Public Debt in Dinars Surpasses Foreign Currency Debt for the First Time
As expected for months, the public debt denominated in dinars has officially surpassed that in foreign currencies. As of the end of June 2024, external debt totaled 62,242.6 million Tunisian dinars (Mtnd) compared to 65,108.2 Mtnd for internal debt.
To understand the significance of this change, it's essential to recall that at the end of 2020, the figures were, respectively, 31,753.8 Mtnd and 62,286.5 Mtnd.
This trend reflects a significant acceleration of borrowing on the local market, which has shown remarkable responsiveness. Even rating agencies have finally acknowledged this. In the first half of the year, the Treasury raised 11,166.7 Mtnd, more than what was mobilized in a full year until 2022. The 2023 figures would already be exceeded at this stage, as internal borrowing reached 13,245 Mtnd. We will likely approach the symbolic bar of 20,000 Mtnd by the end of the year, a first in the country's financial history.
Notably, there are 4,000 Mtnd of local loans listed under "Other Internal Borrowing," which corresponds, in part, to direct financing from the Central Bank of Tunisia (BCT). Thus, in the first half of the year, the Treasury used a maximum of 4 billion dinars out of the 7 billion at its disposal.
Meanwhile, on the external debt front, only 1,097 Mtnd were mobilized, out of the 16,445 Mtnd programmed. The budgetary support is only 14.1 Mtnd. What was obtained falls within the framework of external borrowing allocated to state projects (961.1 Mtnd) and retroceded resources to public enterprises (121.9 Mtnd). It is clear that there is a financial embargo on Tunisia regarding budget deficit financing. We believe this is a means of pressure to make the Carthage Palace show more flexibility on certain issues, particularly those related to immigration. However, this is far from being achieved, as the slogan of the period is simply "counting on oneself."
Reducing debt on the external front remains a positive point, but it requires accepting the price of slow growth. With the available means, the state cannot ensure a high debt service, a growing social role, and a heavy wage bill.
