Tunisian Banks Halt Long-Term Loans Amid Profit Concerns

Tunisian private banks have ceased issuing new loans exceeding 15 years following a government mandate that reduces borrowing costs, aiming to support households during the economic crisis. The new regulations, effective since January, allow borrowers to reduce interest rates by 50% on certain fixed-rate loans and compel banks to offer a set amount of interest-free loans. In response, banks have verbally instructed staff to halt long-term lending to safeguard profitability, particularly affecting access to housing loans. Fitch Ratings said last month that the new banking regulations could cut Tunisian banks’ combined annual profit by 11%. The government also raised corporate tax rate on bank profits to 40% from January 2025 from 35% previously, a move that will also weigh on profitability, according to Fitch. President Kais Saied has criticized banks for high profits and fees, intensifying tensions between the government and financial institutions. 

Reuters