The inflow of foreign capital to Tunisia has decreased
Tunisia recorded a noticeable decline in the balance of capital operations, and this decrease is a consequence of the decrease in the inflow of foreign capital from foreign investments and loans, while the budget deficit continued, which, despite the low level, amounted to 7.5 percent. compared to 2020, when it rose to 9.5 percent. And witnessed record levels of the financial deficit, according to the Central Bank of Tunisia, which took a number of measures to develop the functioning of the exchange market with the aim of strengthening the course of liberalization of financial relations with foreign countries in order to activate financial operations and attract funds through direct investments and others.
“Central” reflected on the complexities of the past period, which were reflected in the economic results and slowed down the recovery recorded after the Corona pandemic period. The issuing institution asked the authorities to take decisive decisions to return Tunisia to the global financial market by focusing on a series of reforms. While the experts who spoke to “Independent Arabia” believed that the decline in capital operations is a consequence of the lack of clarity of vision that the Tunisian economy is going through and doubts about finance. Publicity, and thus the inability to win over investors in all fields, let alone invest in portfolios in exchange for the growth of irreducible costs.
Reduction of the excess balance of capital operations
The governor of the Central Bank of Tunisia, Marwan Al-Abbasi, said: “The surplus of the balance of operations in capital and financial operations witnessed a noticeable contraction due to the coincidence of the decrease in mobilized foreign capital with the increase in debt repayment. .
The balance sheet surplus in capital and financial operations was reduced in 2021 by 2.5 billion dinars (786 million dollars), to 6.7 billion dinars (2.1 billion dollars). This development was characterized by a sharp decline in external financing. This was due to a reduction in financial aid in the form of donations, which amounted to only 645 million dinars (202.8 million dollars), the largest part of which was given by the United States of America, the European Commission and Germany.
As for the surplus in the foreign investment balance sheet, it decreased to 1.3 billion dinars ($408 million) in 2021, compared to 1.5 billion dinars ($471 million) in the previous year, due to the semi-stagnation of foreign direct inflows. investments, while expenditures increased.
The flow of foreign direct investment in Tunisia maintained almost the same level recorded in 2020, reaching 1.8 billion dinars ($566 million), representing 15.3 percent of total medium- and long-term foreign financing and 1.4 percent of GDP, compared with 16.5 percent. 1.5 percent in 2020, 41.7 percent, and 3.3 percent in 2010.
On the other hand, the inflow of foreign direct investments, excluding energy, enabled the completion of 502 construction and expansion investment operations worth 1.3 billion dinars ($408 million), which enabled the creation of 11,000 new jobs. These are 81 construction projects worth 82 million dinars (25.7 million dollars) and 421 expansion projects worth 1.2 million dinars. One billion dinars (377 million dollars).
The geographical distribution of foreign direct investment flows, excluding energy, according to regions, shows that the European Union is in first place with a share of approximately 69 percent of the total, followed by the Arab countries with a share of 14 percent.
The analysis of the sectoral distribution of these foreign investments obtained in 2021, according to the beneficiary sectors, shows a decline in the energy and production sectors, but a significant increase is recorded in direct foreign investments directed to the tourism, real estate and financial sectors.
Energy sector flows decreased by 12.9 percent in 2021, to 541 million dinars ($170.1 million), i.e. 29.3 percent of these total investments, since they included investments in the field of development and, to a lesser extent, within the framework of exploration works. The total number of valid permits in 2021 was 19, of which 12 for research and 7 for research.
The inflow of foreign direct investment in the manufacturing industry sector was also reduced by 7.2 percent, to 953 million dinars ($299.6 million) in 2021, or more than half of these investments.
On the other hand, the flows of the food industry sector and those aimed at the plastic industry decreased by 60.2 percent and 53.6 percent, respectively, to 80 million dinars (25.1 million dollars) and 45 million dinars (14.1 million dollars ) in 2021.
As for direct foreign investments in the service sector, they recorded a significant increase, and increased from 169 million dinars (53.1 million dollars) to 345 million dinars (108.4 million dollars) from year to year, as a result of supporting the flow investment. made in the financial sector, which included an amount of 144 million dinars ($45.2 million), including 70 million dinars ($22 million) related to the capital increase of the “Arab Bank of Tunisia” by the “Arab Bank” group.
As for foreign direct investment expenditures, it increased from 205 million dinars (64.4 million dollars) in 2020 to 407 million dinars (127.9 million dollars) in 2021, of which 183 million dinars (57.5 million dollars) corresponds to the acquisition of Kart Group. For 39 percent of the capital “Bank Union for Commerce and Industry”.
