Tunisia Holds Key Interest Rate as It Presses Economic Program

(Bloomberg) -- Tunisia’s central bank kept its benchmark rate steady at 7.75%, citing success in meeting inflation and deficit targets even as it stressed the need to push ahead with a sweeping economic reform program.

The bank, in its first board meeting since the Arab Spring’s birthplace elected a new president, noted that inflation had stabilized at 6.7% in September, easing from 25-year highs in 2018. At the same time, weakness in exports has put pressure on the North African nation’s finances as it struggles to push ahead with an IMF-backed program that calls for cost-cutting measures.

Economic growth isn’t expected to exceed 1.4% this year, it said in a statement, adding that “all efforts must be made to raise the pace of growth by setting the necessary economic policies to realize sound growth and restore” economic balance.

Tunisia has struggled to revive its economy after the 2011 uprising that led to the ouster of President Zine El Abidine Ben Ali, with its main accomplishment being the establishing of a solid democracy -- as evidenced by the election of political outsider Kais Saied as president this month. At the same time, successive governments have failed to properly tackle economic ills such as inflation and youth unemployment that’s around double the national average.

Pushing ahead with the economic program is key, not only for Tunisia to continue unlocking installments from the $2.9 billion International Monetary Fund loan it secured in 2016, but for it to be able to secure favorable rates on the international market and attract robust foreign investment.

The bank said the recent accomplishments included boosting foreign reserves to a level that covers 104 days of imports, as of Oct. 25, up from 84 days last year.

©2019 Bloomberg L.P.

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