Government resorts to domestic borrowing and neglects effective solutions (Mourad Hattab)

Even though the ruling authorities have imposed a number of financial options that have contributed to reducing the public finance deficit and the budget deficit, the Ministry of Finance will still resort to financing mechanisms that often deplete budgetary resources, including the issuance of national bonds in 2023,” said financial risk specialist Mourad Hattab.

Speaking to TAP, Hattab added that the ministry is still dependent on debt, especially domestic debt, despite the country’s achievements in 2023, particularly in terms of reducing the foreign trade deficit, which was reduced to 3.5 billion dinars or the equivalent of 2.2% of GDP at the end of September 2023, according to BCT data.

On Monday, the Ministry of Finance opened the subscription of the fourth tranche of the national bond loan for 2023, following its target to raise 700 million dinars. The aim is to provide funds for the state budget, which is facing difficulties in accessing external financing to the tune of 2.8 billion dinars.

For Hatt
ab, this situation increases Tunisia’s indebtedness, which could cost the financial system up to 10%.

He affirmed that the State’s dependence on the financial system to finance the budget deprives the private sector of the necessary financing to support its investments, in a context in which the Head of State, Kaïs Saïed, is calling for autonomy and the renewal of financing methods, supporting national capital and encouraging private initiatives, particularly among young people.

Hattab spoke of the existence of factors that could allow the budget deficit to be closed once and for all, such as tax reform, the rationalisation of tax benefits, the recovery of tax debts identified and the integration of the parallel sector.

Three tranches were launched in the framework of the 2023 national bond issue, which made it possible to raise 2.583 billion dinars, or 92% of the target amount.

Hattab stressed that the financial system has performed well to the detriment of the state and its liquidity needs within the fr
amework of the consecration of a legal arsenal, in particular the law on the independence of the Central Bank, which has largely contributed to the current domestic debt reaching 42% of GDP by the end of 2022.

He warned of a further depletion of the state’s budgetary resources next year, in line with the 2024 Finance Bill, based on such approaches by increasing the use of borrowing.

According to the expert, domestic borrowing resources will total 11.7 billion dinars next year, including 2.9 billion dinars for the national bond loan, which will cost taxpayers 4.3 billion dinars in interest, an increase of 17.4% compared to 2023.

“Tunisia is facing a difficult situation because the loans obtained from the domestic market are not intended for investment or infrastructure.”

Source: Agence Tunis Afrique Presse