Tunisia 'Unable to Repay External Debt': Central Bank

Published June 29th, 2017 - 11:09 GMT
Protesters wave Tunisian flags during a demonstration against terrorism in Paris on June 27, 2015, a day after a deadly attack on a Tunisian beach resort. (Loic Venance/ AFP)
Protesters wave Tunisian flags during a demonstration against terrorism in Paris on June 27, 2015, a day after a deadly attack on a Tunisian beach resort. (Loic Venance/ AFP)

In recent years, Tunisia has relied on external debt to finance the state budget and provide public expenditure, which accumulated the volume of debt from year to year to exceed 50 billion Tunisian dinars (about $20 billion). However, the announcement by Tunisia’s Central Bank of the decline in foreign reserves of foreign currency fueled fears that there may be difficulties in repaying external debts within the deadlines.

The Tunisian authorities are facing difficulties in repaying six billion Tunisian dinars of the external debt due in 2016, according to economic reports presented by economic and financial analysts. During the current year, Tunisia is obliged to pay about eight billion Tunisian dinars, which increases the risks facing the economy in the country.

The Tunisian parliament has approved 19 foreign loans in the past six months despite criticism from opposition MPs and their emphasis on dumping the country into debts that do not help in creating jobs and financing development projects.

Tunisia has faced direct criticism from the International Monetary Fund (IMF) missions that have visited it over the past months because it is spending the loans to provide wages for public sector employees instead of employing them in development projects capable of providing employment to more than 630,000 unemployed citizen.

These difficulties are reflected in the repayment of foreign debts through Tunisia’s difficult economic and financial indicators.

Net foreign currency savings recorded a decline of 41.9 million Tunisian dinars by the end of last month, which resulted in a loss of 13 supply days.

This negative image is expected to affect the various foreign debt repayment services in foreign currencies and pose great difficulties in meeting the financial obligations of the state.

In this matter, Tunisian Economic and Financial Analyst Saad Bou Makhla said that what makes the external debt issue difficult to digest in Tunisia is that the largest proportion, if not all the external debt, is directed towards consumption and the fulfillment of the budget deficit without implementing development programs that actually create wealth and change the economic reality in Tunisia.

By AlMunji AlSaidani

 


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