Tunisia Central Bank Governor: National economy figures 'very frightening'

On Thursday, Governor of Central Bank of Tunisia, Marwan Al-Abbasi said that “the wellbeing of the Tunisian economy are very frightening.”

In a news conference at the bank’s headquarters in the capital, Al-Abbasi insisted that “we have to take difficult and sometimes painful decisions.”

He added: “Inflation cannot rise without the Central Bank’s intervention as price stability is one of its top priorities.”

Inflation, unemployment and trade balance deficit rates in the Tunisian market are on the rise, while domestic economic growth is suffering from a sharp slowdown.

The bank’s Governor confirmed that “the analyses indicate that there would be another rise in inflation rates in the upcoming months. Therefore, the bank has taken proactive measures to reduce this rise.”

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Last Monday, the Central Bank announced that there would be an increase in interest rates by 75 basis points to 5.75 per cent.

Annual consumer prices “inflation” in Tunisia increased over the past month to 7.1 per cent, compared to the corresponding period of last year.

In this regard, during the press conference on Thursday, Rim Al-Qulsi, Director of the Monetary Policy Strategy said that the country has not witnessed the recorded inflation rate for nearly two decades.

Al-Qulsi clarified that the inflation rate will rise, “since the value of the Tunisian Dinar is deteriorating, global prices in the market are likely to rise and the financial imbalances are exacerbating.”

She expected that the percentage of consumer prices in the domestic market during the entire current year would reach the range of 7.2 per cent.

Al-Abbasi also talked about the national deficit saying: “The deficit, which is more than ten per cent of GDP, is a major problem.”

During the conference, Mourad Abdesslem, the Bank’s director of studies and international cooperation, said that the deficit rose from 4.8 per cent in 2010 (at $ 1.23 billion), to 10.3 per cent (at $ 4.1 billion) in 2017.

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He went on: “This will affect the Tunisian Dinar’s value against the Dollar and the Euro, as the current deficit rise exacerbates the deterioration of the Tunisian Dinar’s value.”

The Tunisian Dinar has been witnessing a sharp decline against the US Dollar and the Euro. In 2017, it has lost 9.5 per cent of its value that was recorded by the end of 2016.