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Home , Ben Arous, Central Bank of Tunisia, Guelma, Jendouba, Kebili, Tunisian dinar

148 – Tunisia ITALIE

S a r d a i g n e Italie M E R � Iles Baléares MEDITERRANEE Espagne

2006 At a Glance M E R � MEDITERRANEE Ile de la Galite S i c i l e Population (mn) El Djazaïr� Rass Ben SekaaBizerte 10.2 Cap Bougar'oûn Italie Alger Cap de Fer Golfe de� Boumerdès Cap Rosa Cap Bon Bejaïa SkikdaAnnaba Ariana Béja Tizi-Ouzou El Tarf Tunis Ile de � El Boulaida Italie Bouïra Mila Guelma Population Growth (annual %) 1.1 Aïn Defla Lemdiyya Stif Qacentina Bordj� ZaghouanGolfe de� Bou Arreridj� IEN Oum El� A TL A S TE LL Hammamet � Bouagui MALTE Djebel Refaa� Batna M'sila� 2170 m Monastir M 2328 m Tbessa Ile de� � fD Lampedusa� Official Language Italie E L'A Khenchla ÏL U RE 1712 m Rass Kaboudia N A S Mts DES� Jebel Chambi� El � D Sidi Bou Zid LA NEMENTCHA 1544 m O U N �S E D E I Beskra� ts R M A ILES KERKENNA H � A Tunisian (TND) S S 23 m A Golfe de� M E R � T L 40 m Gabès A Ile de Jerba Gabès MEDITERRANEE Médenine GDP (Current US$ bn) 30.2 El Wad� � –ar$bulus� JEFFARA GDP Growth (annual %) JEFFARA Misr$tah 5.8 Ghary$n R J$dº Yafran Wargla M N$lºt Golfe de� E A H L F ª S la Grande Syrt L J A B A L N A Ban= Wal=d E A L Mizdah A T GDP Per Capita (US$) 2,962 B I Surt N O D a i E M I d e R u O O LIBYE

G D A A L H A M FDI, net inflows (US$ mn) (2005) Ghad$mis M A R A 782.4 A R H E D N JABAL� A WADD*N R P L A T E A U H E R T D U N G T Wadd$n G T I IN External Debt (US$ bn) 17.5 U G D H E A U R T E T JABAL AS-SAWD* A P L

Sovereign Ratings 1189 m

External Debt/GDP (%) 57.8 A D E S E R T � L ALGERIE - H 1200 m Ad=r= A D E O U B A R I R ª Long Local ¡AM*DAT ZEGHERForeign J O A A L CPI Inflation (annual %) S Sabh$ 4.5 - IS D E A SA BH* S W TUNISIE Awb$r= A D Term CurrencyIlizi Currency Exports of goods and services (% of GDP) 48.2 Fitch GEOATLAS - A-Copyright1998 Graphi-OgreBBB Gross Official Reserves (US$ bn) 5.1 0 km 100 200 300 400 km S&P A BBB Gross Official Reserves (in months of imports) 4.7 UNDP HDI RANKING 87 Moody’s Baa2 Baa2 Source: AfDB, IMF, UNCTAD, UNDP, UN Population Division

