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Tunisia may ask central bank to buy bonds for first time

Credit: REUTERS/ZOUBEIR SOUISSI

Tunisia's government is likely to ask the central bank to buy bonds for the first time in order to finance a record budget deficit expected in 2020, the finance minister said on Monday.

By Tarek Amara

TUNIS, Oct 19 (Reuters) - Tunisia's government is likely to ask the central bank to buy bonds for the first time in order to finance a record budget deficit expected in 2020, the finance minister said on Monday.

The government has revised its forecast for the deficit from 7% percent to 14%, which will increase expenditures by about $4 billion, officials told Reuters.

"We do not have many options to finance the budget gap ... we will not raise taxes, we will not sell the state's stakes in public companies," Finance Minister Ali Kooli said.

"One of the remaining options that the central bank has to contribute to financing the Tunisian economy is by buying bonds, and we are talking with the central bank," he told reporters.

The central bank's purchase of bonds is unprecedented, but "the exceptional situation requires exceptional measures," the minister added.

According to a 2021 budget draft seen by Reuters, Tunisia faces debt payments worth 16 billion dinars ($5.8 billion), which is a record.

Debt service in 2020 was around 11 billion dinars, compared to only 3 billion in 2010 before the revolution that toppled former President Zine El Abidine Ben Ali in 2011.

Kooli said Tunisia would have to ask some of its creditors to allow delayed payment of some debts.

($1 = 2.7558 Tunisian dinars)

(Reporting by Tarek Amara; Editing by Andrew Cawthorne)

((andrew.cawthorne@thomsonreuters.com;))

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