecasts of 4.6%. Yet, the international financial institutions agree that the world economic recovery is still fragile estimating that essential factors for return to growth at the same pace as before the crisis are not available yet.

This is particularly true in the United States where unemployment persists at high rates and domestic demand is flat. Against this background, the industrialised countries, notably Japan and the United States, continued to undertake recovery measures to further boost the economic activity. Besides, price rise for most commodities on the international market went on in current October, while foreign exchange rate volatility persisted in the same way as for the main international stock indexes which posted nevertheless an upward trend.

At the national level, the economic activity was marked by an ongoing recovery in manufacturing industries’ production, mainly mechanical and electrical industries, and a progress in certain service activities like transport and telecommunications.

Foreign trade continued to progress, though at a faster pace for imports than for exports. The increase in the trade deficit exerted tensions on the balance of current payments which posted a deficit of 4% of GDP over the first nine months of the current year, the coverage of which required recourse to tapping on foreign currency assets. The latter amounted to 13,288 MTD up to 22 October 2010, corresponding to 153 days of imports vs. 13,172 MTD and 185 days of imports a year earlier.

At the monetary level, M3 went up over the first nine months of the current year by 8.9% vs. 10.3% a year earlier, while financing to the economy posted a faster pace over the same period (14.5% vs. 7.6%). Besides, bank liquidity tightening was pursued in current October, and the average interest rate came at 4.6% vs. 4.5% in September.

From the beginning of October till the 21st,in the dinar exchange rate posted 2.5% appreciation against the US dollar and 0.3% depreciation against the euro.

As for prices, the inflation rate stabilized in the first nine months of the current year at 4.6% vs. 3.4% in the same period of 2009.

In the light of these evolutions, the Executive Board underlined the need to continue to follow up rigorously the international situation and its repercussions on the external sector in Tunisia, and decided to maintain unchanged the key rate of the Central Bank of Tunisia.


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