Politics

Again, Tunisian MPs want exclusive power of central bank over interest rates abolished

Published

2 months ago

October 20, 2024

A measure by MPs on Friday indicated that the Tunisian central bank will no longer be the only entity able to alter interest rates or the country’s foreign exchange policy; rather, it will be permitted to finance the government.

President Kais Saied, who has maintained that the central bank shouldn’t be a state within a state, has continuously criticised the action, which is the most recent that will destroy the bank’s independence.

The current dire state of public finances prompts the possible significant amendment to the central bank statute. The opposition has referred to Saied’s 2021 takeover of practically all power as a coup, and since then, the nation has been unable to obtain Western support. Saied ruled by decree.

If the bank law was not altered, 27 legislators issued a dire warning, stating that Tunisia would unavoidably go bankrupt.

They claimed that the state has suffered enormous losses, estimated at $36.6 billion, due to the present law passed in 2016 and prohibits the central bank from making direct bond purchases or loans to the public treasury.

Additionally, the measure suggests that the president must give his or her consent before the bank can make agreements with international supervisory bodies.

Saied said the central bank should lend directly to the state treasury rather than through expensive bank loans, rejecting the central bank’s independence last year.

To close a budget deficit, the administration requested in January that the central bank give the Treasury $2.25 billion in direct funding.

Marouan Abassi, the former governor of the central bank, has cautioned that purchasing Treasury bonds carries risks, such as increasing inflation and depreciating the value of the Tunisian pound. Saied replaced Abassi with Zouhair Nouri earlier this year.

The central bank has had total authority over reserves, gold, and monetary policy since 2016. However, the proposed statute demonstrated that the central bank might modify exchange rates, gold-related operations, and interest rates after consulting with the government.

The bill permits the central bank to purchase government bonds from banks and lend directly to the government up to 3% of GDP for bonds that have maturities longer than five years.

According to financial sources, the action will probably open the door for a fresh government request that the central bank grant the government loans and direct facilities totalling up to $2.6 billion.

Related Topics:Featured Tunisia Tunisia Central Bank

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Politics

Ethiopia, Somalia agree to resolve Somaliland port conflict

Published

13 hours ago

December 12, 2024

Ifeoluwa Dada

Ethiopia and Somalia agreed to cooperate in settling a disagreement over Addis Ababa’s proposal to construct a port in Somaliland. This breakaway area had attracted regional powers, posing a further threat to the stability of the Horn of Africa.

Following discussions facilitated by Turkish President Tayyip Erdogan on Wednesday, the leaders of the two nations said that they had reached an agreement to create business agreements that would provide landlocked Ethiopia “reliable, secure and sustainable access to and from the sea.”

The meeting was their first since Ethiopia announced in January that it would recognise the independence of Somaliland, a breakaway entity in northern Somalia, in exchange for leasing a port there.

The agreement was rejected by Mogadishu, which also threatened to drive out Ethiopian forces fighting Islamist terrorists in Somalia.

Somaliland, which has governed itself and had relative peace and stability since announcing its independence in 1991, is opposed by Somalia to international recognition.

Ethiopia and Somalia announced in a joint statement issued late Wednesday that they had agreed to begin technical talks by the end of February of next year and to wrap them up in four months.

“This joint declaration focuses on the future, not the past,” Erdogan said at a press conference in Ankara afterwards.

Ethiopian Prime Minister Abiy Ahmed praised Turkish attempts to settle the conflict, while Somali President Hassan Sheikh Mohamud declared he was prepared to cooperate with Ethiopia.

The dispute has brought Somalia closer to Eritrea, another of Ethiopia’s longstanding enemies, and Egypt, which has been at odds with Ethiopia for years over Addis Ababa’s development of a massive hydro project on the Nile River.

Ethiopia and Somalia are close partners of Turkey, which provides development aid and security force training to Somalia in exchange for a foothold on a vital international shipping route.

Politics

Officials report fight between Somalia’s Jubbaland region, central govt

Published

2 days ago

December 11, 2024

Ifeoluwa Dada

After Jubbaland staged an election against the advice of the Mogadishu administration, officials claimed on Wednesday that fighting had broken out between the federal government and the semi-autonomous Jubbaland region of Somalia.

“This morning, federal forces from Mogadishu in Ras Kamboni, using drones, attacked Jubbaland forces,” Adan Ahmed Haji, assistant security minister of Jubbaland, told a press conference in Jubbaland’s capital Kismayu.

Response requests were not immediately answered by Interior Minister Yusuf Ali or Information Minister Daud Aweis of the national administration.

Jubbaland, one of Somalia’s five semi-autonomous republics that borders Ethiopia and Kenya, elected regional president Ahmed Mohamed Islam Madobe to a third term in late November.

Jubbaland has the potential to be one of Somalia’s richest districts due to its location and natural resources, but for more than 20 years, violence has kept it permanently unsettled.

There are no explicit guidelines in the Somali constitution regarding the establishment of recently formed federal entities or their interactions with the national government.