VZCZCXRO3353
PP RUEHTRO
DE RUEHTU #2303/01 2500725
ZNR UUUUU ZZH
P 070725Z SEP 06
FM AMEMBASSY TUNIS
TO RUEHC/SECSTATE WASHDC PRIORITY 1781
INFO RUEHAD/AMEMBASSY ABU DHABI PRIORITY 0789
RUEHAS/AMEMBASSY ALGIERS PRIORITY 7278
RUEHNK/AMEMBASSY NOUAKCHOTT PRIORITY 0777
RUEHFR/AMEMBASSY PARIS PRIORITY 1625
RUEHRB/AMEMBASSY RABAT PRIORITY 8207
RUEHTRO/AMEMBASSY TRIPOLI PRIORITY 0386
RUEHCL/AMCONSUL CASABLANCA PRIORITY 3987
RUEATRS/DEPT OF TREASURY WASHINGTON DC PRIORITY
RUCPDOC/USDOC WASHDC PRIORITY

UNCLAS SECTION 01 OF 02 TUNIS 002303 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR NEA/MAG (MHARRIS) AND 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 (RORTIZ) 
PARIS FOR NEA WATCHER 
 
E.O. 12958: N/A 
TAGS: ECON EFIN ETRD ELAB EAIR TS
SUBJECT: TUNISIA ECONOMIC HIGHLIGHTS: AUGUST 15 - August 31 
 
REF: TUNIS 2173 
 
¶1. (U) This cable contains highlights of recent economic 
developments in Tunisia on the following topics: 
 
¶A. Central Bank Figures Show Climbing Inflation 
¶B. Tunisian Olive Oil Exports Fall Below GOT's Expectations 
¶C. Tunisia and Libya Continue Dialogue on Trade, Tourism 
¶D. Tunisia to Increase Oil Exploration 
¶E. AIRBUS A380 Test Flight to the Tunisian Desert Delayed 
 
 
 
 
--------------------------------------------- -- 
Central Bank Statistics Show Climbing Inflation 
--------------------------------------------- -- 
 
¶2. (U)  Central Bank statistics released August 29th show 
that the average rate of inflation for the first seven 
months has reached 4.7 percent.  Over the past year the 
average rate of inflation has risen from 1.4 percent in 
July 2005 to the current figure of 4.7 percent. 
 
¶3. (U)  In foreign trade, Central Bank figures show the 
current account widening by 580 million dinars (USD 443.6 
million) on the year over the previous period in 2005. 
Exports rose 10.6 percent over the July 2005 figures but 
were offset by a 13.9 percent rise in imports.  Exports of 
textile and clothing dropped 3.5 percent.  The rise in 
imports is largely attributable to the importation of 
energy (34.6 percent) and raw materials and semi-finished 
products (12.4 percent).  The current account deficit 
represents 2.1 percent of GDP over the first seven months 
of 2006, of which 1.4 percent is attributable to the cost 
of energy.  Foreign currency reserves, however, are up 
approximately 50 percent over the same period in 2005.  The 
increase is partially explained by the earnings from the 35 
percent privatization of Tunisie Telecom. 
 
--------------------------------------------- ----------- 
Tunisian Olive Oil Exports Fall Below GOT's Expectations 
--------------------------------------------- ----------- 
 
¶4. (U)  During the first half of 2006, Tunisia reportedly 
exported only 75,000 metric tons of olive oil, far below 
the target needed to reach the GOTs initial forecast of 
180,000 metric tons for the marketing year ending this 
November.  Tunisia has an excess stock of nearly 80,000 
metric tons of olive oil.  Tunisia produces, on average, 
170,000 metric tons of olive oil annually, with 35 to 
50,000 metric tons for local consumption and the remaining 
quantity for export.  Olive oil is one of Tunisias most 
important exports.  Tunisian olive oil exports were 
negatively affected by better-than-expected olive crops in 
Italy and Spain, the two main export markets for Tunisian 
olive oil.  Tunisian olive oil is primarily sold in bulk to 
Italian and Spanish producers who blend and rebottle 
Tunisian olive oil under their own labels.  Additionally, 
Tunisian olive oil exporters have had difficulty recouping 
their production costs as the Spanish and Italian olive oil 
inventories pushed the market price of olive oil down. 
Based on the GOTs optimistic forecast for exports, many 
Tunisian olive oil producers paid high prices for this 
years olive crop. 
 
¶5. (SBU) Comment: The lackluster export of Tunisian olive 
oil is an example not only of the failure of the GOTs 
forecasting abilities, but is also a product of the 
Tunisian industrys reliance on bulk sales.  In order to 
r to 
become less dependent on the Spanish and Italian markets, 
the Tunisian industry needs to address the shortage of 
processing and bottling facilities.  End Comment. 
 
--------------------------------------------- -------- 
 
TUNIS 00002303  002 OF 002 
 
 
Tunisia and Libya Continue Dialogue on Trade, Tourism 
--------------------------------------------- -------- 
 
¶6. (U)  Tunisian and Libyan officials from the commerce and 
tourism sectors met to discuss and implement the creation 
of the free trade zone recommended by the 19th Libyan- 
Tunisian High Commission, held in Tunisia in July 2006. 
Libya is Tunisia's most important Arab and African trade 
partner.  In 2005, the volume of trade between Libya and 
Tunisia reached 1.27 billion Tunisian dinars (USD 970 
million).  For the first seven months of 2006, the trade 
exchange has already reached 1.07 billion dinars (USD 817 
million). 
 
¶7. (SBU)  Comment:  While both Tunisia and Libya have 
agreed in principal to create a free trade zone that will 
allow the free movement of both goods and people, Tunisian 
traders continue to face administrative controls imposed by 
Libyan authorities.  Tunisian companies must export their 
goods through state-controlled Libyan trade agencies.  No 
such restrictions exist for Libyan exports to Tunisia, 
which can be imported by private companies or smuggled 
across the border, as evidenced by the numerous Tunisian 
road side stands boasting cut-rate Libyan gasoline. End 
Comment. 
 
----------------------------------- 
Tunisia to Increase Oil Exploration 
----------------------------------- 
 
¶8. (U)  Soaring oil prices and the continuing growth of 
local demand have pushed the GOT to intensify drilling 
activities.  According to the Financial Director of the 
Entreprise Tunisienne dActivites Petrolieres (ETAP), it 
will raise 75 million USD on the international market to 
finance exploration operations on its concessions for 
fiscal year 2006.  Additionally, the Ministry of Industry 
has increased the issuance of drilling licenses, issuing 14 
in 2005 from an average of only four licenses per year. 
Investments for activities related to exploration reached 
150 million USD in 2005, whereas the former annual average 
used to be 100 million USD.  The current national 
production is 3.4 million tons of oil equivalent, roughly 
70 thousand barrels per day. 
 
--------------------------------------------- --------- 
AIRBUS A380 Test Flight to the Tunisian Desert Delayed 
--------------------------------------------- --------- 
 
¶9. (U)  Local press and international wire services 
reported that on August 29, an Airbus A380 test flight to 
the Tunisian desert was postponed for unspecified technical 
reasons, according to Lotfi Jomni, Director of the Tozeur- 
Nefta Airport.  The superjumbo jet was scheduled to fly to 
the airport of Tozeur-Nefta in southern Tunisia, but the 
pilot returned to the plane's base in Toulouse, France, 34 
minutes after taking off. 
BALLARD