Tunisia to issue up to $3bn in dollar-denominated bond this year as economy scuffles

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Tunisia to issue up to $3bn in dollar-denominated bond this year as economy scuffles

Tunisia, the debt-laden North-east African oil-dependent country, reeling from political infighting, a still-raging pandemic outbreak at large alongside a protracted protest over inequality, had been looking to issue up to $3 billion worth of debts this year, largely aimed at restructuring some of its existing credit arrangements due in first half of 2021, the grief-sickened nation’s Finance Minister Ali Kooli said in an interview with a press agency on Sunday.

In point of fact, as foreign lenders alongside the country’s labour unions have repeatedly demanded a sweeping overhaul of the country’s economic infrastructure, Kooli was quoted saying in the interview that the Government was looking to slash its public wage bill and subsidies in a bid to offset the fiscal impacts of pandemic.

If truth is to be told, although the country had been planning to issue up to $3 billion worth of US Dollar-denominated bond, questions were raised whether the economy’s feeble stature could be able to pay off term repayments.

More importantly, Tunisian economy, which had contracted as much as 11.5 per cent last year with public debts soaring to 90 per cent of GDP (Gross Domestic Product), was betting on a $1 billion in debts from the United States to help securing the debts, compounding the narratives further.

Tunisia looks to issue up to $3 billion in bonds ahead of debt repayments

Factually, Tunisia’s latest attempt to issue $3 billion in Dollar-denominated bonds would highly unlikely to attract foreign investors given its 2021 budget forecast borrowing need of at least $7.2 billion including as many as $5 billion in foreign loans.

On top of that, the country’s debt repayments due this year at a lump-sum of $6 billion might hinge on a new financing program that Tunisia was expecting to reach with the International Monetary Fund (IMF) in a near-term outlook, suggested analysts.

Nonetheless, voicing a strident tone over a rebound in Tunisian economy this year, Kooli said in the interview, “Our situation is tough, but it doesn’t mean that we aren’t in a position to pay salaries or reimburse our debt.

I believe there is a real possibility to go to the markets for at least $1 billion during 2021. In tandem, Tunisia, the smallest country in Africa, was also mulling an option to issue a Sukuk or “Islamic Sharia-based compliant bonds” for the first time which would be targeting the Asian markets, added Kooli.