Tunisia’s foreign exchange reserves down 3%

Cash-strapped Tunisia reported a 3% decrease in its foreign exchange reserves to 22.9 dinars ($ 7.5 bln), enough to cover 99 days of imports, as the country struggles to access foreign debt amid a biting social and economic crisis.

The decline follows the government’s $1 billion Eurobond repayment in February, reducing import coverage.

The government has turned to the central bank to fund external debt, amid weak revenue from key export sectors such as manufacturing and phosphates.

The president has shunned foreign debt while ordering the central bank to tap into its reserves to pay foreign loans.

As Tunisia struggles to gain foreign funding, the treasury opts for domestic debt which has already hit its limits, impacting investments.

Tunisia has further thwarted foreign investors when the central bank ordered firms to avoid distributing dividends to prevent the outflow of hard currency.

The president has then cut ties with the IMF accusing it of interfering in Tunisia’s economic policies.

This came after he rejected an IMF deal calling for subsidies’ cuts and a reform of public finances.

The $1.9 billion lifeline loan that was offered by the IMF and conditioned on reforms is now obsolete and needs to be updated in light of the deterioration of Tunisia’s public finances.

Without the IMF deal, rating agencies have been warning of risk of default as the country struggles to gain foreign debt to fund imports, leading to shortages of some basic goods.