The budget deficit has narrowed considerably in the first seven months of 2018 to 2 billion dinars against 3.2 billion dinars in July 2017, according to the document “Interim results of the implementation of the State Budget at the end of July 2018 “, published by the Ministry of Finance.
The government expected, under the Finance Act 2018, a deficit of about 5.2 billion dinars, for the current year, which represents 4.9% of GDP.
According to the Ministry of Finance, this control of the deficit was favored by the increase in the volume of tax revenues, and particularly indirect taxes (8.6 billion dinars in July 2018 against 7 billion dinars in July 2017), coming mainly from the VAT (4 billion dinars during the first seven months of 2018, against 3.3 billion dinars during the same period of 2017), customs duties (0.6 billion dinars against 0.4 billion dinars), consumption taxes (1.5 billion dinars against 1.3 billion dinars) and other indirect taxes (2.3 billion dinars against 1.9 billion dinars).
At the same time, non-tax revenues grew by 150 percent, from 0.7 billion dinars to 1.7 billion dinars, during the period July 2017-July 2018, thanks mainly to the increase in the income from the holdings of public companies (611 million dinars-MD in July 2018 against 18 MD in 2017), revenue from gas pipeline royalties channeling Algerian gas to Italy, via Tunisia (265 MD against 147 MD), and other non-tax revenue (464 MD vs. 311 MD).
In terms of total government spending, the Finance Department reported an increase in these expenditures to 20.6 billion dinars at the end of July 2018, against 19.7 billion dinars in the same period of the past year.
This is because of higher expenditure excluding principal debt (17.9 billion dinars against 16.4 billion dinars, during the period July 2018-July 2017), resulting from the increase in interest on the debt (1.8 billion dinars against 1.5 billion dinars) and development expenditures (3.2 billion dinars against 2.9 billion dinars).
In return, the principal repayment of the debt fell at the end of July 2018 to reach 2.6 billion dinars, against 3.3 billion dinars in July 2017.
Due to the improvement in the deficit and the increase in State revenue, the use of borrowing resources continues to decline from 6.1 billion dinars to 3.9 billion dinars during the period July 2017-July 2018, and particularly external borrowing, which fell more than half, from 4.9 billion dinars to 2.3 billion dinars.
The Finance Department reminded that Tunisia’s external debt is made up of loans received in the framework of a multilateral co-operation (50.3%), loans contracted from the financial market (35.5%) and loans obtained through bilateral cooperation (14.2%).