Tunisia to concern as much as $three billion debt and push reforms this yr, finance minister says By Reuters
By Tarek Amara and Angus McDowall
TUNIS (Reuters) – Tunisia is set to issue up to $ 3 billion in debt this year and intends to extend some existing loan arrangements while launching broader economic reforms, Treasury Secretary Ali Kooli said in an interview with Reuters.
With an estimated 11.5% of gross domestic product deficit last year and national debt of 90% of GDP, Tunisia plans reforms to cut its high public wages and subsidies and restructure malfunctioning state-owned companies, Kooli said.
The COVID-19 pandemic, political strife and ongoing protests against inequality have put pressure on the government, while foreign lenders and the powerful union have often made competing demands for reform.
“Our situation is difficult, but that does not mean that we are unable to pay salaries or repay our debts,” said Kooli, adding that Tunisia can easily meet the repayments due in the first half of 2021.
Tunisia’s budget for 2021 is projecting a loan requirement of 19.5 billion Tunisian dinars (7.2 billion US dollars), including around 5 billion US dollars in foreign loans. The debt repayments due this year amount to 16 billion dinars compared to 11 billion dinars in 2020.
Kooli said Tunisia wanted a new $ 1 billion loan guarantee from the United States that could help secure the $ 3 billion bond issue, the first time he gave that figure Has.
The government also hopes to reach an agreement with the International Monetary Fund on a new funding program, and he said the recent Article IV consultations are a step in that direction.
However, Kooli said Tunisia has not yet decided how much new international debt to seek and is taking steps to improve its creditworthiness and receive IMF blessing for the move.
“I think there is a real possibility of going to market for at least $ 1 billion in 2021,” he said, adding that the higher of $ 3 billion would also be possible.
Tunisia is examining various instruments including, for the first time, a sukuk, a club deal, a specific action for the Asian market or a dollar-denominated bond, Kooli said without going into detail.
The government could also issue a sukuk for the domestic market separately before July, he said, adding that it could be in the region of around 300 million dinars.
Tunisia will switch to targeted subsidies in the coming months and announce restructuring plans for state-owned companies after Ramadan, which ends in mid-May this year.
However, the pandemic may delay some reforms to avoid increasing the economic troubles of ordinary Tunisians and because it is not a good time to attract potential investment in state-owned companies.
Targeted subsidies include the distribution of digital maps to lower-income Tunisians as well as other measures, he said.
However, the government is still examining how many people need help, what price different products should be, and how to avoid a sharp rise in inflation, he said.
Although Prime Minister Hichem Mechichi has already announced a new unit to take state-owned companies out of direct control by government ministries, the details of the reforms will not be revealed until they are complete, Kooli said.
He confirmed that the government would sell its stake in some companies, but did not identify them. He asked whether the state had to hold minority shares in companies, whether it had to hold shares in 12 banks or games of chance as before.
Any revenue generated by the privatization would be pumped back into other state-owned companies that the government plans to restructure, he said.
Tunisia’s main union, the UGTT, has previously opposed any privatization, but Kooli said he expected no problems there, adding that the government was “not looking for a fight”.
Regarding public sector wage costs, Kooli said the government had been looking for several ways to reduce it, such as by offering slightly lower wages for heavily reduced hours.
“Being able to work half-time and get a little over half the salary is one avenue we are considering,” he said.
($ 1 = 2,7014 Tunisian dinars)