The latest financial and monetary indicators disclosed by the Central Bank of Tunisia indicate a significant increase in the money supply. The money supply, including banknotes and coins, rose by 17.3% over a one-year period. As of early April, the amount of money in circulation has now surpassed 28.2 billion dinars, marking a notable difference compared with the 24 billion dinars recorded at the same time last year.
This phenomenon is not mysterious in itself, but it is probably the unprecedented speed at which the volume of banknotes in circulation is increasing in the economy that is problematic.
Indeed, the growth of the money supply in circulation in the economy is largely associated with the radical overhaul of checks, as well as the expanding informal economy that consumes a substantial portion of liquidity.
The informal sector today accounts for more than 50% of GDP, thereby depriving the government of essential tax revenues. It is essential to clean up the enormous amount of informal money in order to revive the economy.
It is true that Tunisians still have a long way to go before joining the peoples who are about to say goodbye to cash. However, the Central Bank of Tunisia (BCT), which in recent years has undertaken an ambitious program to modernize the national payments infrastructure as part of its decashing strategy and which has always highlighted the explosive growth of electronic payments, is faced with the paradox of a spectacular increase in the volume of banknotes and money in circulation in the Tunisian economy.
One could say that the state is trying to address these shortcomings through the law on the fight against financial exclusion, which is awaiting entry into force. It is undeniable that this exclusion of a large portion of the population serves the interests of certain groups who seek to slow structured and contemporary monetary inclusion.
It is essential to clean up the enormous amount of informal money circulating around Tunisia to revive the economy and weaken the criminal networks that have prospered after the collapse of the state’s authority. The spread of mafia-type activities is a growing threat in Tunisia, and the attempts by senior officials to confuse authentic demonstrations with criminal activities are fallacious. Tunisia must master the informal sector and ensure that the state does not lose about half of the levies owed to it by its citizens.
It is therefore essential that the state intensify its involvement in the fight against this exclusion by promoting cashless transactions, in order to catch up with Tunisia’s lag behind the rapid global move toward monetary digitization.
Amine BEN GAMRA
Chartered Accountant
Statutory Auditor
Member of the Order of Tunisian Chartered Accountants