1. Overview of Financial System regulating, monitoring and supervising the capital The financial system, while dominated by the banking markets. It oversees and controls the stock market, industry, also includes a capital markets sector. 24 brokerage companies, mutual funds and the The of Tunisia, Banque Centrale de clearing and settlement house. Twelve banks and one Tunisie (BCT), was established in 1958, and plays brokerage company are primary market dealers. a regulatory and supervisory role over banks and financial establishments which include enacting Bank and Non-Bank Financial Sector management rules and setting prudential standards. Twenty commercial banks, eight offshore banks It acts as the financial and fiscal agent of the and two merchant banks are operating in the government, and advises on economic and monetary country. Most commercial banks are also majority management issues. shareholders in leasing companies, and investment The primary objective of the in Tunisia funds. The government maintains a firm control is to maintain price stability. over the three largest banks (Banque Nationale de The BCT formulates and implements monetary l’Agriculture, Banque de l’Habitat, Société Tunisienne policies through open market operations and uses de Banque). the monetary base as operating target, and inflation The banking sector remains dominant, accounting for as intermediate operating target. over 90% of financing to the economy, but has been The capital markets have a marginal role in financing plagued with high levels of non-performing loans. the economy (7%) compared to the banking industry, The authorities are making efforts to strengthen the although there have been recent spurts of growth. sector by improving prudential practices. Reforms The Financial Markets Council, (Conseil du Marché have thus been initiated to ensure the stability of the T Financier-CMF), created in 1994, is responsible for banking system, and have led to the improvement of Tunisia – 149 the institutional framework, the adoption of a statutory to increase by 2009 the capital markets share of and prudential framework that meets with international the finance system to 20% and the number of listed banking standards, and a better response to demand companies to 100. for financing. More than 90% of bonds issued are government The insurance and pension sectors remain very securities. The number of corporate issuers is limited small. There are 18 local insurance firms and three although fiscal incentives have been offered to induce offshore insurance firms, and their penetration rate is listing. Bonds are usually listed on the stock exchange quite low (1.8% compared to a world average of 8%). and therefore regulated and supervised by the CMF. The insurance sector is expected to provide long- term resources for private investments. However, 2. Fixed Income Market insurance companies have not yet succeeded in Government Securities stimulating the development of national savings. In conducting its monetary policy, the central bank A stronger insurance sector with diversified uses a variety of financial instruments. It auctions product offerings would undoubtedly promote the securities every two weeks, using the Dutch auction development of capital markets by providing long system. The day count basis convention used for term resources. Approximately 9.5% of the investors treasury securities is actual / 365. Security types are in bond markets are insurance firms, and 50% are presented below: mutual funds (Organismes de Placement Collectif • Treasury bonds (Bons du Trésor Assimilables- en Valeurs Mobilières-OPCVM). There were 45 BTA), first launched in 1997 with maturities ranging mutual funds with total assets of USD 2,042 mn as of from 2-12 years. A total amount of TND 1,010 mn 31 December 2006. was issued in 2006. A Guarantee Fund has been established by a • Treasury bills (Bons du Trésor à Court Terme brokerage firm, Fonds de Garantie de Marché, to -BTCT). Maturities can vary from 13, 26 or 52 guarantee capital markets transactions in case weeks. A total amount of TND 485 mn was issued of non-payment. It protects stockbrokers against in 2006. counterparty risks. • A zero-coupon treasury bond was launched for the first time in 2006, with a 10-year maturity. The Capital Markets issue has been re-opened twice. The amount of The stock exchange, Bourse des Valeurs Mobilières the issue was TND 107 mn. de Tunis (BVMT), was established in 1969 and Foreign investors can only purchase up to 10% of privatized in 1994. It is regulated and supervised by the estimated semi-annual volume of treasury bonds the Financial Markets Council. Forty-eight companies, issued by the Government. They are not allowed to mostly from the finance industry, were listed on the invest in T-bills. Repatriation of principal and interest BVMT in 2006 with a combined market capitalization of is only allowed if the purchase was originally made USD 4,224 mn. Stocks from banks account for more by converting foreign currency into Tunisian . than 55% of total capitalization. The stock exchange In 2006, foreign-domiciled investment amounted to performance is measured by two indices: the BVMT 0.135% of BTA issuance (0.044% in 2005). index (created in 1990, and currently composed of 32 stocks) and a broader index, the Tunindex (created in 1998 and currently composed of 40 stocks). During the last decade, the role and efficiency of capital markets have been improved through various reforms. The objective of the Tunisian authorities is 150 – Tunisia

Tunisia Yield Curve (End 2006) International issuance 7.00

6.50 Tunisia has been rated investment grade since 1994 and was for a long period the only % 6.00 sovereign in Northern to access the 5.50 international capital markets. Tunisia has been 5.00 52 Wks 6 Y 7Y 10Y a regular issuer in both Samurai and Yankee Source: Financial Markets Council bonds, with maturities ranging from 2-30 years. Tunisia issues approximately EUR 500 mn per year. All borrowings in the international capital markets are conducted by the central bank.

