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The World Bank: Financial flows to Tunisia decreased by 26%, amid rise in debt

October 13, 2021 at 2:29 pm

World Bank headquarters May 8, 2007 in Washington, DC [Win McNamee/Getty Images]

On Tuesday, 12 October 2021, the World Bank said that governments around the world have responded to the Covid-19 pandemic by launching massive tax, monetary and fiscal stimulus packages.

The World Bank pointed out that, while these measures were aimed at dealing with the health emergency and mitigating the impact of the pandemic on the poorest and most needy groups, and putting countries on the path to recovery, the debt burden arising from it in low-income countries in the world rose by 12 percent, to reach a record level of $860 billion in 2020.

In this context, the World Bank highlighted that the external financial flows to Tunisia decreased, in general, by 26 percent from the level of 2019 to reach $600 million, due to the sharp decline in investments in the service sectors—tourism, in particular—in addition to the rise of Tunisia’s total external debt to $41.038 billion, equivalent to 118 billion dinars, during 2020.

This came in the new report, issued on Tuesday by the World Bank, under the title “International Debt Statistics 2022”, an annual publication that the World Bank issues that include external debt statistics and analysis for the 123 low- and middle-income countries that report to the Bank’s debt reporting system.

The Bank also highlighted that many low- and middle-income countries were already in a fragile situation in 2020 before the outbreak of the pandemic, seeing the slowdown in economic growth and the arrival of public and external debt to high levels and that the external debt stocks of low- and middle-income countries combined increased by 5.3% in 2020 to reach $8.7 trillion.

The report noted that a comprehensive approach to debt management is necessary to help low- and middle-income countries assess and reduce risks and bring debt to sustainable levels.

READ: $16.6bn in financing to Middle East economies

Commenting on this, David Malpass, President of the World Bank Group, said: “We need a comprehensive approach to deal with the debt problem, including debt reduction, accelerated restructuring, and improved transparency. Maintaining debt levels within sustainable limits is essential to the recovery of the economy and reducing poverty.”

The report further shows that the decline in debt indicators has been widespread, affecting countries in all regions. The report also showed that the rise in external indebtedness in all low- and middle-income countries exceeded the total national income and the growth of exports.

It added that the ratio of foreign debt to the total national income of low- and middle-income countries (excluding China) increased to 42 percent in 2020 from 37 percent in 2019 and that the ratio of their debts to exports rose to 154 percent in 2020 compared to 126 percent in 2019.

Is Tunsia's President Kais Saied ruining democracy?- Cartoon [Sabaaneh/Middle East Monitor]

Is Tunsia’s President Kais Saied ruining democracy?- Cartoon [Sabaaneh/Middle East Monitor]