On Wednesday, Tunisia’s central bank confirmed the rise in its interest rate by 100 basis points to 6.75%. This was done to tackle inflation in the nation, which has reached its highest level since 1990.
This raise is the second time that this has happened in three months. The last rate increase was in March, by 75 basis points, while annual inflation hit 7.7% in May.
The International Monetary Fund, IMF said last month that anchoring inflation expectations through additional rate increases would be crucial if price pressures did not moderate quickly.
Ezzedine Saidan, a local analyst said that increasing the rate will have a negative impact on investment and on the cost of production, but it had to be done. Officials have speculated that inflation is expected to reach about 9% by the end of this year.
The nation through its central bank said it needs $3 billion worth of loans to finance a $14 billion deficit. The apex bank said the timing is right to issue a Eurobond worth $1Billion.
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