The Central Bank of Tunisia has announced it will continue making efforts to maintain the financial and economic balance of the country. The bank said it will not print money to provide liquidity and finance the general budget.
The Governor of the Central Bank, Marwan Al-Abbasi, confirmed his rejection of financial solutions to finance the budget that raises the monetary mass without any economic growth.
Al-Abbasi also warned of an increase in inflation in the event of pressure on the financial issuance institution to pump money to finance the budget.
Central Bank of Tunisia
He added that “the central bank will not accept financing the budget again”.
Al-Abbasi also considered going to the International Monetary Fund is inevitable. He said obtaining other funds from donor institutions is conditional upon reaching an agreement with IMF.
The governor of the central bank warned of a new rise in the rate of inflation during last April, reaching 5%, compared to 4.6% in March. He described the economic situation in Tunisia as cautious and dangerous.
Downgrading Tunisia’s rating
Al-Abbasi warned of the possibility of reducing Tunisia’s rating again by credit rating agencies next June.
He pointed out that Tunisia’s C-rating exposes the country to high risks in mobilizing financial resources and affects the investment climate.
The Central Bank will continue its role in protecting the country’s financial balances and curbing inflation, in order to maintain the stability of the currency and the foreign exchange balance, which is still at respectable levels according to the governor, covering 141 days of supply, he affirmed.
He stressed the importance of creating a political pressure force, which he described as “political lobbying” to facilitate technical discussions with the IMF. He described the business climate in Tunisia as deteriorating.
Many investors, including Tunisians, do not want to invest in Tunisia due to what he described as the economic chaos taking place in the country.
Decline in investment
A document issued by the Central Bank revealed a decline in the investment rate in the country by 13.3% in 2020 compared to a growth of 17.5% in 2019, as well as a decline in national savings to 4% of GDP last year compared to 9.4% in 2019.
Due to the health pandemic, Tunisia recorded a historic shrinkage of 8.8% in its economy in 2020.
The National Institute of Statistics in Tunisia announced, last Saturday, that the country’s economy shrank 3% in the first quarter of 2021 compared to the previous year. This was caused when the vital tourism sector was damaged due to Coronavirus repercussions.