Tunisia’s economy grew 3.1% in 2021 thanks to burgeoning mining and gas sectors, which helped it bounce back from an 8.7% contraction in 2020, the National Institute of Statistics said in a report on Tuesday.
According to the agency, the economy grew 1.6% in the fourth quarter of 2021. The mining sector grew by 78%, while the oil and natural gas sectors expanded by 20%.
Following years of stagnation and political turmoil, Tunisia’s economy has been hard hit by the COVID-19 pandemic.
To avert a collapse in public finances, the North African nation is seeking a rescue package from the International Monetary Fund.
Meanwhile, Tunisia’s central bank announced a hold on its key interest rate at 6.25% on Monday, warning that the war in Ukraine would have a big impact on public finances and increase inflation.
In October 2020, the central bank cut rates by 50 basis points to stimulate investment and improve growth. In response to the Coronavirus outbreak the previous March, rates were cut by 100 basis points.
In the absence of urgent decisions in Tunis, a rise in global food and energy prices due to Russia’s invasion of Ukraine will exacerbate Tunisia’s current deficit and increase inflationary pressures, the bank said in a statement.
The bank called on the authorities to do more to mitigate the negative effects of the Russian-Ukrainian crisis on national economic activity and overall balances.
In January, Tunisia’s annual inflation rate hit 6.7%, as Tunisians lost some food items like sugar, oil, rice, and flour, causing unions to issue a warning about a social explosion.
Prior to the war in Ukraine, Tunisia, which subsidises domestic fuel prices and some foods, already sought a foreign rescue package to avoid a crisis in its public finances.
Oil prices are assumed to average $75 a barrel in the 2022 budget, so an increase in purchasing costs could widen the forecast fiscal deficit already equal to 6.7% of GDP.
Last month, the energy ministry estimated that each dollar increase in the price Tunisia had to pay for hydrocarbons would cost the country 140 million dinars ($48 million).