African Reserves Loans

Tunisia: 9-day siphoned foreign exchange reserves. But good news of 700 million dollars!

Tunisia never ceases to amaze… Indeed, as the country turns in circles, and political vicissitudes punctuate its daily life, it has just repaid a bond loan with an American guarantee in the amount of 500 million dollars, contracted on August 5, 2016 It is the second of its kind and of the same amount, in just 15 days. The first had been honored on July 23.

But, as in this previous episode, it is the foreign exchange reserves that are siphoned off by 9 days of imports to settle at 120 days of imports. They thus fell from TD 20,471 billion on Wednesday to TD 19,041 billion on Thursday, down from TD 1,429.8 billion.

Huge amount? Let it be so, but not equal to a default which would be disastrous, both for Tunisia’s image and for its finances, its commitments and its financing prospects. By drawing on its foreign exchange reserves, Tunisia displays the profile of a trusted borrower. Whatever the cost, this image must be preserved.

It should also be noted that Marouane El Abassi, governor of the Central Bank of Tunisia (BCT) recently declared before an ARP parliamentary committee that Tunisia, via its Central Bank, will honor these two important loans. It is now done.

But Tunisia is not yet out of the woods. Because, with the rating of a country which is eroding, it is urgent to find and validate a national consensus around a reform plan to be agreed with the IMF, synonymous with a sesame of international financing.

– Good news of 700 million dollars

In the meantime, good news that could consolidate foreign exchange reserves at the BCT. Indeed, on August 2, 2021, the Board of Governors of the IMF approved a general allocation of special drawing rights (SDRs) equivalent to 650 billion dollars (approximately 456 billion SDRs), in order to increase liquidity in the world. .

According to the IMF press release, “the general allocation of SDRs will come into effect on August 23, 2021. Newly issued SDRs will be allocated to member countries in proportion to their IMF quotas. Emerging and developing countries, including low-income countries, will receive about $ 275 billion (or about SDR 193 billion) from the new allocation. “

What really happened last Monday in Washington was an allocation of SDRs. In its statutes, the IMF has the power to propose to its executive board and its board of governors, as it does every five years, and when it considers that the world economy lacks liquidity, an allocation of SDRs and therefore inject more money into the global economy.

“What is certain is the agreement on 650 billion USD. The distribution will be made according to the quota of each country, itself linked to the size of the economy of each country ”, explained to AfricanManager an authorized source at the BCT.

We know, moreover, that Tunisia’s quota in the IMF, one of the lowest because it is linked to the size of its economy, is 286.5 million SDRs, corresponding to some 400 million USD.

“We have not yet been notified, but we know after this IMF decision and taking into account our quota, that at the end of August 2021, Tunisia will receive some 700 million USD. [Editor’s note: 1, 942850 billion DT] which will go to its foreign exchange reserves at the BCT ”.

It should also be noted that Tunisia’s quota in the IMF will not change, and the amount that could be negotiated with the IMF for possible support to the economy, either.

– Until better… maybe!

Moreover, the idea evoked last May by several African presidents, including Kais Saïd, during the summit on the financing of African economies, seems to have been seized by the IMF CEO.

In her statement on increasing quotas that will benefit Tunisia, Kristalina Georgieva said: “We will also continue to actively engage with our members to identify viable options for the voluntary channeling of SDRs from the richer member countries to the richest member countries. poorest and most vulnerable member countries to support their recovery in the event of a pandemic. and achieve resilient and sustainable growth, ”said IMF Managing Director Kristalina Georgieva. This could then increase the amount of SDRs (Special Drawing Rights) for Tunisia. But it is not certain.

Indeed, as the IMF Managing Director said on August 2, 2021, “A key option is for members with strong external positions to voluntarily channel part of their SDRs to increase lending to low-income countries through through the IMF’s Poverty Reduction and Growth Trust Fund. (PRGT). However, Tunisia is not considered a poor country, and therefore could not be affected by the option described by Kristalina Georgieva.

It is therefore necessary to know how to negotiate with the IMF, and above all to use the next facility, not for salaries and other expenses, but for reforms and for wealth-creating investments.

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