An “exceptional” measure that worries experts for its consequences on inflation or the value of the dinar.
On February 6, the Tunisian Parliament adopted an amendment that allows direct financing of the budget by the Central Bank of Tunisia (BCT), an “exception” according to the government whose consequences on inflation or the value of the dinar worry experts. The Assembly of People’s Representatives approved by a majority of 92 votes out of 133 an amendment to the law guaranteeing the independence of the BCT, which prohibits it from financing the Public Treasury.
This text of law authorizes the BCT to lend “ exceptionally” to the State 7 billion dinars (2 billion euros), repayable without interest in ten years after a grace period of three years. These funds will be used to partially fill the 2024 budget deficit (28.7 billion dinars), including 16 billion in external loans of which 10 billion were not found.
During the debate preceding the vote, Finance Minister Sihem Boughdiri Nemsia assured that these funds are “not intended to finance current expenses”. Three billion dinars (900 million euros) will be used to repay old foreign debts but “part (of the loan) will be used to finance public investments”, according to the minister. MEPs criticized “an easy solution”. “We have not been able to borrow from outside, so we are borrowing from within,” said Hichem Hosni, an independent MP.
Potentially negative effects
According to economist Aram Belhadj, the use of the BCT “is the direct consequence of the closing of the doors” in negotiations with the IMF on a loan of around two billion dollars. Aid was violently rejected last spring by President Kaïs Saïed because the reforms to be carried out in return would not be sustainable for Tunisians.
BCT Governor Marouane Abassi, whose mandate expires in mid-February, warned that the BCT loan would lead to “a decline in foreign currency reserves” with potentially negative effects on the Tunisian dinar. The authorities “are asking for an exception of 7 billion but there is no guarantee that in 2025, there will not be another exception, then a third, a fourth and a fifth”, Aram Belhadj also worries to AFP.
The BCT loan risks, in his eyes, stimulating already high inflation (around 8%), because “you will have a quantity of money in circulation without compensation in terms of goods and services” generated. In addition, “this will further delay the necessary reforms,” he adds, citing public spending to be reduced or loss-making public companies to be restructured.
