UPDATE 1 — Tunisia plans first $3 bln sukuk issue, turns again to direct central bank borrowing
(Adds details and background) By Tarek Amara TUNIS, Oct 15 (Reuters) — Tunisia plans to issue its first sukuk Islamic debt instrument, worth 9 billion dinars ($3 billion), in 2027 and seek $3.35 billion more in direct financing from the central bank, a draft budget bill seen by Reuters showed. Tunisia is grappling with a financial crisis marked by high public debt, weak growth, and limited access to external funding since President Kais Saied seized almost all powers in 2021, in a move that the opposition called a coup. The government’s borrowing needs are expected to reach around 28.1 billion dinars ($9.4 billion) in 2027, compared with 27 billion dinars in 2026, reflecting continued pressure on the public finances. Domestic borrowing is expected to account for the largest share of financing, reaching more than 20 billion dinars, as Tunisia continues to rely heavily on local banks and the domestic financial market given the scarcity of external financing. Economists have warned that increased domestic borrowing could put pressure on banks’ capacity to provide financing to businesses and households, potentially limiting the amount of credit available to the private sector. Tunisia'
(Adds details and background) By Tarek Amara TUNIS, Oct 15 (Reuters) — Tunisia plans to issue its first sukuk Islamic debt instrument, worth 9 billion dinars ($3 billion), in 2027 and seek $3.35 billion more in direct financing from the central bank, a draft budget bill seen by Reuters showed. Tunisia is grappling with a financial crisis marked by high public debt, weak growth, and limited access to external funding since President Kais Saied seized almost all powers in 2021, in a move that the opposition called a coup.
The government’s borrowing needs are expected to reach around 28.1 billion dinars ($9.4 billion) in 2027, compared with 27 billion dinars in 2026, reflecting continued pressure on the public finances. Domestic borrowing is expected to account for the largest share of financing, reaching more than 20 billion dinars, as Tunisia continues to rely heavily on local banks and the domestic financial market given the scarcity of external financing. Economists have warned that increased domestic borrowing could put pressure on banks’ capacity to provide financing to businesses and households, potentially limiting the amount of credit available to the private sector.
Tunisia's external financing is expected to total around 7 billion dinars in 2027, while the government plans to resort to direct borrowing from the central bank for the fourth consecutive year. Economists say continued reliance on central bank financing could fuel inflation that becomes difficult to contain. ($1 = 2.9856 Tunisian dinars) (Reporting by Tarek Amara, Editing by Louise Heavens and Hugh Lawson) ((mailto:tarek.amara@thomsonreuters.com;)