The Impact of Reduced External Debt on Tunisia’s Balance of Payments

The positive effects of the decline in external debt are becoming increasingly visible and significant in Tunisia’s balance of payments. Interest payments on long-term capital, which had already dropped sharply by 20.6% in 2025 to 2,017.2 million Tunisian Dinars (MDT), have continued this downward trend in 2026. As of the end of August, these payments stood at 1,184.8 MDT, compared to 1,383.3 MDT during the same period last year. It is important to note that these figures encompass all economic agents, including private sector operators.

Is This a Good Thing? A Mixed Response

The answer is nuanced.

On one hand, it is certainly positive. For a country struggling to maintain even 100 days of foreign exchange reserves (measured in days of import coverage), this reduction is a welcome development. Building a larger reserve buffer is essential to more easily meet the foreign currency demands of economic agents. Furthermore, without a high and stable level of foreign exchange assets, there is little hope for the implementation of a revolutionary new foreign exchange code.

On the other hand, complete isolation from foreign financing is not necessarily beneficial. Refusing to borrow in euros or dollars to fund current expenditures with no return on investment is understandable and even reflects good governance. However, when it comes to investment, the country must remain open to external capital.

The Ideal Path: Virtuous Debt

The ideal trajectory lies neither in sterile debt nor in autarkic closure, but in a transition toward virtuous debt. This type of debt finances productive projects that generate foreign exchange, are capable of self-repayment, and drive long-term economic growth.