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Tunisia pays price for sacking central banker

Tunisia's central bank governor Mustapha Kamel Nabli addresses a news conference at the Central Bank in Tunis July 6, 2012.


Tunisia's fragile democracy learned a hard lesson about global financial markets on Monday, getting a swift downgrade by Moody's Investor Services just days after firing is widely respected central banker.

Mustapha Kamel Nabli, a former World Bank economist in Washington who returned to Tunisia when the country's former president Ben Ali was thrown out during the early phases of the Arab Spring, was sacked last week after falling out of favour with Tunisia's current president Moncef Marzouki. Mr. Nabli fought off what he perceived as repeated challenges to the central bank's independence. Most recently, he spoke out against interference in his work when the government announced its own target inflation rate.

Mr. Nabli's work in Tunisia since January 2011 earned him the 2012 Central Bank Governor of the Year Award from the African Development Bank this past May. He has been praised for saving Tunisia from financial and economic collapse that would have negated the successes of the country's political revolution after 23 years of dictatorship.

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The Globe and Mail's Eric Reguly interviewed Mr. Nebli in Tunis, Tunisia in April.

Moody's said the loss of Mr. Nabli "damages the central bank's credibility" and "will further unsettle investors already jittery after last year's revolution."

"We interpret Mr. Nabli's dismissal as a way for the government to intervene in the financial and banking sector and potentially undermine the central bank's independence, which is critical for macroeconomic stability," the ratings agency said in it's credit outlook

The Tunisian parliament is dominated by members from the Islamist Ennahda party, who had earlier argued for Mr. Nabli's dismissal. In the end, a little more than half of the 217 parliamentarians voted to get rid of Mr. Nabli.

The sacking creates uncertainty about Tunisia's monetary policy, through which Mr. Nabli maintained a steady inflation, interest, and exchange rates, even while political uprisings raged throughout the country. Mr. Nabli was also lauded for maintaining adequate liquidity to Tunisian banks. All of that now appears in jeopardy looking ahead.

The Tunisian president has recommended Chedly Ayari, a member of the country's first post-colonial government in the 1970s, as Mr. Nabli's replacement, but some members of Tunisia's governing coalition government oppose this.

Moody's warns that some political leaders may be tempted to put off action until the next scheduled elections in March, 2013, but inaction for that long will have dire consequences for an economy in need of careful and constant care.

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"The decision to sack me is designed to impose ... government control on the financial and banking sector," Mr. Nabli said before a vote in the Tunisian parliament that ultimately removed him from his role, according to a Reuters report.

The Tunisian economy shrunk 2.2 per cent in 2011, and as of yet there has been no action policies to support economic growth and provide jobs for the country's young people. Youth unemployment is about 30 per cent in Tunisia, and oddly young people with post-secondary education are worse off when it comes to finding a job.

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