The opening of subscriptions for the second tranche of the national bond issue is a “risk-free savings mechanism for the moment”, said financial market expert Moez Hadidane.
In an interview with TAP, the expert also pointed out that the signing of the syndicated loan agreement of an amount exceeding 400 million dinars between the Ministry of Finance and 12 local banks “is a simple white financing operation.”
The Tunisian government is working to increase the amount of bank loans in foreign currency to TND 528 million in 2023, while the 2022 version has mobilised an amount of TND 340 million.
The subordinated bank loan in 2021 brought about 1.2 billion dinars. The government is currently studying the repayment of the tranches of the loan that are due in 2023 according to the repayment schedule.
Hadidane stressed the importance of the figures related to the response rate for the subscription of the second tranche of the national bond issue for the year 2023, which reached almost 120%, in addition to the use of these funds and their impact on the financing of the economy and companies.
The national bond loan is not a new instrument to finance the State budget, but it has become necessary in recent years, especially as Tunisia’s room for manoeuvre on the international financial market and at bilateral and multilateral levels remains limited.
The four tranches subscribed for last year mobilised almost 2.9 billion dinars, while the 2023 bond issue (first two tranches) has mobilised 1.5 billion dinars, as the government seeks to raise 2.8 billion dinars.
The government, in 2020, signed a syndicated loan agreement in foreign currency with 17 local banks to raise 455 million euros or 1,417.17 million dinars for the mobilisation of funds in the state budget for 2020.
Q: What is your assessment of the results of the subscriptions to the second tranche of the national bond issue?
A: Tunisia has managed to mobilise an amount of 844 million dinars (MD) within the framework of the second tranche of the national bond issue for 2023, while the first tranche reached more than 700 million dinars.
This is the third year in a row that the government has used this mechanism, given the difficulty of issuing assimilable treasury bills (BTA) for banks.
Tunisia, which has been issuing bonds since 2014, aims to raise 2.8 billion dinars during 2023. Almost 15.9 billion dinars have been mobilised, to date.
This mechanism, i.e. the issuance of bonds, targets a wider category of operators (banks, citizens, financial market, intermediaries), which has allowed the State to overcome the difficulties associated with the issuance of BTAs.
The amounts subscribed during the period from May 8 to 17, 2023 come from banks (TND 185 million) and stock market brokers (TND 600 million).
These figures show that the subscription rate by banks is around 22%. This rate shows that this bond does not represent a major threat to the economy.
We can therefore say that this is a normal financing operation based on the savings of subscribers in three categories and aimed at reducing the financial pressure on the State in order to mobilise the resources needed for the budget.
Q: Why did the Ministry of Finance choose a syndicated loan of 400 million dinars when its financing needs are much higher?
A: The syndicated loan contracted by the banks is a financing instrument used by the state for the seventh time since 2017. The Ministry of Finance has proposed to the banks to subscribe in foreign currencies, namely the euro or the dollar, at fixed or variable rates. According to the information I have received, the rate applied to the euro is either a fixed rate of 5% or a variable rate based on the calculation of Euribor plus 1.75 points.
The syndicated bank loan cannot in any way affect the foreign exchange reserves, which stand at 94 days.
Tunisia had, in 2020, borrowed pound 140 million and $15 million from 17 banks, which have already been repaid.
In June 2020, the State borrowed pound 257 million and $130 million, to be repaid in 2022, 2023 and 2024.
For the second maturity, scheduled for June 2023, the government will pay the banks pound 86 million and pound 43.3 million.
This operation, carried out by the Ministry of Finance, is simply a loan to repay an old debt in the form of a syndicated loan. And that is why I consider the new loan recently contracted between the Ministry of Finance and a number of local banks as just a dummy operation to repay the second tranche of the syndicated loan for the year 2022.
As for a possible increase in the amount of the loan, the state cannot borrow more, especially since Tunisian banks do not hold large amounts of foreign currency.
Q: What should Tunisia do to overcome the deadlock in the agreement with the IMF?
A: I would like to point out that recourse to the International Monetary Fund (IMF) loan is provided for under the Finance Act for the year 2023. The delay in the final agreement for the granting of this credit by the IMF requires the executive to revise this agreement by presenting a new file that should take into account the difficulties encountered by Tunisia and the reforms required by the IMF.
I would like to stress that the new file should present a compromise solution between what the country sees as difficulties and what the IMF sees as a need for reform.
Source: Agence Tunis Afrique Presse