Tunisia has managed to pay off all its domestic and external debts for 2023 despite enormous pressure on public finances, Finance Minister Sihem Boughdiri said on Monday, dispelling doubts about the possibility of a default.
Tunisia will pay $4 billion in external debt in 2024, a 40% increase on 2023, according to an official document, amid a shortage of external financing for the North African country as it struggles to redress its ailing public finances.
According to economists, Tunisia has relied heavily on new domestic loans to repay its external debts, which has significantly reduced liquidity and contributed to a reduction in bank financing of the economy.
They believe that the situation will be very difficult this year due to the increase in external debt and the difficulty of repeatedly resorting to internal borrowing.
The government forecasts that cumulative public debt in 2024 will reach around 140 billion dinars ($45.17 billion), or around 79.8% of GDP, up from 127 billion dinars.
“In 2023, public finances faced major challenges due to a very tense regional and international context and an exacerbation of climate change, leading to a rise in inflation rates and in the prices of staple commodities on a global scale,” she added at the opening of a debate on “2024 Finance Law and new tax provisions” held on Monday in Tunis by the Tunisia Council of Joint Chambers (CCM).
“All these constraints have had a major impact on Tunisia’s financial balance, sharply reducing the authorities’ room for manoeuvre in controlling debt levels and meeting essential and sometimes unpredictable public expenditure, despite the good results achieved in raising tax resources and improving the performance of some sectors (services, tourism, etc.),” she pointed out.
Nemsia indicated that “the Tunisian project of major reforms is a global project characterised by a balanced vision between a social component placing the middle class and vulnerable groups among its top priorities, and an economic component aimed at rewarding work and boosting private initiative and wealth creation.”
TunisianMonitorOnline
