Tunisia's banking sector is able to meet tothe growing financing needs of the State in 2024, said the international financial rating agency, Fitch Ratings, explaining that "healthy growth in deposits and low demand for credit helps support the sector's liquidity.» In a note published on March 7, Fitch indicated that banks' recourse to refinancing with the Central Bank of Tunisia (BCT) was below 9 billion dinars (i.e. 7% of total sector financing) at the end of August 2023, which suggests adequate liquidity conditions. Nevertheless, the high dependence on banks and the BCT to meet financing needs could lead to macroeconomic risks, tighten banks' liquidity conditions as well as increase their solvency risks in case of a sovereign default, the financial rating agency said. In February 2024, the government borrowed 1 billion dinars on the domestic market, exceeding its objective of TND750 million for the first tranche of subscriptions to the 2024 national bond loan. This is in addition to the TND7 billion that the Treasury borrowed from the BCT which allowed it to repay 850 million Eurobonds (performed on February 17). The 2024 budget provides for a 20% increase in gross financing needs compared to last year, to TND28.7 billion, 40% of which (around TND12.3 billion) would be covered by domestic financing sources and the rest through external financing, Fitch indicated, emphasizing that budgetary financing must be equal to or greater than 16% of GDP per year in 2024-2025, one of the highest percentages among sovereign states rated «CCC+» or lower . According to the same source, "the government may not be able to raise more than $2.5 billion from external financing sources in 2024, which would leave a gap of at least $2.5 billion compared to the scheduled external financing". Fitch does not count "on an agreement between Tunisia and the International Monetary Fund (IMF) before this year's presidential elections." The agency believes that nearly 70% of gross financing needs in 2024, or 12% of GDP, will have to be met by national sources, namely banks and the BCT. Source: Agence Tunis Afrique Presse
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