The fate of public banks, the difficulties they face and the latest Fitch rating were the main issues raised in the interview given to African Manager by economic expert and president of the “Tunisia Progress” Observatory, Mohamed Jarraya.
What is the importance of the Fitch rating and which impact on Tunisia?
This rating is important for Tunisia because, on the one hand, it is the third largest in the world (after Standard and Poor’s and Moody’s), and on the other hand this downgrading falls just before the April deadline for which the government is about to go out to the international capital market to raise the necessary funds for the budget. And even if we can find donors, we risk paying a little more for our loans, at a higher interest rate than usual.
What future for public banks in Tunisia?
At the dawn of independence, while entrepreneurship was “nourishing,” it was the duty of the young Tunisian state to play its role as a welfare state. Thus, a network of state-owned enterprises has emerged in the strategic sectors of primary economic utility for the citizen, including banks that have played their social role well.
Today, the banking sector is becoming increasingly competitive and the state no longer has any place in the capital of banks.
Therefore, public banks have no future and it is up to the private to take over. For the control and regulation, the State has laws and bodies: BCT, CMF, specialized courts, etc. Thus, the national interest will be well protected.
Where do you think the difficulties of these banks lie?
The major handicaps of these public banks include bad debts, the wage bill and, consequently, the accumulation of deficits. The underlying reasons are well known. It is no longer wise to use the taxpayer’s funds to wipe away the abuses of profiteering barons. Recapitalization will no longer be able to save these banks.
What is the best bailout, in your opinion?
In my opinion, the best bailout (restructuring) of these banks should provide for the reduction of costs, the development of productivity (efficiency) and transmission to the private sector.
And what are the advantages of privatization?
Generally speaking, privatization has two clear advantages for the government: bringing in funds (helping to reduce the budget deficit) and getting rid of the management of competitive services.
Since privatization does not create a monopoly that could harm harmonious economic and social development and promotes competition and better functioning of markets, it can have positive effects.
Thus, we need to develop privatization under the following conditions, to be provided by the State: To establish and guarantee a good transparency in the study of the files and the gradual transmission of the enterprises to the private ones, to impose and guarantee the good rules of competition and competitiveness avoiding any monopoly and reserving to the State the power to re-nationalize the company or the sector at any time in the event of a breach.
