A new law that establishes legal procedures for a bank’s possible insolvency, adopted by the parliament on May 12,  raised concerns amongst opposition parties who say that such unprecedented measures could worsen the country’s severe economic and financial crisis. 

Critics of the new banking act believe that its ratification was a “hasty” move imposed upon the country by the International Monetary Fund (IMF), which reached a preliminary deal this past April to assist Tunisia with a loan program worth about US $2.9 billion.

A new law that establishes legal procedures for a bank’s possible insolvency, adopted by the parliament on May 12,  raised concerns amongst opposition parties who say that such unprecedented measures could worsen the country’s severe economic and financial crisis. 

Critics of the new banking act believe that its ratification was a “hasty” move imposed upon the country by the International Monetary Fund (IMF), which reached a preliminary deal this past April to assist Tunisia with a loan program worth about US $2.9 billion.

Tunisian economist Ezzedine said the banking bill was hastily drafted and introduced without involving enough expert economists. He also stressed that the new act does not guarantee the establishment of solid banking institutions capable of surviving financial difficulties or supporting institutional activities.

“Introducing measures allowing for a bank’s insolvency would further increase the country’s rapid and frequent resort to foreign loans which would in turn deepen its financial crisis,” Saidan underlined.

Saidan also explained that the possible collapse and insolvency of banking institutions will drive the entire country into bankruptcy since the banking sector is the primary financier of the country’s economy. Banks’ insolvency would have serious implications on the Tunisian banking system and would have direct dangerous effects on the economic institutions, citizens and national economy, he stressed.

Citizens’ fears credible?

Moungi Rahoui of the leftist Popular Front, who made public statements declaring the danger to regular citizens’ savings under the new law, however, these concerns were soon contained after revising the banks’ insolvency chapter to include articles regulating guidelines for compensating customers. Such guidelines include compensating staff within a one-month period  followed by compensating depositors, on the condition that their accounts do not exceed 60,000 dinars (about US $28,000).

Member of the National Commission of Accountants Anis Wahabi said banks are very susceptible to bankruptcy since they could encounter difficulties just like any other economic institution. However, he stressed, the Tunisian Central Bank plays a major role in controlling other banks not only in terms of their legal compliance but also in terms of following up their financial solidity and risk management means.

Wahabi also criticized Ayari’s statements on the insolvency of two Tunisian banks. These statements affected the public opinion as well as the financial arena especially the banks listed on the stock exchange, he said and added that avoiding to identify these two banks was an ‘irresponsible’ act that confused the public opinion which expanded the circle of doubt to include all banks without exception.

One of the banks is believed to be the French Bank of Tunisia (BFT) which has been facing financial difficulties since a decade. The other bank is the Tunisian Foreign Bank which operates in France and is threatened with license withdrawal due to suspicions of malpractice.

Additionally, a large number of banking institutions in Tunisia, including three public sector banks, have been struggling with financial difficulties since the 2011 revolution due to failure to retrieve the outstanding loans from the family of former President Ben Ali.