Tunisia – The banking rent is the main obstacle to monetary policies in Tunisia, which are characterised by their inability and failure to achieve the desired objectives, according to a study by the organisation Alert.
Alert explained this situation in its study, presented earlier this week, by several causes, including the structural nature of the inflation phenomenon and the restructuring of the financial and financing system, as well as the inconsistency of the central bank’s monetary policies.
It pointed out that the structural phenomenon of inflation is due to the deficit in the balance of the State budget, given that the economy is structurally dependent on imports, to imported inflation, i.e. the subsidisation of imports by policies designed to maintain the value of the dinar by relying on foreign debt, in addition to the blocking of productive sectors, for example, the agricultural sector which does not meet national requirements, the failure to revise the property system, and the exclusion of farmers from the economic cycle, as well as climatic crises, and the structure of markets governed by monopolies, in the absence of regulations, control and competition.
Regarding the structure of the financial system and financing, the study showed that the financial system has led to two types of demand for banking services: an economic player that relies on illegal channels due to several factors, including the excessive increase in the guarantees required when taking on debt, and an economic player that is heavily dependent on bank financing and has no banking alternatives.
The study concluded its explanation of the failure of the country’s monetary policies by highlighting the contradiction between the BCT’s monetary policies aimed at reducing the rate of monetary inflation, given that the increase in the key interest rate has coincided with a reduction in the rate of compulsory reserves, in addition to monetary injection operations into the economy through refinancing and intervention on the open market.
Among the other negative results of these policies, according to the study, is the high risk of default due to the sudden rise in financing costs, given that the average level of non-performing loans remains high (up to 13%) compared with other countries.
To absorb payment defaults, Alert pointed out that banks are imposing high-interest rates, stressing that the application of the highest interest rates is likely to encourage banks to make high profits.
Most loans granted by banks are subject to a variable interest rate, depending on the financial market interest rate, so any revision of the key interest rate allows banks to make higher profits.
Over the last five years (2017-2022), banks have been able to achieve high-profit margins as a result of the increase in the financial market interest rate.
Source : Zawya