VZCZCXRO6512
PP RUEHTRO
DE RUEHTU #2036/01 2220801
ZNR UUUUU ZZH
P 100801Z AUG 06
FM AMEMBASSY TUNIS
TO RUEHC/SECSTATE WASHDC PRIORITY 1519
INFO RUEHAD/AMEMBASSY ABU DHABI PRIORITY 0782
RUEHAS/AMEMBASSY ALGIERS PRIORITY 7267
RUEHFR/AMEMBASSY PARIS PRIORITY 1614
RUEHRB/AMEMBASSY RABAT PRIORITY 8196
RUEHTRO/AMEMBASSY TRIPOLI PRIORITY 0372
RUEHCL/AMCONSUL CASABLANCA PRIORITY 3981
RUEATRS/DEPT OF TREASURY WASHINGTON DC PRIORITY
RUCPDOC/USDOC WASHDC PRIORITY

UNCLAS SECTION 01 OF 02 TUNIS 002036 
 
SIPDIS 
 
SIPDIS 
 
NEA/MAG FOR MAYA HARRIS, EB/CIP 
STATE PASS USTR (BELL), USPTO (ADLIN), USAID (METZGER) 
USDOC FOR ITA/MAC/ONE (ROTH), ADVOCACY CTR (JAMES), AND 
CLDP (TEJTEL) 
CASABLANCA FOR FCS ORTIZ 
PARIS FOR NEA WATCHER 
 
E.O. 12958: N/A 
TAGS: ECON EFIN ETRD ELAB TS
SUBJECT: TUNISIAN CENTRAL BANK RELEASES 2006 PRELIMINARY 
MACROECONOMIC FIGURES 
 
REF: TUNIS 629 
 
¶1. SUMMARY: On July 24, the Tunisian Central Bank released 
preliminary figures of the country's macroeconomic 
performance for the first half of 2006 after a meeting of the 
Bank's Executive Board.  The Bank discussed Tunisia's 
industrial and services output, monetary policy and inflation 
concerns, and foreign currency reserves level and exchange 
rate. The figures confirm the findings in the June 2006 IMF 
Staff Report on Tunisia.  END SUMMARY. 
 
¶2. The following are the Tunisian Central Bank's preliminary 
macroeconomic figures for the first half of 2006. 
 
 
OUTPUT AND PERFORMANCE OF GOODS AND SERVICES 
-------------------------------------------- 
 
The general index of production rose by 1.5 percent over the 
first five months of 2006 (compared to a 0.5 percent drop 
during the same period last year) due to steady performance 
of the mechanical and electrical industries, agrofood 
industries, building materials, ceramics and glass 
industries.  Production in the textile and apparel, leather, 
and footwear sectors posted a slight decrease.  Tourism 
revenue increased by 4.5 percent to 1.23 million Tunisian 
dinar and hotel receipts increased by 1.8 percent over last 
year. 
 
Foreign trade data showed an increase in exports of goods and 
services of 10.8 percent and an increase in imports of goods 
and services of 14.6 percent.  At the same time, work 
remittances transferred by Tunisians abroad grew by 7.8 
percent to 593 million Tunisian dinar over the first five 
months of 2006.  These transactions brought the current 
account deficit to 750 million Tunisian dinar, or 1.9 percent 
of GDP, over the first six months of 2006.  The Executive 
Board noted that increased energy costs represented more than 
60 percent of the deficit. 
 
 
MONETARY POLICY AND INFLATION 
----------------------------- 
 
The General Consumer Price Index maintained a steady growth 
of 0.4 percent in June, resulting in an average rate of 
inflation of 4.6 percent in the first half of the year, 
compared with 1.4 percent in 2005.  At the monetary level, 
the M3 aggregate (currency plus demand deposits, savings 
deposits, and large-denomination time deposits) rose by 6.1 
percent in June versus 3.4 percent a year earlier.  Due to a 
tighter monetary policy for the fourth straight month, the 
Central Bank injected 232 million Tunisian dinar into the 
money market, up from the 207 million Tunisian dinar injected 
last month.  The money market rate fluctuated in July, 
bringing the average money market rate to 5.06 percent.  The 
Tunisian Central Bank Executive Board stated that they were 
aware of the money market rate fluctuations and planned to 
maintain a steady Central Bank rate.  The Board also stated 
that they plan to watch commodity prices closely, especially 
crude oil prices, to find out the impact on the economy. 
 
 
FOREIGN CURRENCY RESERVES AND EXCHANGE RATE POLICY 
--------------------------------------------- ----- 
 
For the first seven months of 2006, the dinar appreciated 2.4 
percent against the U.S. dollar and depreciated 3.8 percent 
against the euro.  Foreign currency reserves totaled 8.22 
million Tunisian dinar in July 2006, which represents about 
163 days of imports, versus 5.35 million Tunisian dinar and 
115 days of imports over the same date in 2005.  The Central 
Bank reported that this rise was due to "resources from the 
opening of the capital of Tunisie Telecom."  Excluding these 
resources, which are the windfall from the sale of 35% of 
state-owned Tunisie Telecom to Dubai-based telecommunications 
provider Tecom, the foreign currency would cover 104 days of 
 
TUNIS 00002036  002 OF 002 
 
 
imports. 
 
¶3.  COMMENT: The preliminary results fall in line with the 
International Monetary Fund's 2006 Staff Report on Tunisia. 
The IMF Staff Report indicated that while Tunisia's stable 
macroeconomic performance was among the best in the region, 
the country was not reaching its desired goals due to 
unemployment, high external debt, and weakness in the banking 
sector.  According to reftel and the IMF Staff Report, 
Tunisian authorities used some of the 2.3 billion dollar 
proceeds from Tunisie Telecom's privatization to reduce 
external debt, which was about 68 percent of GDP in 2005. 
The report further indicated that the external debt/GDP ratio 
is sensitive to currency fluctuations and that while 
Tunisia's foreign currency reserves had reached a 
"comfortable level", they remained lower than many comparable 
emerging market economies.  END COMMENT. 
BALLARD