On the economic and financial level, bad news follows one another in Tunisia. While an agreement with the International Monetary Fund (IMF) on a new line of credit is still delayed, the economic crisis is sinking deeper in the country, already shaken by an unstable social context.
The daily life of Tunisians is far from pleasant, the majority is hit hard by an unprecedented rise in the prices of consumer products. While the authorities explain this situation by an international situation, it is clear that the government is preparing the population for the gradual lifting of the subsidy, a more than risky bet on the social level. It is in this context that a new inflation rate record was recorded in Tunisia. Indeed, inflation confirmed its upward trend in September 2022, increasing once again to reach 9.1% in September 2022 against 8.6% last August and after the rate of 8.2% recorded last July, indicates the National Institute of Statistics (INS).
The inflation rate rose to 9.1%, after recording 8.6% in August, 8.2% in July, 8.1% in June 2022, and 7.8% in May, while that it was only 6.7% in January. This new inflation rate is breaking a new record, since last August it was already the highest rate reached in 31 years. In 1991, Tunisia had reached the annual average of 8.2%. This increase is explained in particular by the acceleration in the rate of rises in the prices of food products (13% against 11.9% in August), prices for the “housing, water, gas, electricity and other fuels” group (6.4 %, against 6.2% in August), as well as the prices of transport goods and services (8.3% against 8.1% in August). If inflation corresponds to a situation of generalized and lasting rise in the prices of goods and services, it directly leads to a drop in the purchasing power of Tunisians.
Clearly, with the same amount of money, you can buy fewer things than before, in the space of a few months. And for Tunisians to notice, the surge in prices in recent months is out of control, this is not without consequences on their daily budget. Except that the rise in prices concerns practically all consumer products. According to several testimonies, social discontent is quite palpable, especially in the ranks of the poorest families. It is in particular the prices of agricultural and food products that are experiencing recurrent increases.
The TMM, a coup de grace?
In an attempt to curb this upward trend in inflation, the Central Bank increased its key rate. A veritable barometer of the health of the currency, the money market rate (TMM) corresponds to the rate at which banks borrow and lend money to each other. It plays an essential role in financial activity and fluctuates according to inflation, unemployment, but also the international situation. Indeed, the Board of Directors of the Central Bank of Tunisia (BCT) decided, during its meeting held on Wednesday, October 5, 2022, to raise its key rate by 25 basis points, to 7.25%. The deposit and 24-hour marginal lending facilities are increased to 6.25 and 8.25% respectively, the BCT added in a statement made public, specifying that this decision entered into force since yesterday, October 6. 2022. The Board of Directors of the Central Bank of Tunisia also decided to raise the savings remuneration rate (TRE) by 25 basis points, to 6.25%.
Furthermore, the Board of Directors of the BCT noted the continuation of the accelerated and generalized rise in inflation, marking the highest level reached for more than three decades. The Council expressed, in this context, its concern about the upside risks surrounding the future path of inflation and underlined the importance of the coordination of economic policies to avoid a drift in inflation which could accentuate economic and financial vulnerabilities. . To this end, he called on all stakeholders to support the action of the Central Bank in its fight against inflation and in the preservation of financial stability.
The Board also considered that inflationary pressures would remain active and expects the impact of both internal and external factors, which are currently amplifying pressures on consumer prices, to persist over the quarters. coming. It is in this sense that several economists have warned against double-digit inflation in Tunisia. Moreover, the Governor of the Central Bank, Marouane Abassi, considered that the increase in the key rate is a “necessary evil” in order to control inflation in Tunisia. For him, the great fear is to see a two-digit inflation rate, that is to say, to reach 10% in the months to come. “It’s a disaster,” he warned. In any case, in the midst of this unprecedented economic crisis, and while Tunisian households are facing a sharp deterioration in their purchasing power, it is the citizens who will foot the bill. If for the BCT this decision comes with a view to coping with the upward trend of inflation, this measure will directly raise the debt ratio of Tunisians.