VZCZCXYZ0006
PP RUEHWEB

DE RUEHTU #0110/01 0581127
ZNR UUUUU ZZH
P 271127Z FEB 09
FM AMEMBASSY TUNIS
TO RUEHC/SECSTATE WASHDC PRIORITY 6004
INFO RUEATRS/DEPT OF TREASURY WASHINGTON DC PRIORITY
RUCPDOC/USDOC WASHDC PRIORITY
RUCNMGH/MAGHREB COLLECTIVE

UNCLAS TUNIS 000110 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EEB/CBA (WINSTEAD AND GILMAN) AND 
NEA/MAG (PATTERSON AND HAYES) 
STATE PASS USTR (BURKHEAD) AND USAID (MCCLOUD) 
USDOC FOR ITA/MAC/ONE (MASON), ADVOCACY CTR (TABINE), AND CLDP 
(TEJTEL AND MCMANUS) 
CASABLANCA FOR FCS (ORTIZ) 
CAIRO FOR FINANCIAL ATTACHE (SEVERENS) 
LONDON AND PARIS FOR NEA WATCHER 
 
E.O. 12958: N/A 
TAGS: ECON EFIN ETRD TS
SUBJECT: TUNISIA: ECONOMIC HIGHLIGHTS 
 
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Summary 
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¶1. (U) This cable contains highlights of recent economic 
developments in Tunisia on the following topics: 
 
¶A. Central Bank Cuts Key Rate 0.75 Basis Points 
¶B. Trade Deficit Narrows 47.3 Percent 
¶C. Tunisia Eyes Energy Surplus 
¶D. Maghreb Arab Union Still Struggling for Unity 
¶E. GOT Authorizes First Tunisian Private Islamic Bank 
¶F. Households Indebtedness Reaches Historic Records 
 
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Central Bank Cuts Key Rate 0.75 Basis Points 
-------------------------------------------- 
 
¶2. (U) Tunisia's Central Bank (BCT) cut its key interest rate from 
5.25 to 4.5 percent on February 17, citing the global economic 
slowdown and falling domestic inflation.  The announcement referred 
to recent IMF and World Bank economic growth forecasts projecting a 
drop in global growth from 3.4 percent in 2008 to 0.5 percent in 
¶2009.  It also noted that domestic inflation, on an annual basis, 
eased to 3.5 percent in January 2009 versus 4.1 percent in January 
¶2008.  This move in the key rate aims to ease credit flow and 
liquidity in the banking sector and preserve the country's economy 
growth, according to the BCT.  In parallel, the BCT announced it 
plans to introduce new monetary policy instruments by establishing 
permanent facilities of deposit and credit that banks can use on 
their own initiative. 
 
¶3. (SBU) Comment:   According to a local private business 
representative, the recent BCT interest rate cut will allow indebted 
companies to contract new loans to continue their activities and to 
refinance debts caused by decreasing EU demand.  In addition, the 
Central Bank is hoping to stimulate a demand effect on the economy 
by increasing household consumption.  This, despite the risk that 
Tunisian households, already weighed down with high levels of debt, 
see para 12, might not respond.  End Comment. 
 
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Trade Deficit Narrows 47.3 Percent 
---------------------------------- 
 
¶4. (U) In January 2009, as compared to January 2008, the Tunisian 
trade deficit narrowed by 47.3 percent from TND 321.8 million (US 
$263.88 million) to TND 169.6 million (US $123.13 million) according 
to mid-February figures from the Tunisian National Institute of 
Statistics (INS).  Total exports and total imports decreased 
respectively 12.5 percent and 17.6 percent.  This situation reflects 
the ongoing economic slowdown both internationally and domestically. 
 Tunisian textile exports fell 4.1 percent and phosphate exports 
decreased 34.6 percent.  Energy and food balances, however, 
generated surpluses of TND 94.8 million (US $68.82 million) and TND 
0.9 million (US $0.65 million), respectively, due to a downward 
trend in international commodity prices. 
 
--------------------------- 
Tunisia Eyes Energy Surplus 
--------------------------- 
 
¶5. (U) Tunisian Secretary of State in charge of renewable energies 
and food industries Abdelaziz Rassaa predicted Tunisia will enjoy an 
energy surplus in 2009, as expected resources will exceed by 0.6 
million tons of oil equivalent (MTOE) the projected demand.  This 
improvement in energy supplies is due to an increase in natural gas 
production which jumped to 3.2 MTOE, up from 2.2 MTOE a year ago. 
The Hasdrubal gas field, developed by British Gas in southern 
Tunisia, is expected to produce an additional 2 MTOE by 2012. 
Concerning energy pricing policy, Rassaa said the GOT is working to 
index domestic prices to the international markets.  Mr. Rassaa gave 
his statement during an international energy forum in Tunis on 
February 20. 
 
