Tunis, Tunisia - Tunisia's Office des Céréales (OdC) has accumulated a record debt of TND 5.0 billion (approximately 3.8% of GDP) to the Banque Nationale Agricole (BNA) as of June 30, accounting for about 30% of BNA's total balance sheet commitments. This revelation was part of the World Bank's Fall 2023 Economic Monitor of Tunisia, published on Monday.

According to Agence Tunis Afrique Presse," the debt commitments of OdC to BNA have risen by 3.9% since the end of 2022 and by 12.3% from one year earlier. The State fully guarantees OdC's commitments against counterparty risk, which includes principal, interest, and commissions. However, the Tunisian government is increasingly struggling to provide necessary financing for OdC to cover losses incurred due to cereal subsidies.

The OdC's financing needs have significantly affected BNA's cash position, resulting in a negative balance of TND 5.1 billion at the end of June 2023, a steep increase from TND 4.5 billion at the end of December 2022. This situation has likely impacted BNA's ability to lend to other entities.

The World Bank report notes a shift in BNA's lending patterns, with a nearly fourfold increase in credit to OdC between 2019 and June 2023. In contrast, credit extended to private clients grew by only 12 percent over the same period. This imbalance highlights the growing financial pressures on Tunisia's banking sector due to the state's commitments to OdC and other state-owned enterprises (SOEs).

The escalating debt of OdC represents a significant challenge for Tunisia's economy, with implications for the national banking system's liquidity and the broader financial stability of the country.