The Tunisian cabinet signed on Thursday a controversial bill permitting the central bank to finance the treasury.
This created fears in many circles and amongst the stakeholders over the bank’s independence.
Just the previous year, the President of the country, His Excellency Kais Saied said the law that does not allow the central bank to finance the budget directly, by buying state bonds must be reviewed. The position taken by the president didn’t auger well with the central bank governor, Marouan Abassi.
In support of the bank governor, economists believe the bill’s approval by the cabinet will make the governor leave next month at the end of his first term.
Furthermore, critics of the move said an attempt to amend the 2016 law would cause the likelihood of intervention in monetary policies in fiscal deficit and it would cause difficulties in foreign borrowing.
Abassi has repeatedly warned in 2022 that government plans to ask the central bank to buy treasury bonds would arm wrestle the economic landscape of the country characterized by an increase in high inflation and will affect the Tunisia currency.
He said the move by the cabinet would undoubtedly increase inflation which could be very bad. He likened the scenario to come as the one that happened in Venezuela.
A Venezuelan scenario will be repeated in Tunisia.
Abassi said
However, word on the street is saying the bill will be signed by the Parliament in the few weeks to come.
The government’s desperate need for external loans is set to rise in the 2024 budget to about $5 billion, including $3.2 billion which the government didn’t shed any light on where it would come from.
It is clear that the main source for obtaining this loans($3.2 billion) will be directly from the central bank
Aram Belhadj
