Tunisia’s government said on Monday it had withdrawn the supplementary budget bill for 2020 that would have entailed the biggest deficit in decades, after both parliament and the central bank demanded it cut its spending plans.
Parliament’s finance committee last week rejected the bill which would have widened the fiscal deficit to 14 percent of GDP as the state stepped up spending by about $4 billion, largely to alleviate the impact of the coronavirus pandemic.
The government was counting on the central bank buying treasury bonds to finance this deficit. But the bank rejected the move saying it would boost inflation, cut reserves and weigh on the local currency, among other risks.
Tunisia’s economy has been crippled by high debt and deteriorating public services, made worse by the pandemic and a year of political turmoil.