Tunisia keeps rates on hold, currency reserves rise in February

TUNIS (Reuters) – Tunisia’s central bank kept its benchmark interest rate on hold at 4.75 percent on Thursday but said that, despite progress in the political process, economic indicators were still “negative” in major sectors such as industry and tourism.

Foreign currency reserves rose to 14.974 billion dinars ($7.73 billion) in February, it said, with a billion-dollar bond sold last month to cover the 2015 budget deficit. Reserves on Feb. 25 of 14.974 billion dinars were the equivalent of 128 days of imports against 112 days at the end of 2014.

The bank said also that inflation rose to 5.5 percent in January 2015 from 4.8 percent in December 2014.

Tunisia faces pressure from its international lenders to curb high public spending, including by cutting politically sensitive subsidies on basic foods and fuel. Job security and high living costs are Tunisians’ main worries.

“Positive development in the political process has not yet been reflected concretely in the economic situation at the beginning of the current year, which was characterised by negative economic indicators,” a statement from the bank said.

Four years after toppling autocrat Zine El-Abidine Ben Ali, the country is widely praised as a model for the region, having held free elections last year and adopted a new constitution.

($1 = 1.9372 Tunisian dinars)
(Reporting by Tarek Amara; Editing by Louise Ireland)