Buoyant Bond market and the Crowding out Effect tv_user April 24, 2023
Buoyant Bond market and the Crowding out Effect

State bonds continue to put pressure on the debt market causing an inevitable crowding out effect. In 2022 the Tunisian treasury has launched 25 auctions in BTA bonds (bonds with long maturity) raising 2.441billion Tnd while the budget for 2022 was aiming to raise 3.650 billion Tnd

In BTCT bonds (bonds with short maturity) the state of Tunisia has raised 14.010billion Tnd while the treasury’s budget was aiming to raise 800 million Tnd. The total amount raised in 2022 includes 25 exceptional auctions on a one to one basis with the Tunisian banks amounting to 13.971 billion Tnd

The state has also launched a national bond in four tranches (March June September and November 2022) to raise a total of 2.974billion Tnd while the state budget had initially planned to raise 1.4billion Tnd under the National Bond 2022.

On May 18th 2022 the government has launched a syndicated bond in Euros and US Dollars as part of a deal with a pool of Tunisian Banks to raise 81.5m Euros and 25m US Dollars which means a total of 341m Tunisian Dinars. It should be reminded that the State had initially planned to raise 1.481billion Tnd in a syndicated loan.

When we look at the state budget at the close of the year 2022 we can depict a relative stability in the budget deficit at 7.6% of GDP (-11 billion Tnd) against 7.7% of GDP at the close of the year 2021 (-10billion Tnd). Budget revenues have been rising 22.2% in 2022 (at 41 billion Tnd in 2022 versus 33.6 billion Tnd in 2021) boosted by the rising tax revenues in 2022 (+16.6% to reach 35.5billion Tnd). Non fiscal revenues were up +34.4% to reach 4.2 billion Tnd while financial aid has reached 1.4 billion Tnd in 2022 versus 44.3million Tnd in 2021. Budget expenses have also been rising 16.4% to reach 50.6billion Tnd in 2022 against 43.4 billion Tnd in 2021. Most of the state expenses go to the salaries (21.1 billion Tnd meaning a rise of 4.7% year on year). The second biggest expenses are the loan repayments (4.66 billion Tnd in 2022 up 26% year on year ). Subsidies have also been rising significantly at 17.9billion Tnd in 2022 (+42.4% year on year). Government subsidies have almost doubled under the double impact of rising food and energy costs. Food and energy subsidies have reached 12 billion Tnd in 2022 to be compared with 6 billion Tnd in 2021. Subsidies to energy have reached 7.6billion Tnd. Then subsidies to staple (3.8billion Tnd) then transportation (600 million Tnd)

The debt pile has reached 114.8 billion Tnd as at year ending 2022 which means 79.4% of GDP to be compared with 128 billion Tnd or 88.8% of GDP expected in the reviewed financial law