Tunis: Public debt reached 83% of GDP in 2022, an unprecedented level, according to a recent INS report entitled “Indebtedness of non-financial economic agents: Reading in the financial accounts.”
At national level, outstanding debt securities rose from TND 16.8 billion (bln) in 2015 to TND 39.6 bln in 2022. In terms of net flows, debt securities increased considerably from TND 0.86 bln in 2015 to TND 6.4 bln in 2022.
The massive increase in 2022 is mainly due to the acceleration in issues of government securities, whose share of total national issues upped from 68% in 2015 to 75% in 2022 (73% in 2020).
“There are two agents or economic operators that use this financial instrument to finance themselves: general government (around two-thirds of issues) and financial companies (on average one-third of the volume of annual issues).”
Public administrations (mainly the State) carried out massive issues of negotiable debt securities (TCN) over the period 2015-2022, accounting for an average of one-fifth of thei
r total debt.
This financing includes, in particular, issues of Treasury bills on the domestic market, held largely by financial companies.
Recourse to this financing method picked up considerably, with the volume of issues rising to TND 4.1 bln in 2020 and TND 4.8 bln in 2022.
“As a result, the share of the net flow of these securities, which accounted for just 11% of their commitments in 2015, rose to 55% in 2022. This increase is explained by the acceleration in the issuance of Short-Term Treasury Bonds (BTCT), but also by the intervention of the Central Bank of Tunisia (BCT) in the context of so-called Open Market operations.
This kind of intervention consists of acquiring public securities, by making intensive firm purchases of Treasury bills up to 15% in 2022 compared with 8% in 2020 and 1% in 2015 of the outstanding debt securities issued.
The aim is to meet the liquidity needs of banks, notably in 2020, when economic activity was hampered by the health crisis.
According to the INS report, recour
se to credit remains the major source of financing for general government, with an average proportion close to 80% over the period 2015-2022, peaking at 83.4% in 2018.
The net flow of credit from general government fell from TND 4.65 bln to TND 3.68 bln in 2022. This flow accounted for more than 84% of their commitments in 2015, compared with only 42% in 2022 and 45% in 2021, due to the pandemic, which considerably reduced net inflows of external capital in the form of medium- and long-term borrowing and inflows of foreign investment.
In terms of domestic/external debt structure, about two-thirds of the total outstanding debt of the general government was contracted from abroad over the last five years, with this propensity contracting since 2018, when it stood at 73.5%.
The external/domestic debt split continues to testify to the heavy dependence of public finances, and of the national economy for that matter, on external financing, according to the INS report.
Source: Agence Tunis Afrique Presse