The Central Bank of Tunisia decided to raise the main interest rate, starting today, Wednesday, by 75 basis points from 6.25% to 7%, which will lead to an increase in the deposit facilities and marginal loan rates to 6.0% and 8.0%, respectively, in order to address the inflationary pressures that Looming on the horizon of expectations and to avoid any slippage of inflation and any exacerbation of the external sector deficit.
A statement issued today by the Central Bank of Tunisia stated that the bank’s board of directors reviewed the recent developments at the economic and financial levels. Ukrainian.
The statement added that despite the review of global activity to the downside, prices continued to increase in accordance with the developments of the global crisis, on the grounds that the almost generalized rise in international prices for basic materials and the ongoing turmoil at the level of supply chains had intensified, which led to fueling inflationary pressures at the level of the price chain. and these pressures could be more sustainable than expected.
The Tunisian Central Bank indicated that many central banks around the world are heading towards tightening monetary policies, and that at the Tunisian national level, economic activity supported mainly by the industrial sector continued during the first quarter of 2022, gradually supporting it to reach 2.4 percent. The industrial sector has contributed a significant amount to the recovery in the volume of exports, which increased by 14%, compared to 4.4% in the last quarter of 2021. The continuous rise in imports of raw materials and semi-manufactured materials during the period under study will facilitate the continuation of the recovery of industrial production in the coming months, and it is expected The improvement of the epidemiological situation and the lifting of health restrictions should promote the recovery of services, especially those related to the tourism sector.
With regard to prices at consumption, the Council noted the continued acceleration of inflation, which reached 7.5% in April 2022, after recording 7.2% in the previous month and 5% in April 2021, which is the highest level recorded since March 2018. The acceleration of the prices of manufactured goods, which increased by 9.3% (compared to 5.1% a year ago), and the prices of foodstuffs, which rose by 8.7% (compared to 4.9% in April 2021).
The Council considered that the transmission of inflationary pressures emanating from abroad to domestic prices, on the one hand, and the repercussions of the expected adjustments to prices set within the framework of the reform of the subsidy system, on the other hand, would maintain inflation at historically high levels, whether during 2022 or 2023.
The statement referred to the level of the external sector, which recorded a widening of the current deficit, which amounted to -2.7 percent of GDP during the first four months of 2022, compared to -1.7 percent in 2021, due to the deterioration of the trade yield. On the other hand, it reached The level of exchange reserves is 23.655 million dinars, equivalent to 124 days of supply on May 16, 2022, compared to 23.313 million dinars and 133 days of supply in March 2021.
The Tunisian Central Bank stated that foreign exchange reserves amounted to 23.655 billion dinars ($7.76 billion), or 124 days of imports, on May 16, compared to 23.313 billion dinars, or 133 days of imports, at the end of 2021.
The Board of Directors of the Central Bank of Tunisia expressed its deep concern about the upward risks surrounding the prospects for the development of inflation, stressing the importance of coordinating economic policies to avoid any inflationary slide that might exacerbate weaknesses and impede the recovery of economic activity.
It is noteworthy that inflation in Tunisia rose to 7.5% in April 2022, from 7.2% in March of the same year and 7% in February of the same year, and the last time the Tunisian Central Bank increased interest rates was in February 2019 when it raised them by 100 basis points.