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Cablegate: Tunisia Economic Highlights

VZCZCXRO2740
PP RUEHTRO
DE RUEHTU #0602/01 1580616
ZNR UUUUU ZZH
P 060616Z JUN 08
FM AMEMBASSY TUNIS
TO RUEHC/SECSTATE WASHDC PRIORITY 5104
INFO RUEHAS/AMEMBASSY ALGIERS PRIORITY 7684
RUEHLO/AMEMBASSY LONDON PRIORITY 1462
RUEHNK/AMEMBASSY NOUAKCHOTT PRIORITY 0999
RUEHFR/AMEMBASSY PARIS PRIORITY 1927
RUEHRB/AMEMBASSY RABAT PRIORITY 8557
RUEHTRO/AMEMBASSY TRIPOLI PRIORITY 0241
RUEHCL/AMCONSUL CASABLANCA PRIORITY 4230
RUEATRS/DEPT OF TREASURY WASHINGTON DC PRIORITY
RUCPDOC/USDOC WASHDC PRIORITY

UNCLAS SECTION 01 OF 02 TUNIS 000602

SIPDIS

STATE FOR NEA/MAG (HARRIS)
STATE PASS USTR (BURKHEAD)
USDOC FOR ITA/MAC/ONE (NATHAN MASON), ADVOCACY CTR (REITZE), AND
CLDP (TEJTEL)
CASABLANCA FOR FCS (ORTIZ)
LONDON AND PARIS FOR NEA WATCHER

E.O. 12958: N/A
TAGS: ECON ETRD EAIR EFIN BEXP ENRG TS
SUBJECT: TUNISIA ECONOMIC HIGHLIGHTS


1. (U) This cable contains highlights of recent economic
developments in Tunisia on the following topics:

A. Central Bank Raises Reserve Requirement
B. EIB Loans Tunisia 260 Million Euros
C. GOT Adopts New Customs Code
D. GOT Forecasts Growing Budget Deficit and Inflation
E. Karthago Airlines to Delist and Merge with Nouvelair

---------------------------------------
Central Bank Raises Reserve Requirement
---------------------------------------

2. (U) On May 27, Tunisia's Central Bank (BCT) raised bank reserve
requirements to 7.5 percent in order to absorb liquidity and stem
inflation. The Central Bank had already raised the reserve
requirement to 5 percent in January from 3.5 percent. The benchmark
interest rate remained unchanged at 5.25 percent. The Central Bank
stated it was raising reserve requirements to reduce surplus
liquidity and limit consumer credit, which can drive the rate of
inflation. The consumer price index climbed to 6 percent
year-on-year in April, up from 5.9 percent in March.

-----------------------------------
EIB Loans Tunisia 260 Million Euros
-----------------------------------

3. (U) On May 16, the European Investment Bank (EIB) granted a loan
of 200 million euros to Tunisia to be disbursed to small and
medium-size enterprises (SMEs). The EIB announced the credits would
be granted to SMEs through five Tunisian banks: Amen Bank, Arab
Tunisian Bank, Banque de l'Habitat, Banque Internationale Arabe de
Tunisie, and l'Union Bancaire pour le Commerce et l'Industrie. The
EIB also granted a loan of 60 million euros to Tunisian state-owned
Electricity and Gas Company (STEG) to support the development of
Tunisia's natural gas network. According to the EIB, this loan aims
to reduce oil imports by encouraging commercial and household
natural gas connections. The EIB holds nearly eight percent of
Tunisia's external debt; much of this funding is designed to support
implementation of Tunisia's Association Agreement with the European
Union.

---------------------------
GOT Adopts New Customs Code
---------------------------------

4. (U) On May 13, the Tunisian Parliament adopted a new Customs
Code, which will go into effect January 1, 2009. According to the
Minister of Finance Mohamed Rachid Kechiche, the new code was
necessary to adapt customs services to current national economic
needs. Kechiche explained that code has three objectives: saving
time and money for companies during customs clearance, reinforcing
transparency in dispute resolution, and bringing Tunisian customs
legislation into compliance with international agreements.
Additionally, Kechiche announced that the GOT is currently working
on legislation that will improve enforcement and limit importation
to the black market. A GOT Customs official told Econoff that the
new code represents a major shift in emphasis away from control and
towards facilitating trade. He added that the code will also
facilitate Customs officials' efforts to enforce intellectual
property rights by expanding seizure authority (NFI).

--------------------------------------------- -----
GOT Forecasts Growing Budget Deficit and Inflation
------

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