Tunisia’s central bank raised its benchmark interest rate for the first time in almost a year as surging consumer prices and dwindling foreign reserves heap pressure on the North African nation’s struggling economy.
Policy makers raised the rate by 75 basis points to 5.75 percent. The increase was the first under Governor Marouane El Abassi, who was appointed last month amid protests over an economy that has failed to recover since the Arab Spring in 2011. His predecessor had resigned before a parliamentary vote to remove him from the post he had held for about six years.
Tunisia was hailed as a model for the transition from dictatorship to democracy following the uprising that topped President Zine El Abidine Ben Ali. Political unrest, terrorist attacks and a dearth of foreign investment, however, have stymied successive governments already grappling with high unemployment and the fallout from austerity measures.
Foreign currency reserves have been steadily declining, and now provide only 80 days of import cover, according to data posted on the bank’s website.