The volume of banknotes and cash in circulation reached TND 20.4 billion as of September 12, compared with TND 18.5 dinars during the same period last year, an increase of TND 1.9 billion, according to data published by the Central Bank of Tunisia (BCT). This increase in the circulation of banknotes and currency outside the banking sector underlines the continuing impact of inflationary pressures and financial transactions outside the banking and financial sector. It also reflects the impact of the informal economy. In response to the consequences of capital outflows from banks and tax evasion, the BCT injected liquidity of TND 14 billion, up from TND 11.9 billion the previous year, according to the same source. This situation represents an increase of TND 2.1 billion in the total volume of refinancing. However, the aim of injecting liquidity through refinancing operations is not only to counteract this phenomenon, but also to cover the liquidity gap faced by banks as a result of lending to the government in the form of treasury bonds, which currently stands at TND 24.5 billion, an increase of TND 3.5 billion over the previous year. President Kais Saied made an unannounced visit to the BCT headquarters on September 8 and urged a revision of the laws that allow the bank to finance the budget directly by purchasing treasury bonds. This is a measure that BCT Governor Marouane Abassi had repeatedly warned against because of the risks of hyperinflation. In recent years, the BCT's monetary policy has focused on raising the key interest rate to combat inflation, which reached 9.3% at the end of August according to the National Institute of Statistics (INS). This increase is mainly due to rising food prices, which reached as high as 15.3%.
Source: Agence Tunis Afrique Presse