The Tunisian banking sector has sufficient liquidity to meet the government’s financing needs in 2025 on the back of healthy deposit inflows (+6% yoy in 8M24) and sluggish private sector credit growth (+1.5% yoy in 8M24), said Fitch Ratings.
“We expect banks’ claims on the government (excluding deposits at the central bank) to rise further this year, following a 9% yoy increase in 8M24, driven by loans to the Ministry of Finance (MOF),” the ratings agency added.
Fitch expects Tunisia (CCC+) to secure TND4.8bn (or USD1.5bn) of external financing in 2025, equivalent to 2.8% of GDP, broadly unchanged from 2024 (2.5%) and well below the 2018-2022 average (5.5%). As in 2024, the Tunisian budget allows the Central Bank of Tunisia (CBT) to directly finance the deficit by up to TND 7 billion (USD 2.2 billion).
The amount of domestic financing to be provided by the domestic financial sector in 2025 (through loans, bonds and treasury bills) is estimated at around TND15bn, or 9.4% of GDP (2024: 10.3%).
“We expect this to rise to 11.8% of GDP in 2026, assuming that CBT financing is discontinued.”
The ratings agency noted that the 2025 budget envisages borrowing from domestic banks totaling TND 5.6 bn. This will come from a local currency national borrowing program of TND4.8 billion and foreign currency syndicated borrowing of TND0.8 billion.
It added that the government expects to raise a further TND8.2 billion through bond issues. The CBT recently removed restrictions on the type of collateral for repo financing, meaning that pledged collateral can now be entirely in the form of government bonds, providing an incentive for banks to continue to invest in government bonds. T-bill issuance is forecast at TND 1 billion.
The banking sector’s exposure to the government and the CBT was 21% of sector assets (or 2.4 times equity) at end-8M24. This is high, according to Fitch, but lower than in many emerging market banking sectors. Around 60% of Tunisia’s domestic public debt was held by domestic banks and the CBT at end-3Q24 (37% and 22% respectively).
