Tunisia's central bank (CBT) left the benchmark interest rate unchanged at 4.5%, underscoring some negative economic trends, including falling industrial output and weakening tourism activity. The CBT, however, praised the strong agriculture output amid favourable weather conditions and strong harvest, which will help curb inflationary pressures. The latter are usually fuelled by volatile fresh produce prices.

The central bank warned of the widening current account deficit, which reached 2.7% of the forecast GDP in the first three months of the year compared with 1.8% 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 prompted the central bank to tap into its FX reserves. The latter covered 97 days of imports as of April 29, down from 102 days of imports at end-April 2013.

As to inflation, the CBT underscored that inflationary pressures have eased in March, when CPI inflation cooled to 5.0% y/y from 5.5% the month before due to cooling core inflation, excluding fresh produce prices.

The central bank also noted the rising liquidity needs of the banking sector in April, boosting the central bank’s daily intervention on the money market to an average of TND 5.280mn in April, up from TND 4.688mn in March.

The inter-bank interest rates inched up to 4.73% in April from 4.72% in the month before, the CBT noted.

The Tunisian dinar has appreciated by 3.1% and 2.7% against the USD and the EUR so far in 2014 up to April 28, the central bank said.