Hakim: Relying on bonds.

Tunisia plans to raise more than $100mn with the sale of a local currency Islamic bond by July, according to Finance Minister Hakim Ben Hammouda.

The country will push ahead with a debut sukuk sale worth 180mn dinars ($112mn) after months of delays, Ben Hammouda said in an interview in Tunis on Thursday. The notes will be issued under the Supplementary Finance Law, which will be ready by the end of June and applied from July 1, he said.

“Despite the delay, the government is still planning to issue the Islamic bonds” guaranteed by the Islamic Development Bank, Ben Hammouda said. “We are relying on these bonds to mobilise the budgetary resources this year.”

Three years after the ousting of President Zine Abidine Ben Ali, Tunisia’s economic situation has reached a “critical and difficult” stage, the minister said. A worsening trade deficit has cut currency reserves to about 93 days of imports, according to the central bank website. The budget shortfall is set to grow to 8% of gross domestic product this year, while Prime Minister Mehdi Jomaa has said external borrowing needs will be $8bn, about double initial estimates.

The economic situation is due to “the continuous rise of expenses of the state versus a significant reduction in revenue,” Ben Hammouda said. As the government seeks solutions, state wages won’t be touched and salaries will be paid on time, he said.

Internal borrowing, or Treasury Bonds, will be sold this month, and “is expected to bring in about 500mn dinars,” Ben Hammouda said.

The government has about $7bn of bonds outstanding, including debt denominated in dollars, Japanese yen and euros, according to data compiled by Bloomberg.

Tunisia’s sukuk law was passed July 17. The finance ministry said shortly afterward it would issue between $500mn and $700mn of Islamic bonds by the end of 2013, maturing in five to 10 years.

“We are trying to find the funds to meet the obligations of the government,” Ben Hammouda said. “The coming period will be a period of rationalisation of consumption, not austerity.”


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