Developments in the financial sector

The stockmarket, the Bourse de Tunis, has reacted to the political and economic uncertainty by beginning what may well be a long downward slide, reflecting weak investor confidence. The bourse has lost 12% of its value (as of March 9th) since the beginning of the year. It shut down in the first week of March, because of volatility in the market and the need to protect investors' interests, opening again on March 7th.

It seems almost certain that some foreign investors will be deterred by the political uncertainty in Tunisia. However, other investors have been determined to show their faith in Tunisia's long-term future. Promochimica Tunisia, an Italian-Tunisian-Libyan joint-venture pharmaceuticals firm, has announced that it is going ahead with the TD39m (US$27m) refit of its factory in Beja in the north-west. The high-tech factory will produce drug components for domestic use and for export to the region. The Italian embassy in Tunis, the Tunisian capital, said that 15 Italian enterprises out of 704 had been affected by looting and vandalism during the disturbances, but that Italian investors had not been discouraged. Eni, an Italian energy group, said in mid-February that it was planning to invest US$500m in exploration in Tunisia over the next three years. France Telecom, which owns 49% of Orange Tunisie, a mobile-phone operator, said that it wanted to pursue its investments in Tunisia.

The governor of Banque centrale de Tunisie (BCT, the central bank), Mustapha Kamel Nabli, said that an audit had shown that firms and individuals close to the former president, Zine el-Abidine Ben Ali, had taken about TD2.5bn (US$1.7bn) in loans from the public and private banks, equivalent to some 5% of all bank loans. Some 182 firms belonging to 23 groups were involved. However, four firms-a cement producer, Ciments de Carthage, two mobile-phone operators, Orange Tunisie and Tunisiana, and a sugar producer, Tunisie Sucre-accounted for TD1.3bn of the total. The activities of these 182 firms are under surveillance to ensure that no further funds are lost. Mr Nabli said that 71% of the total loans were secured and judged to be low risk. However, TD430m were unsecured and carried significant risks. He expressed concern over the potential impact of these loans upon the banks concerned, while at the same time expressing confidence in the capacity of these banks to manage the risk. The BCT also announced on February 21st that currency worth TD41m had been recovered from Mr Ben Ali's home. Some TD23m was in Tunisian dinars and TD19m in foreign currencies. Jewellery and other valuable goods worth some TD175m were also recovered according to some reports, which have not been confirmed by the government.