The Tunisian Ministry of Finance has submitted its report on the state's budget execution to the Parliament, revealing a prioritization of debt servicing over investments. As of June 2026, the ministry has paid 3,733 million dinars (MDT) in debt interest, accounting for 15% of total expenditures. This represents a significant portion of the budget, with debt interest and principal repayment totaling 10,469 MDT in the first six months.
The report highlights a notable disparity in budget allocation, with debt interest being executed at 51.8%, surpassing the theoretical 50% mark. In contrast, investments have only been executed at 21.2%, with a total value of 1,664.7 MDT. The ministry attributes the low investment expenditure to the "specificity" of development spending, which is expected to concentrate in the second semester. However, this explanation has its limitations, as it would require an ambitious 9,400 MDT in development spending from July to December.
On the revenue side, the ministry reports a 2.4% increase in fiscal revenues, reaching 23,188 MDT. However, this growth is lower than the inflation rate of 5.3% recorded in June. A breakdown of the revenue shows that indirect taxes, primarily paid by consumers, have risen by 7.8% to 13,352 MDT. In contrast, direct taxes have declined by 4.1% to 9,836 MDT, which may be attributed to a calendar shift in tax payments.
The report also reveals a shortfall in revenue execution, with a rate of 48.5%, falling short of the theoretical 50% mark. This translates to a gap of approximately 700 MDT. Non-fiscal revenues and donations have been executed at a mere 21%, totaling 1,007 MDT. The report does not provide information on how this shortfall will be addressed.
A concerning aspect of the report is the lack of transparency regarding the financing of the budget. The document does not provide details on domestic or foreign borrowing, nor does it mention any facilities from the Central Bank of Tunisia (BCT). The report only mentions that the principal repayment is divided between 4,151 MDT of domestic debt and 2,586 MDT of foreign debt.
The report is expected to inform the Parliament's examination of the 2027 budget project. However, the project itself is based on a single assumption: a Brent oil price of $75-80 per barrel. No growth rate, deficit target, or debt level is mentioned. The 2026 budget was based on a $63.3 oil price, while the actual average price in the first semester was $92.6.
The Tunisian government's budget priorities are clear: servicing debt and maintaining financial discipline. However, the report's silence on financing sources raises concerns about the sustainability of this approach. The 2027 budget project will need to address these concerns and provide a more comprehensive outlook on the country's financial situation.
Key points
- The Tunisian government has prioritized debt servicing, with a 51.8% execution rate, while investments lag at 21.2%.
- The report reveals a decline in direct taxes, which have fallen by 4.1% to 9,836 MDT.
- The financing of the budget remains unclear, with no information provided on domestic or foreign borrowing.
