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Tunisian Central Bank raises interest rate by 75 basis points

Tunisian Central Bank

Tunis, (Business News Report)|| The Tunisian Central Bank announced that the main interest rate will be raised by an additional 75 basis points, from 6.25% to 7%.

The Tunisian Central Bank attributed the reasons for raising interest rates to high inflation, the first increase in interest rates since 2019.

Inflation in Tunisia also rose to 7.5% in April, from 7.2% in March and 7% in February.

The last time the Tunisian Central Bank raised interest rates was in February 2019 when it raised them by 100 basis points.

The bank said that the current account deficit amounted to -2.7 percent of GDP in the first four months of 2022, compared to -1.7 percent in 2021, due to the worsening trade deficit.

Foreign exchange reserves amounted to 23.655 billion dinars ($7.76 billion), or 124 days of imports, on May 16, compared to 23.313 billion dinars, or 133 days of imports, at the end of 2021, the bank said.

In a statement, the bank expressed its deep concern about the high inflation curve and called for economic reforms as soon as possible to restore economic growth in order to ensure macroeconomic stability and the sustainability of public debt.

The Tunisian government aims to reach an agreement with the International Monetary Fund to obtain a loan of about 4 billion dollars to support its budget.

The government submitted to the Fund a preliminary document of the program of reforms to be implemented in the coming years in order to obtain the loan.

Last Wednesday, the Tunisian Finance Minister said that initial talks with the IMF were positive, and that Tunisia is committed to paying all its foreign debts.

Tunisian Finance Minister Siham Al-Boughdiri said, during a speech she gave during the opening of the International Forum of Francophone Accountants and Auditors in the tourist city of Hammamet, that Tunisia will pay 3.5 billion dinars ($1.14 billion) in foreign debts this month.

Regarding the course of negotiations with the International Monetary Fund, the minister said that the initial talks with the Fund were positive, pointing out that the government is waiting for the IMF to announce the official launch of negotiations with Tunisia.

The Minister expressed her hope for concluding the agreement with the IMF, especially since it was adopted when preparing the Finance Law to complete the country’s needs for financing to support public financial balances.

She pointed out that the Prime Minister had announced, during the celebration of the International Labor Day, the government’s commitment to all its current and previous pledges, based on the belief in the continuity of the state.

In its negotiations with the International Monetary Fund, Tunisia aims to obtain a $4 billion loan.

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