Thursday, November 28, 2013

Tunisia holds rate, appeals for control of C/A, public deficit

    Tunisia's central bank held its key interest rate steady at 4.0 percent and appealed for political stability and security along with measures to control the current account deficit, public finances and thus avoid "runaway inflation."
    Although Tunisia's headline inflation rate was stable at 5.8 percent in October and September, the Central Bank of Tunisia said this should not obscure an acceleration of core inflation which rose to 6.9 percent in October from 6.8 percent the previous month.
    Tunisia's central bank last raised its rate by 25 basis points in March to control inflation.
    The central bank also said in a statement following its board meeting on Nov. 27 that a revision of economic growth estimates for 2013 to 3.0 percent from 3.6 percent now "remains somewhat optimistic since its achievement requires no less than a 3.7 percent growth over the fourth quarter of this year."
  Tunisia's Gross Domestic Product expanded by an annual 2.4 percent in the third quarter, down from 3.2 percent in the second quarter, due to a contraction in agriculture and the mining sector while manufacturing essentially stagnated.

    The central bank expressed its concern over a further increase in the unemployment rate of graduates with higher eduction in the third quarter to 33.5 percent, or 248,000, despite a slight decline in the overall unemployment rate to 15.7 percent from 15.9 percent in the second quarter.
    The central bank also noted the current account deficit of 6.5 percent of GDP in the first 10 months of the year compared with 6.9 percent a year earlier despite higher exports and lower imports. This means foreign currency reserves have to be tapped.
    Tunisia's foreign reserves rose to 11.673 billion dinars as of Nov. 25 - equivalent to 107 days of imports - compared with 9.486 billion on the same date in 2012.
    Last week the Qatar National Bank, part-owned by the Gulf state's sovereign wealth fund, gave Tunisia a $500 million deposit to support its foreign currency reserves.


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