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Broad money aggregate M3 supply rises 9.1% year-on-year at end of August 2017.

(TAP) -- The broad money aggregate M3 supply grew by 9.1% year-on-year at end-August 2017, compared with 8.6% in July 2017 and 7% a year earlier, said a report on economic and monetary developments-October 2017 published by the Central Bank of Tunisia.

This improvement mainly reflects the acceleration of loans to the economy (+ 11.5% in August 2017 compared to + 10.6% in July) and the reduction in the negative contribution of net claims on abroad (-1.158 MD against - 1.445 in July).

However, the contribution of net debts to the state slowed down (1.575 MD compared to 1.867 MD in July).

As for monetary resources, they posted an increase in August 2017. This rise is the result in particular of a significant increase in the banknotes and coins in circulation, noted the document.

As for loans to the economy, they increased by 11.5% in August 2017 against + 10.5% a month earlier. On a month-to-month basis, loans continued to increase rapidly in the last six months (+888 MD or + 1.2%).

Regarding liquidity and the interest rate, the examination of the situation of banking liquidity until August 2017 reveals a continuation of the liquidity needs of banks.

This situation is the result of the combination of several restrictive effects, notably the increase in outstanding banknotes and coins in circulation following large withdrawals caused by household spending during the summer season and preparations for Eid Al-Adha, coupled with the effect of net foreign currency purchases on the foreign exchange market, albeit at a slower pace than in the previous month (564 MD compared with 700 in July 2017).

As a result, monetary policy operations increased to an average of 9.766 MD in August 2017, compared with 9.584 MD in July.

It should be noted in this respect that since July 2017 the Central Bank has quantitatively tightened its monetary policy through a ceiling on the amount of the tender to 7,000 MD.

This approach resulted in an intensive use of the 24-hour loan facility (an average of 1.263 MTD) and a monetary market rate (MMR)'s move towards corridor ceiling.

Therefore, in spite of an unchanged key interest rate (at 5% since the end of May 2017), the MMR increased from 4% in June 2017 to 5.15% in July and then to 5.19% in August 2017.

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Publication:Agency Tunis Afrique Press
Date:Oct 6, 2017
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