African currencies have not fully recovered from the impact of a fall in commodity prices, among other issues that have affected economies in the region in recent times. Several countries in Africa have struggled to maintain the value of their currencies, using all forms of intervention to prevent continuous slide against the US dollar.

In Tunisia, where trade deficit expanded by 57 percent in the first quarter of 2017, the central bank has decided to reduce its interventions and allow the value of the dinar to steadily decline. The apex bank will, however, prevent a dramatic slide in the currency. It is expected that more exchange rate flexibility would help reduce the large trade deficit.

“The central bank is going to minimise its interventions to reduce the value of the dinar in a gradual slide of the dinar,” Finance Minister Lamia Zribi told local Express FM Radio. “But we will avoid a brutal devaluation like that in Egypt.” The dinar exchanged 2.3 to a dollar on Wednesday.

Tunisia’s new strategy is part of talks on reforms with the International Monetary Fund (IMF). The Fund is pushing Tunisia to reduce public spending. The country’s public-sector wages is among the highest in the world compared with gross domestic product, according to Reuters. The IMF also called for tighter monetary policy which it says would reduce inflationary pressures.

On Monday, the IMF agreed to release $320 million to the North African country, a delayed tranche of its $2.8 billion in loans, which had been held up by concerns over Tunisia’s lack of progress in its reforms.

An IMF statement said Tunisia had agreed to prioritize increasing tax revenue, reducing the public-sector wages through civil-service reforms (including early retirement) and reducing energy subsidies. Click here to read more.

Comments

comments

You might also like…

After Mugabe, all eyes are on Museveni: how long can he cling to power?

  Ugandan President Yoweri Museveni speaks during a presidential campaign rally in the capital Kampala in 2016. Reuters/James Akena Justin Willis, Durham University; Gabrielle Lynch, University of Warwick, and Nic Cheeseman, University of Birmingham On 21 November, Zimbabwean president Robert Mugabe resigned as president under intense pressure from the military, his own party, and mass […]

Uhuru Kenyatta sworn in as Kenya’s president for a second term of five years

 Kenya President Uhuru Kenyatta was sworn in for second, five-year term on Tuesday, ending months of political turmoil in the east African nation. Kenyatta won a repeat presidential election on Oct. 26 after opposition leader Raila Odinga boycotted the vote, citing concerns over fairness. Police prevented opposition leaders from holding a rival gathering on Tuesday.  […]

Benin, Liberia and Nigeria lead Africa in ranking at maiden global robotics competition (SEE FULL RANKING)

 Benin and Liberia were ranked highest among the 40 African countries that participated in the just ended FIRST Global Challenge robotics competition held in the United States capital, Washington DC. The six-round maiden international robotics event saw 163 national teams including 6 continental teams made up of students from around the world competing with the common goal of increasing […]