Tunisia’s parliament rejects plan to issue $800 million in bonds

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Tunisia’s parliament said on Thursday it has rejected a government plan to issue up to $800 million in bonds this year, a severe blow to the government which is seeking to secure funding to cover the country’s fiscal budget deficit.

The parliamentary finance committee heard Finance Minister Ridha Chalgoum announce plans to issue bonds worth up to $800 million this year, but refused to approve the issuance.

“There is a possibility to exit to financial market by the end of the year if we need, and any possible deal will be according to the opportunities in the markets”, Chalgoum said.

Tunisia in October sold a 5-year Eurobond worth 500 million euros with an interest rate of 6.75 percent.

The government needs to obtain approval to issue bonds on the global financial market. Tunisia needs around $2.5 billion in external financing in 2019, officials said.

The North Africa country aims to cut the deficit budget from about 5 percent of GDP in 2018 to 3.9 percent in 2019.

The total debt, which hit record levels to reach about 74 percent of GDP by the end of 2018, has become a source of concern for Tunisians, especially the political opposition, which accuses the government of seeking easy solutions through borrowing.

Prime Minister Youssef Chahed said earlier this year that painful reforms must be launched to stop the bleeding of debt, but reform plans face strong resistance from the country’s powerful labor unions.

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