Tunisia Sounds Alarm on Financing as It Holds Key Rate
Tunisia Central Bank Keeps Benchmark Rate at 6.25%
(Bloomberg) -- Tunisia’s central bank kept its benchmark interest rate unchanged, voicing concern about an “acute” drying up of foreign financing and the sustainability of public debt.
The regulator held the rate at 6.25%, where it’s been since the last cut about a year ago, it said Thursday in a statement. The meeting was the bank’s second since President Kais Saied suspended parliament and fired the prime minister in late July, sparking a political crisis that compounded economic problems that have been brewing for the past decade.
While the bank noted some positive developments, including a decrease in the current deficit in the first eight months of 2021, it warned of the consequences of the failure to secure a new deal with the International Monetary Fund. Saied’s power grab, which he said was necessary to save the country, quashed hopes of any IMF deal soon.
The central bank’s board “expressed its concern about the acute drying up of external financial resources,” according to the statement. It also “stressed that the deterioration of public finances” are “likely to curb sustainability of public debt.”
The absence of a new IMF program will require “intensified bilateral financial cooperation by the end of the year in order to mobilize as much external resources as possible and to avoid monetary financing during this period,” it said.
©2021 Bloomberg L.P.