Tunisia: BCT Executive Board Calls for Economic Reform Plan

Tunis/Tunisia — The Executive Board of the Central Bank of Tunisia (BCT), on Tuesday, called for more coordination between the various stakeholders to set in motion an economic reform plan and put in place new mechanisms that will be identified based on the requirements of the current stage to overcome this crisis.

In view of recent developments nationally, including following the decisions taken by the President of the Republic on July 25, 2021 (freezing the ARP, lifting MPs' parliamentary immunity and dismissal of the Prime Minister), it he stressed the importance of preserving the stability and proper functioning of state institutions, protect them and ensure their sustainability, amid unprecedented challenges imposed by the current political, economic, social and health situation.

According to a statement issued by the BCT, the meeting also emphasized, at its periodic meeting, the need to restore the confidence of international institutions and foreign donors in the Tunisian economy.

It decided, on the same occasion, to keep the key interest rate of the Central Bank of Tunisia unchanged.

The Executive Board noted, at the beginning of its work, the increase in the inflation rate to 5.7%, year-on-year, in June 2021 against 5% the previous month and 5.8% during the same month of the past year.

The inflation indicator of products, excluding administered and fresh, amounted to 5.3% against 5.1% a month earlier.

Regarding the external sector, the Board stressed the contraction of the current deficit at around 3.4% of GDP during the first half of 2021, against 3.9% for the same period of the previous year, following the significant increase in labor income, while the balance of services continued to decline, in relation to the persistence of the repercussions of the health crisis on the tourism sector, in addition to the widening of the trade deficit due to the evolution of foreign trade.

In addition, the decline in the mobilization of foreign currency resources, under loans and foreign investment, and the significant repayments made in July 2021 under external debt, have affected the balance of external payments. This brought net foreign exchange reserves to 20,515 MD or 129 days of imports at the end of July 2021 against 21,190 MD and 140 days of imports in the same period of the previous year.

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