- Tunisia’s inflation will accelerate from 8.3% in 2022 to 9.5% in 2023, mainly due to higher taxes and lower food and energy subsidies.
- Fitch Solutions pointed out. In the event of more acute inflationary pressures than expected, the Central Bank of Tunisia (CBT) will implement more aggressive monetary tightening.
More noticeable delays in the IMF package and, more specifically, in Tunisia’s access to funding will cause prolonged shortages of goods in the domestic market and weigh on the dinar, leading to even higher inflation. Tunisia’s inflation will accelerate from 8.3% in 2022 to 9.5% in 2023, mainly due to higher taxes and lower food and energy subsidies, according to a commentary published by Fitch Solutions Country Risks & Industry Research and independent sources.
It explained that lower (higher) food and energy prices than currently expected could affect the forecast for inflation. Meanwhile, a deeper cut in subsidies than we are presently factoring in could also drive inflation beyond our projections. More noticeable delays in the IMF package and, more specifically, in Tunisia’s access to funding will cause prolonged shortages of goods in the domestic market and weigh on the dinar, leading to even higher inflation, Fitch Solutions pointed out. In the event of more acute inflationary pressures than expected, the Central Bank of Tunisia (CBT) will implement more aggressive monetary tightening.
Fitch Solutions also said while it was anticipated that the government would implement austerity measures in 2023, the reforms included in the 2023 Budget came slightly above expectations, especially with the imposition of more taxes than anticipated. Fitch Solutions forecast that the CBT will raise its key rate by an additional 50 basis points (bps) to 8.50% by the end of end-2023 to contain acute inflationary pressures.