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AfDB Announces $134 Mln Loan to Modernize Tunisia Financial Sector

AfDB Announces $134 Mln Loan to Modernize Tunisia Financial Sector

Saturday, 18 May, 2019 - 09:45
A man walks in the medina. (AFP)
Tunis - Mongi Saidani
The African Development Bank (AfDB) announced on Friday a loan of USD134 million to Tunisia to carry out the second phase of the Financial Sector Modernization Support Program (PAMSFI II).

AfDB Director of Financial Sector Development Stefan Nalletamby said that this program would improve the level of financial inclusion with forecasts of positive impact on youths who are owners of SMEs, as well as giant firms that can access the capital market more easily.

Central Bank Governor Marwan Abbasi had warned earlier this week that Tunisian banks are in for a tough year due to liquidity scarcity.

He said that local banks will seek in coming years to merge with each other to create banking institutions that can compete amid challenges.

Several financial experts and economists said that the liquidity scarcity represents a real crisis to the banking sector in which cash flow rate from the central bank rose from TND1billion (USD352 million) in 2010 to more than TND16 billion (around USD5.3 billion).

The scarcity is due to the rise in inflation, high cost of living and shortage of resources of income. Since 2010, the personal saving rate in the country dropped from 21 to 11 percent.

The economic growth rate in Tunisia is expected to stand at 2.9 percent in 2019 given current reforms and the rise in tourism, said a recent World Bank report. Growth rates of 3.4 percent and 3.6 percent are projected in 2020 and 2021 respectively, it added.

The World Bank relied in its report on optimism over the structural economic reforms currently implemented by Tunisian authorities, as well as the improvement of some economic indicators, particularly the tourism and export sectors.

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