WorldTunisia: "Convertibility of the dinar in the next two or three years,...

Tunisia: “Convertibility of the dinar in the next two or three years, with the technical support of the IMF”


AA / Tunis / Majdi Ismail

Technical support from the International Monetary Fund (IMF) has been underway for two years to move towards convertibility of the dinar in the next 2 or 3 years, said the governor of the Central Bank of Tunisia (BCT), Marouane El Abassi .

El Abassi was speaking at a conference-debate organized on Wednesday, November 17, by the Association of Tunisians of Grandes Ecoles (Atuge), on the theme “Foreign exchange regulations: progressive easing or total liberalization?” “.

According to a press release made public by Atuge, the governor of the BCT explained that “the dinar has been maintained, despite two years without tourism, mainly supported by the growth in the production of hydrocarbons and phosphate, and a record contribution of the labor income of Tunisians living abroad ”.

“The foreign exchange regulations have been revised in spurts, resulting in a complex final text, presenting discrepancies and ambiguities, often interpreted conservatively by the banks,” El Abassi added, observing that it is thanks to this regulation that Tunisia avoided the Lebanese scenario.

The former World Bank executive underlined that “comparative experiences show that the precipitous total external liberalization of a country can cause economic and financial slippages with serious consequences”.

According to the governor of the BCT, the prerequisites for a total liberalization of Tunisia’s trade and financial relations with the outside world as well as for the abandonment of exchange controls, come down to sustainable twin deficits, sustainable public debt, an efficient monetary policy capable of influencing inflationary expectations, a solid banking system seasoned in the management of capital flows and the related risks and a comfortable level of foreign currency reserves, allowing the BCT to intervene to regulate the liquidity of the market and defend the value of the national currency.

The senior Tunisian official recalled to this end that the BCT has not ceased to warn against the risks of hasty and ill-ordered external liberalization, considering that in the event that the state of political and social transition and economic-financial continues in Tunisia, it would risk maintaining the prerequisites for the total external liberalization of the country in a degraded state which compromises any definitive transition to the total convertibility of the dinar.

To make its monetary reform project a reality, the BCT has opted for technical and financial assistance from the IMF, which has been ongoing for two years, said El Abassi, believing that the support of the international financial institution will make it possible to carry out these reforms and to move towards convertibility of the dinar in the next 2 or 3 years. It is also a question of accompanying the most risky stages of reform and liberalization, in view of the repercussions they can cause in terms of financial slippages and systemic crises.

Through its spokesperson, Gerry Rice, the IMF indicated on November 18 that it had received a request for assistance from the new Tunisian government and that technical discussions are underway with Tunis to set the country’s economic priorities.

Tunisia is requesting assistance from the IMF for the fourth time in 10 years.

Tunisia’s external debt stood at 97.2% of Gross Domestic Product (GDP) in 2020, the highest rate in North Africa, while the country’s public debt stood at 99.3 billion dinars ($ 35.7 billion) at the end of last June, or 81.5% of GDP.

Tunisia is seeking a new loan of $ 4 billion from the International Monetary Fund (IMF), as new negotiations have started since mid-May.

In April 2016, the IMF’s Executive Board agreed to grant Tunisia a loan of $ 2.8 billion over 4 years, from which it had received only $ 1.6 billion, in due to the inability of the government to implement all the structural reforms planned by the international financial institution.

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