Tunisia: Kais Saied calls on the central bank to fund the budget directly

Tunisia's 7th President, Kais Saied, wants the central bank to help support the government's budget by collecting government bonds. 

He argues that as a public institution, the central bank should do this. However, Tunisia's Central Bank Governor, Marouane El Abassi, had previously warned against such a move.

President Saied made a visit to the Tunisian Central Bank, emphasizing the necessity of distinguishing the bank's function in managing inflation from its role in supporting the government's budget. He also suggested that they should revisit a 2016 statute in order to make this happen.

 The president of Tunisia's Central Bank, Marouane El Abassi, warned against the government's plans in 2020. He thought it would be harmful for the country's economy if the government urged the central bank to purchase its treasury bonds. It could result in severe inflation and a drop in the value of Tunisia's currency.

However, Tunisia's President suggested that they reconsider a 2016 law that prohibited the central bank from making loans or buying government bonds.

Tunisia has been in an economic crisis since 2011, with an increase in inflation and a large national debt. Political considerations are worsening the situation.

Tunisia arranged a $1.9 billion loan with the International Monetary Fund (IMF) in 2022, but President Kais Saied turned it down. He refused to accept the IMF's terms, which included reducing subsidies and selling state-owned enterprises. He predicted that these steps would provoke huge demonstrations across the country.

The US Secretary of State, Antony John Blinken, has urged Tunisia to think of a new approach to obtain the loan.

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