Tunisia - The banking sector must play its full role in the financing of investments and projects, according to a study on the "problems of financing the economy" carried out by the Tunisian Forum for Economic and Social Rights (FTDES).

The study argues that the Tunisian banking system needs to be radically transformed in order to improve its performance in financing the economy, individuals and small and medium-sized enterprises (SMEs).

This study, which was presented at a study day held in Tunis on Monday, also proposes the activation of the social and solidarity economy (SSE) as a means of boosting savings and investment in Tunisia.

Speaking on the occasion, Abdeljelil Bedoui, FTDES study manager, said that "the financing of the Tunisian economy has become dangerous as the country is suffering from a complex public financial crisis".

The FTDES official went on to discuss the historical and structural aspect of financing the economy through the colonial legacy, which has had a negative impact on the savings rate, he described as "low". This, he said, was due to the transfer of wealth abroad to developed countries.

He also pointed out that the development model adopted since independence, especially since the 1960s, is considered "a model whose capacities cannot increase the volume of wealth and preserve productive wealth". This, he said, is due to the existence of several illegal channels for the transfer of money and the smuggling of money through non-resident institutions that are entitled to transfer their profits and debt servicing.

These factors have led to an economy that works for the benefit of others because all the foundations of wealth creation are disappearing, the official said.

The study also recommended the need to improve the performance of the banking sector in order to reach the level of some countries where loans account for more than 100% of GDP.

The study also suggests reducing the recourse to external debt by improving the performance of the banking sector and increasing small savings by strengthening the SSE as it can mobilise financing and improve savings.

Improving the performance of the banking system will necessarily involve restructuring by reducing the number of banks, as in Morocco, where the number of banks is lower than in Tunisia but loans exceed 100% of GDP, the FTDES official pointed out. He also criticised the low level of bank financing for SMEs, which represent 90% of the economic fabric but receive only 12% of this financing.

The study was carried out by five economists: Abdejalil Bedoui, Zied Saadaoui, Mongi Mokadem, Mohamed Sami Nebiet and Nourel Houda Jelassi. The first part deals with the history of the problem of financing and its relationship with the components of the development model.

The second part focused on the contribution of the Tunisian banking system to the financing of the Tunisian economy and highlighted the need for a profound transformation of the banking system in order to improve its performance in the field of financing the economy, individuals and small and medium-sized enterprises (SMEs).

The third part dealt with the contribution of foreign financing to the strengthening of Tunisia's development and the greater integration of the Tunisian economy into the world economy, while stressing its limited contribution.

The fourth part emphasised the need to promote national savings as a key means of financing investment and strengthening the development process by implementing a bold tax reform, increasing non-tax resources, rationalising public spending and developing popular savings in order to reduce the growing gap between the rate of savings in GDP and the rate of investment, which will reach 9% in 2020.

As for the fifth part, the study pointed out the need to develop a social economy as an additional source of financing and an important element in enriching the economic and institutional fabric, while increasing the rate of wealth creation and strengthening the development path.

The sixth part also addressed the issue of microfinance as a tool to step up the financial integration of groups excluded from the economic circuit and to spread

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