Non-Central Government Issuance The share of non-government debt issues remains small compared to total market issuance. Over 42% of outstanding issues are from banks (TND 299 mn), 45% from leasing companies (TND 315 mn), 7% from the tourism sector (TND 50 mn), and 1.6% from the factoring sector (TND 11 mn). A total of eight corporate bonds were launched in 2006, for a total amount of TND 228 mn. Details of these issues are presented in the following table:

Corporate issues in 2006 Issuer Sector Amount in TND Coupon* Maturity Attijari Bank** Bank 80 000 000 4.82% 5 years Amen Bank Bank 40 000 000 TMM+1% 10 years Unifactor Factoring 10 000 000 6.50% or TMM+1% 5 years BTKD Bank 40 000 000 6.25% 5 years Tunisie Leasing Leasing 15 000 000 6.5% or TMM + 1% 5 years El Wifack Leasing Leasing 5 000 000 6.5% or TMM + 1% 5 years ATL Leasing 30 000 000 6.5% or TMM + 1% 7 years El Mouradi Hotel 8 000 000 6.50% 7 years * TMM is the monthly money market rate ** convertible bond

Secondary Market (STICODEVAM) is the clearing and settlement The secondary market is small. About TND 40 mn house, as well as the central depository for Tunisian Dinars in bond issues were traded in the securities. All brokers and banks are members of the secondary market in 2006. The primary market STICODEVAM. dealers are market makers for BTAs. 3. Foreign Exchange

Clearing and Settlement Starting in 1992, a flexible exchange rate regime The Société Tunisienne Interprofessionnelle pour has been established as a key element of the country’s T la Compensation et le Dépôt de Valeurs Mobilières macro-economic policy. The is pegged Tunisia – 151 to a basket composed of of the main trading . Forward rate agreements may be contracted for partners of Tunisia (mainly countries of the Euro zone). tenors of up to 12 months by local companies. It is adjusted in real effective terms to the fluctuations of these currencies, taking into consideration inflation 5. Investment Taxation differentials. The currency is freely quoted by Tunisian Income from bonds is taxed at a rate of 20%. Capital banks and is published on a daily basis by the central gains on bond sales are included in taxable income bank. The BCT can intervene in the market to stabilize for individuals, and are taxed at a rate of 30% for the currency. The TND follows a managed floating companies (excluding financial institutions and oil exchange rate regime and is officially convertible for companies). There is no capital gain tax on stock current account transactions. transactions.

6. Key Contacts TND per Unit of USD (Year End) • Banque Centrale de Tunisie

1.6 Mailing Address: B.P. 777-1080, Tunis, Tunisia Other Address: 25, rue Hédi 1.4 Nouira, Tunis, Tunisia 1.2 Tel: +216-71-254000/345588

1 Fax: +216-71-340615 0 3 4 5 6 0 1 02 0 0 0 0 E-mail: [email protected] 0 0 0 0 20 200 2 2 2 2 20 Web: http://www.bct.gov.tn/ Source: Bloomberg

• Bourse des Valeurs Mobilières de Tunis Cité Montplaisir, Tour Babel, 4. Derivatives Escalier E, 1073 Tunis, Tunisia Derivative activity mainly comprises foreign exchange Tél: +216-71-780288/793903 forwards, including cross currency forwards, and Fax: +216-71-789189 more recently, forward rate agreements and interest E-mail: [email protected] rate swaps. The volume of transactions is small but Web: www.bvmt.com.tn has been growing over the past years. The Tunisian market is divided into domestic and convertible Dinars • Conseil du Marché Financier and trades up to two years, with longer maturities 8, Rue du Mexique 1002, Tunis, Tunisia available upon request. Only offshore banks can Tel: +216-71-844500 transact convertible TND deposits. Fax: +216-71-848001/841809 Forward cover may be established for exporters E-mail: [email protected] (up to 12 months) and importers (up to 9 months). Web: www.cmf.org.tn Residents may also purchase 3-months, 6-months and Source: AfDB, Banque Centrale de Tunisie, 12-months foreign currency options in US dollars and Conseil du Marché Financier, Calyon