VZCZCXRO7993
PP RUEHTRO
DE RUEHTU #2749/01 3180851
ZNR UUUUU ZZH
P 140851Z NOV 06
FM AMEMBASSY TUNIS
TO RUEHC/SECSTATE WASHDC PRIORITY 2203
INFO RUEHAD/AMEMBASSY ABU DHABI PRIORITY 0811
RUEHAS/AMEMBASSY ALGIERS PRIORITY 7337
RUEHBJ/AMEMBASSY BEIJING PRIORITY 0071
RUEHLO/AMEMBASSY LONDON PRIORITY 1207
RUEHNK/AMEMBASSY NOUAKCHOTT PRIORITY 0799
RUEHFR/AMEMBASSY PARIS PRIORITY 1660
RUEHRB/AMEMBASSY RABAT PRIORITY 8256
RUEHTRO/AMEMBASSY TRIPOLI PRIORITY 0001
RUEHCL/AMCONSUL CASABLANCA PRIORITY 4013
RUEATRS/DEPT OF TREASURY WASHINGTON DC PRIORITY
RUCPDOC/USDOC WASHDC PRIORITY

UNCLAS SECTION 01 OF 02 TUNIS 002749 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR NEA/MAG (HARRIS) AND EB/CIP 
STATE PASS USTR (BELL), USPTO (ADLIN AND ADAMS), USAID (MCCLOUD) 
USDOC FOR ITA/MAC/ONE (ROTH), ADVOCACY CTR (JAMES), AND 
CLDP (TEJTEL) 
CASABLANCA FOR FCS (ORTIZ) 
LONDON AND PARIS FOR NEA WATCHER 
 
E.O. 12958: N/A 
TAGS: ECON ETRD ELAB EFIN SENV KTEX TS
SUBJECT: TUNISIA ECONOMIC HIGHLIGHTS: Oct. 16 - Oct. 31 
 
REF: A. TUNIS 2744 
B.TUNIS 2684 
¶C. TUNIS 2598 
 
¶1. (U) This cable contains highlights of recent economic 
developments in Tunisia on the following topics: 
 
¶A. GOT to Issue a Travel Allowance Card 
¶B. GOT Projects 5.3 percent GDP Growth for 2006 
¶C. Central Bank Concerned About Household Debt 
¶D. Tunisia Signs Science Cooperation Deal with China 
 
--------------------------------------------- ------- 
GOT to issue a travel allowance card by end of 2006 
--------------------------------------------- ------- 
 
¶2. (U) According to local press reports, the GOT plans to issue a 
travel allowance card, called the "carte allocation touristique" 
(CAT), by the end of 2006.  The special credit card card is intended 
to facilitate payment and withdrawals in foreign currency for 
Tunisian residents and students while they are abroad.  The card 
will function much as a conventional credit card and will allow 
Tunisians to make hotel reservations abroad; however, it cannot be 
used for ordering goods and services on the Internet.  Tunisian 
credit cards are not valid for use outside of Tunisia. 
 
¶3. (SBU) Comment and Background: The Tunisian dinar is not fully 
convertible.  Tunisians are allocated an annual per person travel 
allowance of foreign currency.  Currently the allowance is the 
foreign currency equivalent of 2,000 dinars (roughly 1500 USD), but 
President Ben Ali recently announced the allocation will be 
increased to 4,000 TND (3,000 USD) (Ref A).  The creation of the 
travel allowance card is indicative of a gradual ease in 
restrictions on foreign currency transactions.  The GOT has 
announced plans to make the dinar fully convertible by 2009.  End 
Comment and Background. 
 
---------------------------------------- 
GOT Projects 5.3 percent Growth for 2006 
---------------------------------------- 
 
¶3. (U) The GOT's National Institute of Statistics (INS) projects 
that GDP growth will reach 5.3 percent for 2006, lower than the 5.8 
percent initially forecast but still an increase over 2005 (4.2 
percent).  While the INS survey showed a 4.1 percent increase in 
industrial production and a 5 percent increase in receipts in the 
tourism sector, high inflation, now 4.7 percent (Ref B), and the 
growing trade deficit (Ref C) have lowered expectations.  According 
to a banking sector contact, Prime Minister Ghannouchi recently 
presented estimates to a gathering of bankers showing that high oil 
prices have shaved one percent off of GDP growth.  Foreign direct 
investment also showed a modest 0.5 percent drop in the industrial 
sector but a substantial 58.7 percent decrease in the services 
sector. 
 
------------------------------------------- 
Central Bank Concerned About Household Debt 
------------------------------------------- 
 
¶4. (SBU) The Tunisian Central Bank (BCT) raised its key interest 
rate from 5 to 5.25 percent, representing the first hike since 2003. 
 According to French daily Le Temps, in July, the BCT issued an 
internal note asking banks to restrict lending to households for 
consumption (Ref B).  Philippe Amestoy, Director General of Union 
Internationale de Banques (UIB), told EconOff that the BCT also 
directed banks to reduce the term for loans reimbursement from 7 to 
3 years, in an effort to discourage household debt.  During the 
first half of 2006, the total volume of household debt, held by the 
approximately 10 million Tunisians, reached nearly 4.8 billion 
dinars (roughly 3.66 billion USD) exceeding the same volume for all 
of 2005, 4.5 billion dinars (approximately 3.43 billion USD).  These 
loans were primarily used to finance real estate (60 percent), cars 
(5 percent), equipment and building materials. 
 
 
TUNIS 00002749  002 OF 002 
 
 
¶5. (SBU) Comment:  Although the Central Bank has expressed concern 
about the growth of household debt, the level of household debt 
remains manageable and below that of most Western countries.  The 
higher interest rates, in combination with the reduced loan terms, 
may reduce the demand for consumption loans.  However, the interest 
rate hike may also be motivated by a desire to curb rising 
inflation, which has recently reached 4.7 percent. 
 
--------------------------------------------- ----- 
Tunisia Signs Science Cooperation Deal with China 
--------------------------------------------- ----- 
 
¶6. (U) On October 23, China and Tunisia signed a scientific 
cooperation agreement in a bid to promote science development and 
technology transfer.  The agreement was announced during a meeting 
in Tunis between Taieb Hadhri, the Tunisian Minister for Science and 
Technology and Wu Zhongze, China's Vice-Minister for Science and 
Technology. The deal paves the way for scientific cooperation 
between research institutes, scientific communities and technology 
organizations from each country.  It will encourage the exchange of 
knowledge and expertise in the areas of desertification, management 
of arid lands, peaceful use of nuclear energy, sea technologies and 
new technologies in the textile sector.  A joint commission for 
cooperation will be established to discuss and approve scientific 
cooperation programs.  The agreement was concluded ahead of the 
summit meeting of the Forum on China-Africa Cooperation, held in 
Beijing, November 3-5. 
 
¶7. Comment and Background (SBU):  China has recently shown an 
unprecedented interest in expanding business and trade with Tunisia. 
 The Chinese government continues to establish goodwill for its 
companies through programs of technical assistance, donations, and 
other type of grants to Tunisia.  Chinese companies have invested 
multiple sectors, including sports and recreation, water supply and 
sewage, environmental protection, energy and telecommunications. 
Chinese investment in the telecom sector has particularly 
aggressive, with Huawei and ZTE (Zhong Xing Telecommunications 
Equipment Company Limited) receiving lucrative contracts from the 
GOT for mobile phone and internet network equipment and services. 
End Comment and Background. 
BALLARD