Central Bank governor faces dismissal

Tunisian coalition debates Nabli's fate

GMT 10:33 2012 Monday ,28 May

Arab Today, arab today Tunisian coalition debates Nabli's fate

Central bank of Tunisia
Tunis – Nébil Zaghdoud

Central bank of Tunisia Tunis – Nébil Zaghdoud Political parties from Tunisia's coalition government have proposed removing the governor of the Central Bank, two party sources said, a step which could alarm investors already jittery after last year's revolution. Despite denials by the Tunisian Central Bank (BCT) over the weekend, the removal of bank governor Mustapha Kamel Nabli seems an increasingly likely possibility. Tunisia, struggling to emerge from recession, has held a steady course on inflation, interest and exchange rates even in the turmoil that followed the ousting of its president, but talk of firing the Central Bank chief suggests it may be hard to hold that line. Tensions have emerged in the past few months between the government and the Central Bank over who has the last say on monetary policy. The government unveiled a target for inflation but Nabli responded by saying this figure was set by the bank and that he would not accept political interference in its work. The governor of the BCT can be relieved of his duties by presidential decree if there is an agreement between the president and prime minister, and if the agreement is approved by a majority of members present in parliament. The removal of a governor can also be put into effect if one-third of the members of the board of the BCT vote in favor of the resolution. "There is a proposal from the three parties to replace the central bank governor," said an official with Ennahda, the moderate Islamist party which dominates the coalition. "We are leaning towards discussing this ...(proposal) in the constitutional assembly, which has the right to make this change," he said. The discussion comes at a time when the Tunisian economy is facing concerns stemming from a high unemployment rate and, most recently, a downgrade rating from Standard and Poors, which will affect Tunisia's economy. The three parties that make up Tunisia's coalition government - the moderate Islamist Ennahda, the centre-left secular Congress for the Republic (CPR), and the social democratic Democratic Forum for Labour and Liberties (Ettakatol) - have proposed removing the governor of the Central Bank and replacing him with Moncef Cheikhrouhou, a member of Tunisia’s Constituent Assembly, a step which could alarm investors already jittery after last year's revolution. A source from the second-biggest party in the coalition, the Congress for the Republic, told Reuters that removing Nabli has been discussed at a meeting of the coalition, but he declined to give any details. A spokesman for the Central Bank said he knew nothing about any plan to remove Nabli and that the bank was functioning as normal. There was no immediate comment from Ettakatol, the third party in the governing coalition. The Central Bank chief is an academic who used to be chief Middle East economist for the World Bank. He was appointed a few days after the revolution which forced out long-standing Tunisian leader Zine El Abidine Ben Ali and inspired the wave of upheavals that swept aside veteran heads of state in Egypt, Libya and Yemen. The violence and upheaval of the revolution scared off tourists and foreign investors. They are slowly returning, but the financial crisis in the euro zone, Tunisia's biggest trading partner, is now taking its toll. Government ministers, with their eyes on winning a round of elections scheduled to take place in 2013, want to restore growth as fast as possible. The Central Bank though is worried by inflation which accelerated to 5.7 percent in April. In a statement issued after its board met earlier this month, the bank said it would have to raise interest rates if inflationary pressures persist, a step that risks hurting the country's tentative economic recovery.

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