The Tunisian banking sector has sufficient liquidity to help meet the sovereign’s financing needs in 2025 due to healthy deposit inflow (+6% yoy in 8M24) and sluggish private-sector credit growth (+1.5% yoy in 8M24), Fitch Ratings says. We expect banks’ claims on the sovereign (excluding deposits at the central bank) to increase further this year, following a 9% yoy increase in 8M24 driven by loans to the Ministry of Finance (MOF).
Fitch expects Tunisia (CCC+) to secure TND4.8 billion (or USD1.5 billion) in external funding in 2025; this is equivalent to 2.8% of GDP, broadly unchanged from 2024 (2.5%) and significantly less than the average over 2018-2022 (5.5%). As in 2024, Tunisia’s budget allows the Central Bank of Tunisia (CBT) to directly finance the deficit by up to TND7 billion (USD2.2 billion). The amount of domestic financing to be met by the domestic financial sector in 2025 (through loans, bonds and T-bills) is estimated at TND15 billion, or 9.4% of GDP (2024: 10.3%). We expect this to increase to 11.8% of GDP in 2026, assuming CBT financing ceases.
The 2025 budget envisages borrowings from domestic banks totalling TND5.6 billion. This will come from a local-currency national borrowing programme of TND4.8 billion and foreign-currency syndicated borrowing equivalent to TND0.8 billion.
The government expects to raise a further TND8.2 billion through bond issuances. The CBT recently removed restrictions on collateral type for repo financing, meaning that pledged collateral can now be entirely in the form of government bonds, which incentivises banks to continue to invest in government bonds. T-bills issuance is forecast at TND1 billion.
Banking sector exposure to the sovereign and the CBT was 21% of sector assets at end-8M24 (or 2.4x equity). This is high, but lower than in many emerging-market banking sectors. About 60% of Tunisia’s domestic public debt was held by domestic banks and the CBT (37% and 22%, at end-3Q24; respectively).
Fitch expects Tunisia’s fiscal deficit to decrease to 5.7% of GDP in 2025 (2024 estimate: 6.8%), driven by a fall in the cost of oil subsidies (Fitch assumes Brent oil prices will fall to USD70/bbl in 2025 from USD80/bbl in 2024) and an increase in tax revenue. Tunisia’s 2025 budget raised the corporate income tax rate to 20% from 15%, introduced an ‘exceptional contribution’ of 2% of profits for companies with revenue over TND20 million and increased the marginal personal income tax rate to 40% from 35%. Fitch expects a further decrease in the fiscal deficit in 2026, to 5.5% of GDP, partly due to oil prices still falling.
Lower fiscal deficits will contribute to a reduction in Tunisia’s total financing needs (including long-term amortisations, but excluding short-term amortisations) to 16.5% of GDP in 2025 and 15% in 2026, down from 18.9% in 2024. We project that Tunisia’s external amortisation will be 4.9% of GDP (USD2.7 billion) in 2025, down from 5.9% in 2024, and that domestic long-term amortisation will increase to 5.8% of GDP (2024: 5.3%).
Tunisia’s foreign-currency reserves of about USD8 billion at the end of 2024 support the sovereign’s ability to meet its upcoming external debt maturities, including a USD1 billion Eurobond due on 31 January 2025.
TunisianMonitorOnline (NejiMed-Fitch Ratings)