As for the balance of investments in the portfolio, it resulted in a minus of 93 million dinars (29.2 million dollars) compared to 86 million dinars (27 million dollars) a year earlier. This deterioration is due to a decline in non-resident savings on the Tunisian stock market, which fell to 32 million dinars ($10 million) in 2021 compared to 52 million dinars ($16.3 million) in 2020, however, there was a jump in stock market index in Tunisia. Tunendax “by (+2.34) percent, after two consecutive years of falling (-3.33) and (-2.06) percent in 2019 and 2020, and this was not enough to attract foreigners to the Tunis Stock Exchange.
As for the balance of other investments, its surplus decreased by 1.9 billion dinars (597 million dollars) to fall to 7.4 billion dinars (1.47 billion dollars) in 2021. This path is a consequence of the simultaneous effect of a noticeable increase in the expenditure on repayment of the principal of medium and long-term foreign debt (b). (+36.7 percent) and to a lesser extent the reduction of the withdrawal of medium- and long-term borrowing funds during 2021 to 3.6 percent.
The clouds are retreating
The withdrawal of medium- and long-term borrowing funds, which represented the main source of external financing in 2021, decreased to the level of 7.9 billion dinars (2.48 billion dollars), compared to 8.7 billion dinars (2.73 billion dollars). The funds mobilized by the administration amounted to 7 billion dinars ($2.2 billion), or almost 90 percent of the total amount. In particular, multilateral cooperation funds were significantly strengthened, mainly thanks to the financial support of the Monetary Fund, which was included in the framework of the allocation of special drawing rights of 523 million dollars, according to Tunisia’s share in the International Monetary Fund.
On the other hand, the European Union allocated an amount of 300 million euros (303 million dollars) within the framework of the financial assistance program. As for the funds of the International Bank for Reconstruction and Development, they amounted to 182 million euros ($183.82 million) under the Corona Social Protection Program.
As for bilateral cooperation funds, they mainly included a 300 million euro ($303 million) loan granted by Algeria to the Tunisian state under the budget support program and a 100 million euro ($101 million) loan from France under the reform program and strengthening the resilience of the economy and the loan Another one from Germany worth 75 million euros (75.75 million dollars) refers to a program to support reforms in the public sector.
Procedures for facilitating financial settlements
The governor of the Central Bank of Tunisia revealed that the bank has issued publications related to new facilitation procedures in the field of financial settlements for foreign trade operations, covering the costs of professional stays abroad and the access of resident companies to foreign sources of financing during 2020 and 2021. Protection against exchange rate risks, interest rates and prices of basic materials, during 2022 the Bank launched a major project to update the exchange journal, with the aim of strengthening the course of liberalization of financial relations with foreign countries.
Tunisia is working on a new exchange law to develop the old code to further facilitate integration into the international economic environment by opening Tunisian institutions to foreign markets by removing remaining restrictions on exchange operations while strengthening the conditions of financial transparency, information and reporting, taking care to preserve macroeconomic balance, and this will be accompanied by the Liberal way of strengthening the information system of the Central Bank and strengthening the internal control of banks in the area of foreign exchange regulation so that they can fulfill their obligations in the best way in terms of the mandate that will be granted to them for that purpose, according to the Central Bank.
Al-Abbasi indicated that the achievement of financial and economic recovery requires cuts as quickly as possible with a constant state of waiting for the authorities and the establishment of the necessary structural conventions that allow overcoming the consequences of the pandemic, which has led to a weak growth rate estimated at 3.1 percent during 2021, with investments of 16 percent of the social product. Raw and weak attraction of foreign investments. The escalation of the outstanding debt and the delay in the negotiations with the International Monetary Fund led to the exclusion of the Tunisian government from accessing external financing, especially in the international financial markets.
The former Director General of Monetary Policy of the Central Bank of Tunisia, Mohamed Salih Souilem, believed that “the deficit recorded in the surplus of the balance of capital operations is self-evident due to its direct connection with the reality of foreign investment and the state of uncertainty hanging over its climate. The balance is affected by borrowing, foreign investment, capital outflows and declining flows. As for the balance situation, Tunisia did not borrow on the financial market due to the low sovereign number. Likewise, the deterioration of the investment reality, which did not exceed 16 percent. Capital operations consist of direct investments, portfolio investments and borrowing, which affected the current account deficit. , because capital operations embodying outflows exceeded their internal equivalent, which does not contribute to the creation of a surplus, and is the result of internal factors added to external conditions that contributed to this deficit, and directly leads to a fall in savings and a fall in foreign exchange reserves.
Anis Wahbi, an expert in economic affairs, explained the decrease in the surplus by the situation on the “internal market” which does not inspire confidence, and in addition to the departure due to the recession in the country, the state of uncertainty and the absence of a clear vision, which inevitably leads to a decrease in currency stocks and a fall in the domestic currency.