Tunisia Holds Benchmark Rate as Central Bank Says Reforms Needed
(Bloomberg) -- Tunisia’s central bank on Thursday held the benchmark rate unchanged, and stressed the need to work quickly to implement a program that will help restore confidence in the nation’s ailing economy.
The bank held the rate steady at 6.25% in its final meeting of the year, opting against changes despite rising inflation and projections of slower economic growth in 2022 under the new budget.
The regulator stressed the importance of coordinating between fiscal and monetary policies to avoid monetary financing of the budget, according to a statement issued after the meeting. It also called on the government to reach an agreement with the International Monetary Fund -- a deal it said would help restore investor confidence and provide an “incentive to improve the sovereign rating of our country.”
The Covid-19 pandemic has battered the North African nation’s economy, compounding damage sustained over the past decade as successive governments failed to deliver the promised goals of boosting youth employment, curbing prices and providing better opportunities.
That damage was further amplified with President Kais Saied’s decision earlier in the year to fire his premier and suspend parliament. While critics dubbed the move a coup, he argued it was intended to save the country from the chaos and corruption it endured since the 2011 ouster of President Zine El Abidine Ben Ali.
The 2022 budget unveiled earlier this week shows economic growth slowing to 2.6% compared to 2.8% this year. The focus is largely on curbing the deficit, which is projected to narrow to 6.7% of GDP from 8.3%.
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