Tunisia's central bank (CBT) maintained the benchmark interest rate unchanged at 4.5%, underscoring the slowing economic activity and rising unemployment, mainly among Tunisians with high education, the bank said in a statement following the monthly meeting of its monetary policy council. The central bank noted that the GDP growth ticked down to 2.2% y/y in Q1 2014 from 2.3% in Q4 2013.

The statistic office has not released the GDP data for the first quarter yet. Tunisia’s GDP growth reached 2.7% y/y in Q1 2013. The central bank also said that all Tunisia’s economic sectors, excluding agriculture, have registered lower activity and output in Q1.

The bank underscored the favourable weather conditions that boosted this year’s agriculture harvest, forecasting a 60% y/y increase to 2.2mn tons.

The central bank again warned of the widening current account deficit, which reached 3.8% of the forecast GDP in the first four months of the year compared with 2.6% of GDP during the same period a year earlier. The current account balance was pressured by an expanding trade gap given high energy and food imports. Such negative parameters, coupled with falling FDI into Tunisia, and despite the government’s external borrowing, cut FX reserves to TND 10.615bn as of May 27. The latter covered 95 days of imports, down from 106 days during the same period of 2013.

The central bank also noted the rising liquidity needs of the banking sector in May, boosting the central bank’s daily intervention on the money market to an average of TND 5.297mn, up from TND 5.259mn in April.

The inter-bank interest rates, however, edged down to 4.70% in May from 4.72% the month before, the central bank said.