Tunisia: BCT will not lower key rate again!
Economics professor Ridha Chkondali has said that the Central Bank's concerns about inflation levels returning due to excessive lending to the state, as well as the possible repercussions of US tariffs, may prevent the BCT's Executive Board from cutting the interest rate again.
In a statement to Express FM, he explained that 'the issuing institute starts from a monetary approach to inflation, which means a lot of liquidity in the economy. But this liquidity comes from direct loans to the state, so it's as if the Central Bank is causing the problem and calling for its own solution.'
He explained how the 50-point reduction in the interest rate had pushed the building and construction sector into positive growth for the first time in years.
'A further reduction in the interest rate would have positive repercussions for Tunisia, as the inflation problem is due to a shortage of production rather than excessive consumption.'
He added: 'I believe Tunisia has the opportunity to review all trade agreements, particularly with the European Union and Turkey. The increase in customs duties on Turkish products has been detrimental to the textile sector, which imports mainly cotton, raw materials, and semi-finished products from Turkey. This has resulted in a total loss of competitiveness on the international market, as well as negative and very low growth.'
He stressed the need to negotiate with these countries, focusing on areas from which Tunisia can benefit economically, as well as improving the business climate by reducing the plethora of administrative and tax procedures and lowering the interest rate, which would have a positive impact on Tunisian investors.
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