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Tunisia May Sell Debt to Qatar, Needs $5 Billion Financing

Tunisian Central Bank Governor Mustapha Kamel Nabli said his country may sell $500 million in dollar-denominated treasury bills to Qatar as it seeks to secure about $5 billion in external financing this year.

Tunisia, the birthplace of the so-called Arab Spring, will also rely on assistance from the World Bank, the African Development Bank and the European Investment Bank to help plug a balance of payments deficit of about 7 percent of economic output this year, Nabli said today in an interview at the World Economic Forum in Davos, Switzerland.

“It’s a fragile situation,” he said. “We have a lot of concerns. We need growth to come back. We need employment to come back.”

One year after its popular uprising, partly triggered by unemployment, Tunisia has an unemployment rate that Nabli said was more than 18 percent. While he said he “hopes” economic growth will accelerate to 3 to 4.5 percent this year, the pace of growth will only lead to “weak” job creation, he said.

Tunisia will repay its 7.375 percent $650 million dollar bond due April 2012, Nabli said, as it seeks to “avoid” selling international bonds after rating companies lowered its credit worthiness following the revolt.

The yield on the bonds fell 36 basis points, or 0.36 percentage point, this year to 3.37 percent today, according to data compiled by Bloomberg. Tunisia’s credit rating was lowered two levels at Standard & Poor’s in March 2011 to BBB-, the lowest investment grade.

“The international markets aren’t in a good situation right now,” Nabli said. “Our rating has been downgraded, so the cost for us will be relatively high, so if we can avoid it, it would be better.”

Instead, the Qatari government may buy $500 million in a “private placement” of dollar-denominated treasury bills, Nabli said. Asked when he expects the sale, he said: “In two to three months.”

Tunisia relies on tourism, foreign direct investment and exports to Europe for economic growth, which ground to halt last year, according to International Monetary Fund forecasts.

“There is a lot of uncertainty on the growth rate,” Nabli said. “We know that the European economy is not doing so well, which is critical for our exports, our tourism. We know that International foreign direct investment isn’t very active these days. We have headwinds in front of us.”

To contact the reporter on this story: Alaa Shahine in Davos, Switzerland at asalha@bloomberg.net

To contact the editor responsible for this story: John Fraher at jfraher@bloomberg.net

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