August 17, 2017 / 11:33 AM / in a month

Tunisia's foreign currency reserves fall to 'weak' levels

People walk out of the Central Bank in Tunis, Tunisia, April 27, 2016. REUTERS/Zoubeir Souissi

TUNIS (Reuters) - A worsening trade deficit has further eroded Tunisia’s foreign currency reserves, which are now equal to just 90 days of imports, official figures showed on Thursday, the weakest level in three decades.

Tunisia’s central bank said on its website that foreign currency reserves had fallen to 11.597 billion Tunisian dinars ($4.8 billion) by Aug. 15, enough to cover 90 days of imports, compared with that 118 days registered in the same period a year earlier.

An official who asked not to be named told Reuters that the decline in reserves to “dangerous levels” was due to a worsening trade deficit.

Praised for its successful democratic transition after a 2011 uprising, Tunisia has struggled to make tough economic reforms that would reduce public spending, as demanded by the IMF and its international partners.

Three months ago, Tunisia imposed restrictions on importing some goods to curb its widening trade deficit and protect foreign reserves.

The trade deficit widened in the first seven months of this year by 26 percent compared with the same period last year to reach 8.63 billion dinars, the State Statistics Institute said.

The level of 90 days of import cover is the lowest level since 1986, according officials and experts.

“90 days of imports is the weakest level in more than 30 years,” a local financial risk expert Mourad Hattab told Reuters.

“This level is the ceiling of risk. The reason is the unprecedented worsening of the trade deficit and the continued devaluation of the Tunisian dinar,” he added.

He said the fall in this level of foreign currency reserves is a threat for debt payments, and for basic and energy imports.

The local dinar currency slid to historic lows against the euro and dollar. The dinar traded at 2.84 against the euro and 2.46 against the dollar on Thursday, the central bank said on its website.

($1 = 2.4233 Tunisian dinars)

Reporting By Tarek Amara; Editing by Toby Chopra

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