Tunisia has begun to use its strategic reserves of petroleum products as it faces a “weekly war” to meet local demand amid the country's worst economic and financial crisis, exacerbated by a rise in global energy and commodity prices.
The North African country is hoping its reserves can bridge the supply shortfall, Rachid Ben Dali, director general of the Hydrocarbons Department at the Ministry of Energy, told state news agency Tunis Afrique Presse on Wednesday.
“This situation is very delicate and represents a weekly war,” Mr Ben Dali said, referring to the scarcity of oil supplies.
The state treasury is under pressure due to its current financial situation, he said.
Tunisia is facing mounting debt, a widening fiscal deficit and high inflation, in addition to political turmoil.
It is seeking $4 billion in assistance from the International Monetary Fund to help it stabilise its economy. Earlier this month, the lender signalled its readiness to engage in discussions with the North African country but called on Tunis to initiate reforms derailed by political instability.
The country, which is struggling with a steep rise in food prices, has struggled to pay for grain imports. The World Bankthis week approved a $130 million loan to help the country pay for wheat imports and buy barley for livestock.
Mr Ben Dali said that the current consumption of petroleum products in the country was about 90,000 barrels per day, while the production capacity of the Tunisian Company for Refining Industries was 32,000 bpd.
The estimated shortfall of 58,000 bpd is being covered by the strategic reserves.
Tunisian laws on petroleum products require operators to build, hold and maintain reserve stocks of petroleum products — gas and petrol — for 60 days while for other products, the minimum time frame is 30 days, he said.
“Because of the significant international demand for petroleum products, the sellers of these materials are currently requesting immediate payment … despite the country's financial situation,” he said.
That political instability and deteriorating economy led Fitch Ratings to cut Tunisia’s rating in March to “CCC”, from “B-", seven notches below investment grade and on par with El Salvador and Ethiopia.
The rating downgrade denotes a very high level of default risk relative to other issuers or obligations, mainly due to heightened fiscal and external liquidity threats.
Tunisia’s economic outlook remains highly uncertain as the economic rebound in 2021 was relatively moderate.
The IMF expects Tunisia's economy to grow 2.2 per cent this year and inflation to rise to 7.7 per cent. The World Bank estimates GDP growth of 3 per cent this year.
Tunisia’s government debt rose to 79.2 per cent of GDP in 2021, according to government estimates, lower than the 85.6 per cent initially projected in the 2021 budget.
However, the debt trajectory moving forward is less favourable, given the expected widening of the deficit in 2022 and worsening of the real growth interest rate differential, according to Tellimer Research, which expects central government debt to rise sharply to about 90 per cent of GDP this year.