Private banks in Tunisia have quietly stopped issuing new loans with terms longer than 15 years, in response to new lending regulations that are squeezing profit margins, banking officials told Reuters.
A branch of Amen Bank in Hammamet © Mena Today
Private banks in Tunisia have quietly stopped issuing new loans with terms longer than 15 years, in response to new lending regulations that are squeezing profit margins, banking officials told Reuters.
The move, though unofficial, risks further complicating access to housing loans for Tunisians amid ongoing economic turmoil.
President Kais Saied’s administration introduced sweeping lending reforms in January aimed at easing financial pressure on households.
The new law mandates a 50% reduction in interest rates on certain fixed-rate loans and requires banks to provide a quota of interest-free credit. However, banks say the changes are financially unsustainable.
“We’ve been given verbal instructions to halt all new fixed-term loans beyond 15 years,” said a senior executive at a private bank, adding that the directive was kept off the record to avoid regulatory scrutiny.
Executives at two other major banks confirmed receiving similar orders, citing the growing risks tied to lower lending margins and rising corporate tax rates.
Tunisia's private banking sector, which includes 19 banks such as BIAT and Attijari Bank, is facing mounting pressure. Fitch Ratings warned in March that the regulatory changes could slash combined annual profits by 11%. Adding to the strain, the government has increased the corporate tax on bank profits from 35% to 40%, effective January 2025.
According to Mohamed Souilem, a financial analyst and former official at Tunisia’s central bank, the banking sector's pullback from long-term lending is a direct reaction to the regulatory clampdown. “This will have severe consequences on housing loan access and may further destabilize an already fragile banking system,” he said.
President Saied, grappling with a slow economy and growing public discontent—fueled in part by a migration crisis and shortages of basic goods—has publicly criticized the banking sector. He accused banks of prioritizing profits over public service and called for deeper financial sector reforms.
Among those reforms is a controversial proposal to amend the central bank’s charter, allowing the government to borrow directly from it, bypassing private banks. Economists warn such a move could increase inflation and deepen fiscal instability.
Tunisia's economy has struggled to grow, recording less than 1.4% GDP growth over the past year. The country continues to face fiscal strain, leading to recurrent shortages of sugar, rice, and coffee—further aggravating an already tense social and economic climate.
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