Tunisia's Local Debt Costs a Record-Breaking 2,143.4 MTD in 6 Months
The interest on Treasury bonds and sovereign bonds has become a significant expense for Tunisia, exceeding investment expenditures in the first half of 2024.
This surge is a result of the sharp increase in interest rates, which is expected to persist for years to come, given that most of the state-issued debt instruments have fixed rates. Even if the Central Bank reduces its benchmark rate, the impact will only be felt on public accounts 18-24 months later.
The actual cost of public debt is significantly lower than the reported figure. The 2,143.4 MTD amount is gross, meaning the state recovers 20% in the form of withholding taxes, which is approximately 429 MTD, a non-negligible amount.
Furthermore, these revenues, which will primarily go to banks and insurance companies, will be heavily taxed. The refinancing provided by the Central Bank is remunerated, allowing the institution to realize record profits, such as those in 2023, and thus receive a handsome dividend.
Upon closer examination, the image reveals that the net cost of debt is not as exorbitant as thought. Although we do not have all the necessary data to calculate it precisely, it is significantly lower than the gross figure reported.
