Tunis: The use of debt to finance growth factors and create growth is the only way to secure public debt sustainability, the Tunisian Institute of competitiveness and quantitatives studies (French: ITCEQ) said.
“This would help steer a way out of this vicious circle,” further reads a recent report entitled “Sustainability of the Public Debt in Tunisia: Dynalmics and Challenges.”
The snowball effect will also be mitigated and the country will move away from the scenario of economic restructuring with all its negative impact on the economy, said the ITCEQ.
The institute urged the need to diversify sources to finance the State budget which means better productive capacities and a reform of the taxation system. This would also help contain the budget deficit.
Increased rationality and efficiency need to be at the core of reform. Strengthening the investment dynamic through a better business climate to reboot private investment and continuous action to protect enterprises and households at this is juncture are
also highly recommended to consolidate the public finance position and secure the sustainability in the long run of public debt.
There is also need to combat informality, undertake structural changes in the economy by targeting high-value-added and knowledge- intensive sectors and promote digital and ecological transition.
The public debt outstanding amounted to TND 127.2 billion (80.2% of the GDP) in 2023 against TND 25.640 billion (39% of the GDP) in 2010, ITCEQ said referring to figures provided by the Finance Ministry.
The debt per capita edged up from TND 2,430 in 2010 to TND 10,300 in 2023, that is + 330%.
The structure of public debt is dominated by external debt with an average rate of 64% between 2011 and 2023. External debt accounts for 64% of the government deby outstanding in 2023 against 61% in 2010.
Since 2021, recourse to domestic debt has grown as a result of bigger financing needs of the State budget and tighter conditions of external funding.
Lending in foreign currency is the main fea
ture of domestic debt. Yet, external debt is more than ever dominated by budget support mobilised in the multilateral framework.
Source: Agence Tunis Afrique Presse