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Tunisia to borrow from international financial market, announces BCT Governor

The Central Bank of Tunisia plans to borrow from the international financial market under guarantees from international institutions, the Governor of the Central Bank of Tunisia (BCT), Mustapha Kamel Nabli told Africanmanager, stressing in this regard, the need for the recourse to external borrowing to cope with declining state revenues in foreign currencies.

He said that debts will be covered by guarantees to be provided by such known financial institutions as the World Bank and the Bank of America.

The Governor of the BCT did not reveal the amount of the projected borrowing that is related to the state’s needs in financing pursuant to the provisions of the draft supplementary budget law 2012 to be discussed by the Constituent Assembly for adoption, knowing that the general State budget amounts to about 23 billion dinars.

The plan to borrow from the international financial market falls clearly in line with the economic and financial situation of Tunisia where, as the BCT Board noted,” exports of manufacturing industries, especially engineering industries and textile and clothing, have dropped substantially since March, which led to the worsening of the current account deficit.”

In fact, this deficit reached 2.3% of the GDP in the first quarter of 2012, causing a decrease in net assets in currencies that fell to 9,947 million Tunisian dinars (MTD) or the equivalent of 101 days of imports against 113 days in late 2011.

In this regard, the Board emphasized that these developments are likely to increase pressure on the external sector and would require, if continued, the mobilization of substantial external resources for the rest of the year.

Already, the Tunisian Central Bank announced, on Wednesday, that it had completed on behalf and benefit of the state a Qatari loan of $ 500 million (about 750 MTD) under the form of private placement. This credit will be repaid at once, April 18, 2017. The interest rate is 2.5%, payable annually.

Observers note that the cost of this loan is high given the political and economic situation in Tunisia since the Revolution of January 14. This is true all the more so that the interest charged is equivalent to the one currently applied in the international financial market, so much that the creditor country has refrained from granting a grace period before the repayment of the debt service.

Meanwhile, the civil society is working to lobby the Government to bring it to demand the cancellation of its debt in order to ensure the success of democratic transition away from economic crises.

The dominant party in the troika that rules the country, namely the Ennahdha, relies, obviously, on its “close” relations with the Gulf states, particularly Qatar and Saudi Arabia which pledged full support to it to secure external financing, while for their part, the U.S. had promised, last March, to grant Tunisia 100 million Tunisian dinars to help it meet its external financial commitments under the year 2012.


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