¶6. (U) Note: GOT incentives for promoting the energy sector 
succeeded in boosting investments from TND 500 million (US $395 
million) to TND 2.7 billion (US $2.21 billion) over the period 
2005-2008. 
 
--------------------------------------------- 
Maghreb Arab Union Still Struggling for Unity 
--------------------------------------------- 
 
¶7. (U) During the celebrations for the Arab Maghreb Union's (AMU) 
20th anniversary on February 17, the GOT hosted a conference on the 
Maghreb economies.  Minister of Development and International 
Cooperation Nouri Jouini underlined the missed opportunities for 
building an economic union in the Maghreb region which holds 3 
percent of the world's oil reserves, 4 percent of its natural gas 
reserves and 50 percent of proven phosphate reserves.  The Minister 
added that exploitation of the region's existing business 
opportunities could enhance trade exchange between AMU countries and 
increase by two additional basis points their respective economic 
growth. 
 
¶8. (U) The head of the Tunisian Agriculture and Fishing Union (UTAP) 
Mabrouk El-Bahri considered it imperative that, in the context of 
increasing global competition, the Maghreb countries coordinate 
their efforts to meet the challenges of food security; climate 
change; and the depletion of environmental resources, especially 
water and fisheries.  Hedi Djilani, head of the Tunisian and the 
Maghreb Employers Unions (respectively UTICA and UME), urged the 
lifting of barriers related to customs and finance.  He said AMU 
economic integration requires the implementation of a free trade 
zone, customs union and common market setting. 
 
¶9. (U) Note:  The AMU's share in Tunisia's total trade is only 7 
percent.  However, in 2008, Tunisia's trade with its AMU partners 
increased 40 percent with Libya, 85 percent with Algeria, 24 percent 
with Morocco and 52 percent with Mauritania. 
 
--------------------------------------------- ----- 
GOT Authorizes First Tunisian Private Islamic Bank 
--------------------------------------------- ----- 
 
¶10. (U) Sakher El-Matri, the influential Tunisian businessman and 
son-in-law of Tunisia President Ben Ali, will soon launch an Islamic 
commercial bank, Zitouna ("Olive Tree" in Arabic -- a Quranic radio 
station owned by El-Matri shares the same name), according to 
regional French-language magazine Jeune Afrique.  The Tunisian 
Central Bank, at the end of January, authorized El-Matri to create 
the first private Tunisian Bank that will operate in compliance with 
sharia law.  Mr. El-Matri owns a large holding group, Princess 
El-Materi Holding, involved in different business sectors, cars 
distribution, real estate, cruise tourism, agribusiness and 
pharmaceuticals. 
 
¶11. (U) Note:  Since independence Tunisia has had a secular system, 
and the GOT did not encourage the development of Islamic banking. 
However, in 1983, Saudi businessman Sheikh Salah Kamel, who 
developed the first Les Berges du Lac real-estate projects, obtained 
GOT permission to establish a Saudi-Tunisian Islamic bank, Best 
Bank, through which the aforesaid projects were financed. 
 
--------------------------------------------- --- 
Household Indebtedness Reaches Historic Records 
--------------------------------------------- --- 
 
¶12. (U) According to Tunisian Central Bank (BCT) figures for the 
overall household indebtedness in 2008 totaled TND 8.2 billion (US 
$6.72 billion), up from TND 5.9 billion (US $4.66 billion) in 2007. 
This figure represents 15 percent of Tunisia's estimated 2008 GDP of 
$42.7 billion in current prices.  An article about these figures in 
Business News specified that 65.2 percent of loans were used for the 
purchase or extensions of houses and 31.1 percent for consumption. 
The number of indebted individuals increased from 50,000 in 2003 to 
over 800,000 in 2008 compared to Tunisia's economically active 
population of approximately 3.6 million individuals.  The article 
remarked that available figures on households' indebtedness are well 
below the actual amount, given that various statistics don't count 
loans provided by the National Social Security Fund, mutual 
insurances and companies' social fund. 
 
¶13. (SBU) Comment:  This represents a paradigm change in a country 
where, prior to the mid-1990s and the establishment of the Banque 
Tunisienne de Solidarite, Tunisians typically self-funded personal 
consumption and even small business development.  End Comment. 
 
GODEC