Tunisian President Kais Saied confirmed today, Friday, that laws need to be revised to allow the central bank to directly finance the budget by purchasing government bonds, a step that the bank's governor had previously warned against. During a visit to the bank, Saied stated, "There must be a distinction between the bank's monetary role in addressing inflation and its role in funding the budget," adding that the central bank is a public institution and is not independent from the state.
Tunisia is facing a comprehensive economic crisis, burdened by multiple crises since the 2011 revolution. Most debts are internal, but payments on foreign loans are due later this year, and credit rating agencies have said that Tunisia may default.
In 2020, the Governor of the Central Bank of Tunisia, Marwan Abbasi, warned that the government's intention to ask the bank to purchase treasury bonds carries significant risks for the economy, including increased liquidity pressures, rising inflation, and a decrease in the value of the Tunisian currency. However, Saied stated that the budget financing law, which prohibits the bank from granting loan facilities or acquiring bonds issued by the state, needs to be developed.
