Tunisia's External Debt Decreases by Over 10 Billion Dinars in 20 Months
Tunisia's external debt has decreased by more than 10 billion dinars in 20 months, dropping from 55,874.2 million Tunisian dinars (MTND) in December 2023 to 56,575.4 MTND. This represents the most aggressive debt reduction in the country's contemporary financial history. The proportion of debt denominated in foreign currencies stands at 41.7%, down from 52.8% at the end of 2023.
Debt Restructuring and Local Debt
However, this decrease in foreign currency debt has been offset by an increase in local debt. Over the same period, the rise in local debt has reached 19,576 MTND. To understand this exponential growth, it is essential to consider the massive recourse to facilities from the Central Bank of Tunisia.
Comparison with the 2025 Finance Law
Compared to the 2025 finance law, the total debt is expected to be lower than initially projected. As of August 2025, the total debt stands at 135,660 MTND, compared to the 147,402 MTND forecast for the entire year.
Interest Rates and Financial Charges
Since local debt is more expensive than external debt, the interest rates supported are higher, reaching 2,699.9 MTND as of August 2025. However, this is expected to change, as debt from the Central Bank is virtually cost-free, while Treasury bonds are issued at over 8%. This will enable a rapid reduction in financial charges paid.
Global Debt Outlook
Regarding global debt, we believe that the figures presented in the 2026 finance law project are extreme and that actual levels will be significantly lower. This will depend on how the state plans to use the 11 billion dinars in monetary financing. If a portion is allocated to repaying some heavy BTA lines, it will be possible to operate a quasi-refinancing without costs.
Opportunities and Risks
This could lead to a relatively alleviated debt service over two years, despite a heavier debt burden. For us, budget flexibility is paramount, making this scheme an opportunity in the medium term. However, it is crucial that this supports growth in production and productivity; otherwise, we risk being trapped by dinar-denominated debt.
