Record – The government contracts 1 billion dinars from banks in a single day

According to data from daily newsletter of “Tunisia Clearing” – central securities depository – the Public Treasury announces that following the auction of short-term treasury bills (BTC) of 03/29/2022 a nominal amount of 1000 million dinars (MD) has mobilized and will be repayable over one year with an interest rate of 6.44%.

The record debt operation was carried out in a single day with Tunisian banks like several other previous operations which have become recurrent, particularly in recent years. Despite the importance of the operation, the Ministry of Finance has not made any communication in this regard, knowing that the latest information concerning the country’s debt and published by the ministry concerns the month of November 2021.

The outstanding amount of short-term Treasury bills amounted to 3873.1 MD on the current 28th, while the outstanding amount of so-called assimilable Treasury bonds (long-term) was estimated on the same day at 16871.8 MD. Outstanding debts, in the form of State bonds with banks, total 20,744.9 MD.

The overall domestic debt is estimated according to the latest updated official data at 40,972.1 MD representing, for this purpose, 39.9% of the country’s total debt. These are figures that illustrate the extent of the counter-productivity of the real economy in Tunisia, on the one hand and the pursuit of obtaining debts whose use is unjustified which classifies them as debts odious, on the other hand.

The President of the Republic, Kais Sied has announced on several occasions that a commission will be mandated to audit Tunisia’s donations and odious debt. This commission is still slow to be set up despite the declarations of the president made, to this effect, several months ago.

In addition, and particularly since 2017, successive governments have resorted to borrowing credit directly from banks to mobilize financial resources. Since 2017, the State has borrowed credits nine times from financial institutions given that article 25 of the internal regulations of the Central Bank of Tunisia prohibits borrowing credits from the BCT.

The issuing institute has since continued to warn against the risks of government policy of resorting without limits to domestic debt, considering that this is not in the interest of the national economy, especially since this financing is not directed towards economic sectors. Excessive recourse to domestic borrowing from banks and financial establishments is, in fact, reviving the spiral of recession and inertia in financing and investment.

It seems that the Bouden government, in turn, does not attach any importance to the warnings of the BCT, like the governments that preceded it.

The IMF said in a analysis note published under the title “Domestic Sovereign Debt Restructuring: A Careful Tool” that in the face of growing debt vulnerabilities and the rising burden of domestic sovereign debt in emerging and developing countries, the questions relating to the opportune moment of a restructuring of this debt and its modalities have never been posed with such acuity.

The fund considers that domestic debt is often majority held by domestic creditors who will suffer losses. Through this channel, sovereign overindebtedness can easily spread to domestic banks, households, and other segments of the domestic economy. This phenomenon may increase the economic malaise that will necessitate the restructuring of domestic debt.

It should be recalled, moreover, that according to an analysis by the rating agency, Standard & Poor’s (S&P), in May 2021, the cost of the default of the Tunisian sovereign debt amounts to 7.9 billion dollars (i.e. 21. 4 billion dinars) for the banking sector (main internal lender of the State), which represents 102% of the total equity of the entire banking system, and 17.3% of GDP for 2021.

According to S&P, Tunisian banks’ exposure to sovereign debt has more than doubled over the past decade, coupled with a sharp rise in public debt.

The rating agency clarified that a sovereign default in 2022 remains very unlikely, and if it does, it would cost banks between $4.3 billion and $7.9 billion or 55% to 102% of their funds. clean.

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