Tunisia plans to issue EUR 1-billion bond

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22 October 2016

Tunisia plans a bond issue of EUR 1,000 million (2,450 MTD), Finance Minister Lamia Zribi announced at a hearing session held Friday by the parliamentary Finance, Planning and Development Committee.

The minister added, at this meeting, attended by Governor of the Central Bank of Tunisia (BCT) Chedly Ayari, that this loan will be dedicated to financing the state budget which posts an additional deficit of 1,550 MTD, compared with forecasts of the state budget for the year 2016.

According to the minister, this deficit is explained by the decrease of own resources of the state, those tax and non-tax, coupled with higher expenses, which caused an increase in financing requirements from 6,400 MTD to 7,800 MTD.

Until October 20, 2016, financial needs were covered by 2,800 MTD of resources from the domestic market and 3,400 MTD from the external market.

This bond will increase foreign exchange reserves, by providing additional resources, she said, adding that the risk is estimated at a value of 490 percentage points and the timing is favourable to borrow from the international market.

Zribi finally advocated increase the launch time of the bond issue, to bring it from 5 years to 7 or 10 years, since the Tunisian government will be liable for the payment of $ 1-billion in 2021.

Her statements were confirmed by the Governor of the BCT who said the role of the BCT is a technical role and is not involved in decisions on credit measures and conditions thereto.

He added that the role of the BCT is limited to that of intermediary between the market and the Ministry of Finance, indicating that external funding must be made on the financial market, to spare the state all the conditions required by international and regional banks.

The session was closed by a vote of the majority of attending MPs for the launch of the bond issue.

They made recommendations on the audit of public debt by stressing need to ensure that the maximum amount be 1,000 million EUR and considering the possibility of issue on instalments.