Tunisia financial system stabilising, says central banker

Reuters , Thursday 22 Sep 2011

The governor of the Central Bank of Tunisia says the North African country needs is more help from the international community

Mustapha Nabli
Mustapha Nabli The governor of the Central Bank of Tunisia (Photo by reuters)

Tunisia's financial system is stabilising and bank deposits are rebounding after street protests in January wreaked havoc on the country's economy, its central banker said on Wednesday.

"The level of lending is reasonably good," Mustapha Nabli told reporters before weekend meetings of the International Monetary Fund and World Bank in Washington. "There is no more pressure on (bank deposits.) In the last two months we have started to see deposits grow again," he said.

In a bid to revive the country's economy, which collapsed after a revolt toppled President Zine al-Abidine Ben Ali, Tunisia's central bank recently cut its key interest rate by 50 basis points to 3.5 per cent.

Nabli said he did not think the central bank would cut rates again in the near future. "I don't think we are going to loosen it more soon. We will see; we have to see how it evolves. If we were going to lower it more, we should have done it already," he said.

What the North African country needs is more help from the international community, he said. So far, Tunisia has received

about $1.4 billion in loans from the World Bank and the African Development Bank.

But it is not nearly enough to help the country, which is also dealing with the fallout from the conflict in neighboring Libya.

"Besides the World Bank and African development funding, there is not much else," Nabli said. "Having an extra billion (dollars) will be helpful, especially in grants, because the fiscal situation clearly is fragile and the foreign reserves are lower," he said.

Nabli did not rule out raising funds from international credit markets but said Tunisia had to wait until its credit rating improved.

The IMF has estimated Tunisia's gross domestic product will flatline in 2011 from growth of more than 3 percent in 2010.

Tourism has taken the biggest hit and contracted some 45 per cent since January. Libya is in the early stages of a transition to a new government after forcing the Muammar Gaddafi regime out of power.

"Tourism collapsing is not because of our fault. It's because perceptions are whatever they are in Europe and elsewhere ... The cost is being born by Tunisians fully," he said.

Short link: