Tunisia: The Paradox of Record Bank Liquidity and Declining Credit to the Productive Sector

Tunisia's banking sector is facing a paradoxical situation: private banks are awash in liquidity yet are severely restricting credit to the productive sector. This "sub-intermediation" phenomenon, detailed in an analysis by the Arab Institute of Business Leaders (IACE), poses a significant threat to the country's long-term economic growth.

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The credit-to-deposit ratio has fallen to 96.2% in August 2025, a major fracture opposes public institutions to private banks.

While the overall credit-to-deposit ratio has fallen, a stark divide exists between public and private banks. Public banks maintain high lending ratios, largely supporting state entities. In contrast, the three largest private banks have seen their ratios plummet to a historically low 67.4%. This reluctance to lend is not due to a lack of funds; their liquidity coverage ratio (LCR) stands well above the regulatory threshold at 138.3% by the end of 2025.

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The LCR of these banks culminates at 138.3% at the end of 2025, well beyond the regulatory threshold of 100%.

The consequences are tangible: credit to private industrial companies actually decreased by 0.3% in 2024. IACE identifies three key reasons for this paralysis. Firstly, massive state financing, including interest-free loans, indirectly drains the Central Bank of Tunisia's refinancing channels. Secondly, a pronounced risk aversion leads banks to demand excessive collateral, effectively excluding small and medium-sized enterprises (SMEs) from accessing finance in an environment of sluggish growth.

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The outstanding credit to private industrial companies even fell by 0.3% in 2024.

Thirdly, banks are opting for the "comfort" of high intermediation margins, around 4%. They achieve this by investing in Treasury bonds or by charging prohibitive interest rates, approximately 11%, to businesses, far exceeding the central bank's policy rate of around 7%. This credit contraction not only stifles real economic activity but also acts as a mechanical brake on inflation, which has already receded to 5.3% in 2025 due to decreased overall demand. IACE urges the Central Bank to pressure private banks to modernize their risk management and make risk assessment a more agile tool for facilitating finance to productive sectors, rather than an insurmountable barrier.

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Banks prefer the comfort of high intermediation margins (around 4%), turning to Treasury Bonds or applying prohibitive rates (around 11%) to companies, against a TMM located around 7%.