Tunisia: State Still Relies On Borrowing From Local Banks and Financial Institutions
Tunis/Tunisia — Loans contracted by the State from banks and public institutions in the form of treasury bills stood at TND 2,506.9 million on October 20, compared with TND 2,550.4 million a year earlier, an increase of TND 1,466.5 million, which suggests that the State will continue to rely on debt, especially domestic debt.
According to the monetary and financial indicators published by the Central Bank of Tunisia (BCT), this increase is mainly due to the rise in outstanding short-term treasury bills to TND 8,493 million, up by TND 2,274.8 million (26.78%).
According to some economic experts, these figures are indicative of the approach adopted by banks and financial institutions, which consists in granting short-term loans to the State, aimed mainly at raising liquidity and achieving significant profit margins.
The total volume of the BCT refinancing currently stands at TND 12,603.5 million, i.e. an increase of TND 528.3 million compared with the previous year.
Nevertheless, recourse to bank borrowing in the form of treasury bills shows the continuation of the debt policy, whereas there are several other options, such as borrowing directly from the BCT as part of the revision of the law on the independence of the issuing institution.
Bank borrowing in the form of treasury bills is extremely costly for the State budget. Interest rates vary between 8.41% and 9.94%, according to the latest data from Tunisie Clearing, which points out that these rates are very similar to those applied by banks to loans granted to Tunisian companies.
The Finance Ministry adopted the same approach as part of the 2024 State Budget Project, raising its domestic borrowing to TND 1,743 million, TND 5,805 million of which was in the form of short-term treasury bills and TND 2,375 million (long-term treasury bills), in addition to a foreign currency bank loan worth TND 693 million.
However, the amount of long-term treasury bills fell from TND 16,332 million on October 20, 2022 to TND 1,523.9 million on October 20, 2022, a fall of TND 808.3 million (21.5%).