TUNIS, Tunisia (AP) — Cash-strapped Tunisia wants to take the unprecedented step of borrowing billions from its central bank to address budget deficits and bandage its economic crisis, a step that experts warn could bring inflation and lessen faith in institutions. Those laws added the central bank to a growing list of institutions that critics say Saied has sought to undermine since taking power in the North African nation, along with briefly suspending parliament and rewriting Tunisia’s constitution. His government wants the central bank to directly buy up to 7 billion Tunisian dinars ($2.25 billion) in interest-free bonds to help plug a 10 billion dinar ($3.2 billion) budget deficit. It comes as Tunisia finds itself unable to borrow from traditional creditors, including the International Monetary Fund, whose proposed $1.9 billion bailout package remains in limbo. Borrowing from the central bank may fund the budget in the short term, retaining subsidies for everyday goods like flour, electricity and fuel.

Source: The North Africa Journal January 31, 2024 18:42 UTC