Paying off almost all of its external debt this year, Tunisia has signaled a strong sign of the sustainability of its debt despite certain vulnerabilities related to its high proportion in terms of gross domestic product (GDP). The country is assessed to have a moderate level of risk, and its external debt is considered sustainable in the medium term, as per the published indicators. However, the profile of public debt service repayment is affected by the burden of loans contracted, especially in recent years.
A busy schedule in 2024
In 2024, Tunisia is facing a substantial public debt repayment plan. The country intends to settle the principal and interest on the external debt of several loans and financing mechanisms, amounting to 12.3 billion dinars. This marks a significant increase of 40.6% compared to the probable figures for 2023.
Two maturities of this debt significantly contribute to the repayment schedule. The first is a Eurobond contracted in 2017 for 850 million euros (2.9 billion dinars), maturing in February, and the second is a loan bond on the Japanese market of 50 billion yen with a guarantee (1.0 billion dinars), with the settlement deadline set for October 2024.
The overall repayment for these two maturities is estimated at the equivalent of 3.9 billion dinars, taking into account the current exchange rates of the Euro and the Japanese Yen.
Tunisia is also obligated to repay other substantial credits, including four tranches of loans from the International Monetary Fund (IMF) worth 360 million dollars under the Rapid Financing Instrument, ten tranches of credits granted by the same institution to Tunisia for 256 million dollars under the Extended Credit Mechanism instrument, and a maturity of 105 million dollars to Afreximban.
For a risk reduction approach
The Tunisian debt problem demands a comprehensive approach that integrates its reduction and restructuring, as well as improving transparency. A comprehensive management approach is required to enable the country to assess, lower risks and achieve sustainable debt levels.
Also, to address vulnerabilities due to growing debt, the authorities must stay cautious when contracting and guaranteeing any new debt, maintain budgetary discipline, improve public investment management and attach vital importance to the improvement of the business environment to maintain growth potential and its major levers.
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