Tunisia raised $800 million through previous IPOs this year and needs more than 225 more (Al Jazeera)

The Tunisian government on Monday floated a fourth national subscription this year to raise 700 million dinars ($225.33 million) to finance this year's budget, amid difficulties in securing foreign loans.

Through the three previous IPOs this year, the government raised more than $800 million.

The government said last month that the fiscal deficit for 2023 would rise from the 5.2 percent it had previously forecast to 7.7 percent of GDP.

Tunisia has so far repaid 81% of its 20.8 billion dinars ($6.7 billion) of its external debt for 2023, Finance Minister Sihem Boughdiri said, adding that the country will continue to meet its obligations despite significant fiscal pressures.

Reducing the fiscal deficit

Tunisia aims to reduce its fiscal deficit with additional taxes on banks, hotels, restaurants, tourist cafes and alcohol companies.

It decided to impose a temporary tax of 4% on the profits of banks and insurance companies in 2024 and 2025. The new taxes raise the tax rates paid by banks to nearly 40%.

President Kais Saied has long criticized private banks, saying they make huge profits, adding that they should help the economy at this delicate moment in the country's history.

Private banks are now the main lender to the government, which is unable to secure the external loans it needs.

Local experts have warned that heavy domestic borrowing threatens to cause a significant liquidity shortage and plunge the banking sector into a crippling crisis.

Last year, Tunisia reached an expert-level agreement with the International Monetary Fund on a loan, but has already defaulted on key commitments.

Donors believe that the state's finances are increasingly different from the figures used to calculate the agreement.

The government will raise its foreign loan needs from 10.5 billion dinars ($3.32 billion) in 2023 to 16.4 billion dinars ($5.19 billion) in 2024.

Foreign loans include an Algerian loan of $300 million, $500 million from Saudi Arabia and $400 million from the African Export-Import Bank.

The government said it was seeking $3.2 billion in loans, without giving a source.

Tunisian port with thousands of commercial containers (Getty Images)

Rising trade deficit

On the other hand, data issued by the National Institute of Statistics in Tunisia (governmental) on Monday showed an increase in the trade balance deficit (the difference between the values of exports and imports) by 26.8% last October, on a monthly basis.

The institute said in a statement that the trade balance deficit last month stood at 645 billion Tunisian dinars ($4.1 million), compared to 578.509 billion dinars ($<> million) in September. The statement did not give export and import figures for the past month.

But he noted that import coverage by exports fell to 71.7 percent in October, down from 76.2 percent the previous month.

Tunisia is witnessing a severe economic crisis exacerbated by the repercussions of the outbreak of the Corona pandemic, and the high cost of importing energy and basic materials following the war in Ukraine.

In January, Central Bank of Tunisia Governor Marouane Abassi said the bank's estimates indicated that inflation in 2023 would rise to 11 percent, up from 8.3 percent last year.

Source: Agencies