The most indulgent epithet to describe the legal and financial situation faced by Tunisia three months before the end of the current fiscal year is atypical. There is no finance bill for 2022, nor even a corrective or supplementary finance bill to end the fiscal year, and the icing on the cake is that there is no parliament to discuss them and possibly vote. The acting Minister of Economy, Finance and Investment Support, Sihem Boughdiri, who says she is watching over the situation, is, however, spending her time in assurances. The exceptional situation faced by Tunisia is not an obstacle to the implementation of cooperation programs, including the preparation of the complementary finance law for the year 2021, and the state budget for next year, she said.
Hardly in rest, the President of the Republic, unperturbed, is wishing for the moon. He overshadowed issues that Tunisians yet consider as priorities, such as the appointment of a prime minister and the formation of a ministerial team that tackles at high speed the profusion of problems that pile up over the days or hours. Especially since the state’s coffers are almost empty, and lenders are to be sought with a magnifying glass.
And the only one who can come to the aid of Tunisia, the International Monetary Fund, does not seem to have been duly requested, that is to say, by a government just as duly constituted, plenipotentiary, and mandated to negotiate an agreement vital for public finances.
Desperately seeking lenders
For many Tunisians, the lack of clarity has become increasingly troubling as their country struggles with economic woes exacerbated by the COVID pandemic, according to Bloomberg. Efforts to secure a new IMF program, seen as essential to gaining investor confidence, are at the forefront. While the economic and security situation remains fragile and hopeless, the high cost of living and lack of opportunity may increase social unrest, adds IPS (International Politics and Society).
“It is in Saied’s interest to appoint an economist to lead the government and negotiate with the (IMF. With other multilateral creditors, it holds nearly 50% of Tunisia’s external debt and holds the Tunisian economy in its clutches,” he said.
Without a new program with the IMF, it would be difficult for the Tunisian state to complete the year 2021 and find the necessary funding for the Finance Act 2022, notes university professor, Fatma Marrakchi Charfi, who analyzed the financial situation in the country in an interview with TAP.
She recalls that the former government promised a supplementary finance bill, at least to rectify the basic assumptions and inform on possible sources of funding, but the latter has not seen the light of day, so far.
The 2022 finance law is not yet developed, while admitting that without doubt, the services of the Ministry of Finance are working on it, without knowing much about it.
It will certainly be characterized by a set of almost irreducible expenses (salaries, transfers and state interventions, management expenses, payment of debt service, etc.) and resources that will be very uncertain, if not largely non-existent.
Indeed, without a program with the IMF, the latter as well as other donors will not provide budget support to Tunisia and tax and non-tax resources are very insufficient to cover budgetary expenditures, she believes.
IMF agreement essential
Based on the progress of the execution of the state budget available (end of June 2021), the state would need 19.1 billion dinars, for the last 4 months of 2021 and could collect only about 9.6 billion dinars of tax revenue.
The non-tax revenues are minimal, the Tunisian state would be looking for about 9.5 billion dinars, all things being equal. It is obvious that borrowing from the international financial markets is very difficult if not almost impossible without a program with the IMF, says Fatma Marrakchi Charfi.
On the issue of debt, its level is quite high, she notes, recalling that the last two large external loan maturities of July and August ($ 1 million) have been paid through issues of short-term government bonds and assimilated treasury bills (BTA) and a currency swap. The inappetence of banks towards long-term BTA, made that the State borrowed from banks in short term on 3 months, at an interest rate of 6,52% to finance a credit whose maturity was on 7 years, with an interest rate of 2,5%.
In fact, the BTA market is increasingly saturated and cannot absorb new BTA issues at reasonable prices. In this sense, the Treasury announced that the two bids launched successively in early September were unsuccessful because the remuneration requested by the market was very high.
A third bid had just been launched on September 14, with the intention of raising 120 million dinars, but the Treasury was content to raise half of the amount requested (60 MDT) whose maturities are for December 2028 and March 2033, to avoid exerting upward pressure on rates.
