• Tunisia seeks $3.7B loan from central bank in 2026
  
• Economists warn of inflation, liquidity risks from domestic borrowing
• IMF talks stalled; budget deficit at 6.3% of GDP

Facing tight access to external financing and a prolonged budget deficit, the Tunisian government plans to seek an exceptional $3.7 billion loan from the Central Bank of Tunisia (BCT) in 2026, according to the draft Finance Law reviewed this week.

Initially introduced as a temporary measure to ease post-pandemic liquidity pressures, central bank borrowing has become a regular feature of Tunisia’s budget. The government already secured $2.3 billion from the BCT in 2025 to cover maturing debt obligations.

Economists warn that this approach, which effectively monetizes the fiscal deficit, poses significant inflation risks. By relying on domestic borrowing in the absence of foreign funding, Tunisia risks stoking inflation and further weakening the dinar.

The 2026 draft budget estimates total financing needs of 27 billion dinars (about $9.2 billion), roughly in line with 2025. Part of this is expected to come from a 7 billion dinar sovereign sukuk (Islamic bond) issuance, a first for the country.

Public spending is projected to rise from 59.8 billion to 63.5 billion dinars, largely due to planned salary increases in both the public and private sectors. The government also plans to introduce a 1% solidarity tax on assets exceeding 5 million dinars.

With negotiations on a new IMF program stalled since 2023, Tunisia has leaned increasingly on domestic debt to stabilize its finances. Economists caution that this reliance could drain banking liquidity and crowd out private sector lending.

Prime Minister Sara Zaafarani’s government defends the strategy as essential to “preserve the continuity of public services” and avert a sovereign default.

Tunisia’s economy remains fragile, with growth at 1% in 2024 and public debt near 81% of GDP, according to the World Bank. The twin fiscal and current account deficits, coupled with a deteriorating business climate since 2021, have weighed heavily on the macroeconomic outlook. The budget deficit is pegged at 6.3% of GDP, while inflation averaged 7.4% in 2024.

Until access to international lenders resumes, the state appears set to rely on the Central Bank as a lender of last resort to maintain financial stability.

Fiacre E. Kakpo