Central Bank of Tunisia: Dinar Remains Resilient Despite Inflation Risks
The Central Bank of Tunisia (BCT) has highlighted that the Tunisian dinar continues to show resilience against major currencies. However, it has warned against the risks of rising interest rates, despite a downward trend in inflation.
In a statement issued after its meeting on March 26, the BCT examined recent economic and financial developments at both international and national levels, as well as inflation forecasts.
The bank noted that the widespread decline in prices of major commodities and basic products on the international market has contributed to a decline in global inflation in 2024. However, underlying inflation remains high, keeping overall inflation above central banks' forecasts for the first months of 2025.
In a context marked by geopolitical and commercial uncertainties, these trends have led to a revision of short-term inflation prospects, prompting several major central banks to maintain their interest rates unchanged.
At the national level, economic growth continued to progress in the fourth quarter of 2024, reaching 2.4% year-on-year compared to 1.8% in the previous quarter. This dynamic is mainly driven by the strengthening of activities in the services and agriculture sectors.
Regarding the external sector, the BCT observed that the current account deficit stood at 1,654 million dinars (0.9% of GDP) at the end of February 2025, compared to 113 million dinars (0.1% of GDP) a year earlier. This deterioration is mainly due to the widening of the trade deficit (-3,518 million dinars compared to -1,780 million dinars at the end of February 2024), despite good performance in tourism revenues and labor income.
Furthermore, net foreign exchange assets reached 22.9 billion dinars (100 days of imports) as of March 25, 2025, compared to 27.3 billion dinars (121 days) at the end of December 2024. The exchange rate of the dinar remains stable against major currencies.
Inflation, meanwhile, continues to slow down, standing at 5.7% in February 2025, compared to 6% in the previous month. This attenuation is largely explained by the decline in inflation of administered prices (2.2% compared to 3.8%), linked to the reduction of VAT on electricity tariffs and the maintenance of price freezes on key products and services. However, underlying inflation, excluding fresh food and administered prices, has slightly increased to 5.1% in February compared to 5% in January.
Fresh food prices continue to evolve at high levels, reaching 13.3% in February compared to 13.2% the previous month.
According to the BCT, recent inflation trends have led to a downward revision of forecasts for the coming months. However, wage increases in the public and private sectors could exert upward pressure on production costs and stimulate demand, in a context where production capacities remain limited, particularly due to persistent water stress and the slow pace of strategic reforms.
This situation could slow down a more marked decline in inflation in the short term. On an annual average, the inflation rate is expected to decrease from 7% in 2024 to 5.3% in 2025.
Finally, the BCT emphasizes that the future evolution of inflation remains uncertain and exposed to several upside risks, linked to fluctuations in international commodity prices, demand dynamics, and the management of the state budget deficit.
