Financing Costs Skyrocket in Tunisia
The Ministry of Finance has just published the average effective interest rates for the first half of 2024 for various credit categories.
The results show that short-term loans (excluding overdrafts) were granted at an average rate of 10.41%, making them the cheapest source of financing. Overdrafts stand at 12.16%, more expensive than medium-term loans (10.67%) and long-term loans (10.72%). Factoring costs 12.55%, and leasing 13.68%.
The only financing product to record a decrease compared to the second half of 2023 is credit leasing, with a 15-basis-point drop. The largest increase concerns overdrafts, with a 0.46% rise, followed by factoring (+0.39%), long-term loans (+0.29%), and short-term loans (+0.22%).
This means that companies must find a project that guarantees extremely high returns to justify approaching a bank. This clearly explains why the country is struggling to create jobs and stimulate growth.
Another growth engine is running out of fuel, namely local demand. Consumer credits stand at 11.99%, while those for real estate are at 11.01%. For both segments, demand remains strong, and the high cost of resources for banks has pushed them up by 16 and 28 basis points, respectively, compared to the second half of 2023.
The maximum interest rates not to be exceeded in the first half of 2024 are obtained by adding 20% to the average effective rates of the second half of 2023. Thus, leasing could reach 16.41%. The interest rate for consumer credits is capped at 14.38%. The rate applied to factoring is limited to 15.06%, compared to 14.59% for overdrafts. Short-term, medium-term, and long-term loans are respectively capped at 12.49, 12.80, and 12.86%.
These rates indicate that investment will not restart soon. It's time for companies to think more about high-leverage operations. This is more interesting on all levels.
