BCT decides to keep key interest rate unchanged
28/05/2020 19:02, TUNIS/Tunisia
(TAP) - The Executive Board of the Central Bank of Tunisia decided at its meeting on Wednesday, May 27, to keep the Bank’s key interest rate unchanged at 6.75%.

A slight improvement in economic activity is expected in the coming period in connection with the targeted lockdown and the gradual recovery of activity in a number of sectors, according to the BCT's Executive Board.

The international repercussions of the spread of the COVID-19 pandemic on the Tunisian economy, as well as the impact of the general lockdown that began on March 22, 2020, were at the heart of the discussions during this meeting.

The general lockdown weighed, in particular, on some export-oriented sectors, notably, the mechanical and electrical industries and those of textile, clothing, leather and footwear, as well as tourism and transport, in addition to the sectors oriented towards domestic demand.

The investment climate and consumption have also been impacted.

Inflation rate rises to 6.3%.

On prices, the Council noted the continued rise in the inflation rate, which reached 6.3% year-on-year in April 2020, compared to 6.2% in March, due to the increase in food prices in a context of strong demand and the disruption of distribution channels recorded during the lockdown and with the advent of the holy month of Ramadan.

It also noted a drop in the current deficit during the first four months of the year 2020, to 2.8% of GDP from 3.6% in the same period of the previous year, mainly related to the reduction of the trade deficit, while tourism and labour income declined following the spread of the COVID-19 pandemic.

Consolidation of net foreign exchange reserves to 134 days of imports

Net foreign capital inflows were able to cover the current deficit and consolidate net foreign exchange reserves which reached 21.724 MTD or 134 days of imports on May 26, 2020 against 13.139 MTD and 74 days on the same date in 2019.

The Board stressed the need to speed up the pace of recovery of activity in exporting sectors such as phosphate and its derivatives and energy, given their important role in controlling the current deficit and easing tensions on net foreign exchange reserves, particularly following the anticipation of a significant decline in tourism and labor income due to the coronavirus crisis.

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