Tunisia: Fears government may pawn Olympic stadium

Tunisia: Fears government may pawn Olympic stadium
3 min read
30 October, 2015
Tunisia's minister of state property has rebuffed claims made by the country's finance minister that Rades Olympic stadium or other state-owned property could be used as collateral for state-issued bonds.
Rades Olympic Stadium was built for the 2001 Mediterranean Games [AFP]
Tunisia's famed Rades Stadium may be used as collateral for financial bonds, if the country's finance minister gets his way.

But there is inconsistency from political leaders in Tunis, as ministers scrap over methods to cut the budget deficit.

Finance Minister Salim Shaker said the country needs to raise 6.6 billion Tunisian dinars ($3.473 billion) of financing for next year's budget.

To cover the deficit, Shaker said that the government would rely on bonds issued against Tunisia's Rades Olympic Stadium.

The statement shocked Tunisians, particularly among economic circles, as it was the first time a government official has spoken of the possibility of using state-owned assets as collateral for bonds to finance budget spending.

Shaker said that the 60,000-seat arena would be sold in the form of bonds, with the possibility of retrieving state ownership of it through an agreement that would specify the date and cost of repurchase.
     The 60,000-seat arena would be sold in the form of bonds, with the possibility of retrieving state ownership

However, despite the media hype created by the finance minister's remarks, Hatem al-Euchi, the minister of state property, rebuffed his cabinet colleague and said that no public assets - including the stadium - would be used as security, calling the minister's plans "unfounded".

Euchi clarified his remarks by saying that a law to allow Islamic bonds (sukuk) has yet to be approved by parliament, which has the right to either accept or reject it. Euchi underscored that Islamic bonds do not require collateral - and their sole guarantor is the state treasury.

Euchi claimed that if parliament approves the law, public assets will still benefit the country, saying that the Islamic bonds system ensures the sovereignty of the state over its property.

Economic expert and parliamentarian Mohsen Hassan told al-Araby al-Jadeed that Shaker was "not right".

He said that it was true that the Tunsian government intends to issue bonds worth two billion dollars during 2016 against some assets, but that bonds are legally and technically different from mortgages.

Unlike conventional bond holders, investors who purchase Islamic bonds are usually rewarded with a share of the profits derived from an asset or business and may bear the share of the loss if the asset or venture does not perform well.

Tunisia is still dependent on foreign financing while it recovers from the instability that followed the 2011 popular revolution that ousted an autocratic regime there and moved the country into what is arguably the most successful democracy in the Arab world.

The state's budget for 2016 will need around a billion dollars of foreign funds, while other spending will be covered by issuing new bonds.

The government, through its finance minister, has frequently expressed its frustration at the failure of the international community to meet its commitments to support the collapsed Tunisian economy, particularly the G8 industrial nations which had promised during 2011 and 2015 summit meetings to help Tunisia overcome economic difficulties.

The Tunisian government is calling for an economic rescue programme worth $25 billion over five years to revive growth and save the country's economy.