Tunisia's president wants central bank to be able to finance budget directly

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Tunisian President Kais Saied said on Friday that the law must be reviewed to allow the central bank to finance the budget directly by buying state bonds, a move the bank governor has previously warned against.

Critics of the proposal said an attempt to amend the 2016 law would threaten the bank's independence and indicated a likelihood of more state intervention in monetary policies, especially in light of the growing fiscal deficit, scarcity of financial resources, and difficulty in foreign borrowing.

On a visit to the bank, Saied said that a distinction must be made between the bank's role in combating inflation and its role in financing the budget, adding that the central bank is a public institution and not independent of the state. But Saied said that "the budget financing law which says that the bank cannot grant loan facilities or acquire bonds issued by the state should be developed".

 

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