Alamy via Reuters
Limited credit alternative
Will cut bank profits by 14%
Economy to grow only 1%
Reforms aimed at reducing Tunisians’ usage of cheques and thereby cutting consumer debt are having a negative impact on the country’s overall economic growth, according to economists.
Cheques had until recently been an important tool for both payments and credit in Tunisia, but in February new laws aimed at strengthening the ailing Tunisian economy and reducing consumer debt overhauled this system.
Now small companies, which have relied heavily on cheque-based installment sales, are facing a sharp decline in revenues because of reduced consumer demand, while many small businesses lack access to financing.
Without an expansion of viable credit alternatives, these changes could “prolong economic stagnation and increase business failures,” independent economist Ali Metwally told AGBI.
The reforms reduced repayment time to seven days, introduced more security around cheques, and enforced a 30,000 Tunisian dinar ($9,700) limit on the amount that can be written into a chequebook.
“Cheques in Tunisia are not just a method of payment, they’re also a method of short-term financing and delayed payments,” Sahar Mechmech, manager at the Washington-based Tahrir Institute for Middle East Policy told AGBI.
A farmer, for example, may pay for seeds and fertilisers through a cheque on a trust basis, and ask the supplier not to cash it until he gets paid for his crops.
Despite problems such as uncashed cheques, difficulty in recovering lost money, and a lack of transparency on the solvency of issuers, cheques were the preferred form of short-term financing in the Tunisian economy, Mechmech said.
Fresh banking laws aimed at plugging the chequebook credit gap also have consequences.
One regulation, set to be enforced soon, requires banks to grant interest-free loans totalling 8 percent of their 2024 net income to micro, small and medium-sized enterprises.
That will cost Tunisia’s 10 largest banks around TND 50 million ($16 million), Fitch Ratings research predicts. Another law, aimed at reducing consumer debt, forced banks to halve interest rates on certain loans issued between 2022 and 2024, costing them TND 170 million ($55 million) in 2025.
Fitch said it expected the two regulations to reduce the 10 largest banks’ 2025 net profit by about 14 percent. The agency expects Tunisia’s economy to grow by only 1 percent in 2025.
Metwally says the combination of the chequebook ban and banking reforms highlight the “extreme fiscal pressure” Tunisia is under, which is leading to “unconventional, interventionist measures that diverge from regional norms.”
