Tunisia: 1st Sukuk to be issued in September, Finance Minister
“This time there will be no delay and we will issue a $140 million sukuk in September.” These were the words of the Finance Minister Hakim Ben Hammouda. Tunisia announced that it was going to issue a sukuk but the deadline has expired four months ago. The minister has promised that September will be the month as the country experiences a sharp fall of its foreign currency reserves which barely covers 100 days of exportation.
The assurances by the minister will be a sign of relief but the lack of explanation with regards to the massive cut from $500 million to $140 million could raise eyebrows in certain corners. The money to be raised from the sukuk is expected to help in boosting the reserves of the state and also reduce its budget deficit.
Tunisia is short of foreign currency reserves. They can only cater for an equivalent of only 93days of importation expenses, an amount of days that the central bank classifies on adequate. There are plans to cut on subsidies and public spending in order to save around $927 million this year, Prime Minister Jomaa stated. The budget needs a financing of $3,5billion.
The government has since managed to secure more financing from international lenders and foreign partners as it tries to shore up an economy reliant on foreign tourism and remittances from overseas and damaged by its political crisis.
The revival of the once flamboyant tourism sector has been difficult due to the insecurity and political crisis. Tourism is however expected to grow by 3% and that the budget deficit will be 7.5 to 8 percent of gross domestic product. Elections are scheduled to take place before the end of the year.