Banks’ exposure to sovereign risk increased to 20.7% of total assets in 2022, compared with 19.2% the previous year, the Central Bank of Tunisia (BCT) said in its annual report on banking supervision for the financial year 2022, published last Friday.
This exposure mainly concerns public banks, with a total of 18.9 billion dinars, or 33% of the total assets of these banks.
According to the BCT, the banks’ exposure to sovereign risk is explained in particular by the increase in the indebtedness of public companies and the financing of the budget deficit through recourse to funding on the domestic market.
The State has indeed raised 19 billion dinars on the local market in the form of treasury bills and a national bond issue.
As a result, the BCT’s recourse to refinancing has intensified, reaching almost 15 billion dinars at the end of 2022, compared to 10 billion dinars the previous year, up 48%.
According to the BCT, the Treasury’s increased reliance on domestic debt in a context characterized by difficulties in mobilizing external resources has led to increased pressure on bank liquidity.
Moreover, the share of BCT refinancing in total banking resources has increased from 5.6% at the end of 2021 to 6.8% at the end of 2022, in line with the growing financing needs of the state and public enterprises, which account for 20.7% of total banking sector assets.
The pressure on liquidity has been mitigated by the banking sector’s efforts to attract deposits in dinars, with growth of 10.1%, benefiting in particular from the increase in the interest rate on savings to 6.25%.
