The exposure of banks to sovereign risk has risen to 20.7% of total assets in 2022, up from 19.2% the previous year, as disclosed by the Central Bank of Tunisia (BCT) in its annual report on banking supervision for the fiscal year 2022, published on Friday. This exposure is particularly evident among public banks, amounting to TND 18.9 billion, or 33% of the total assets of these banks. According to the BCT, the increased exposure of banks to sovereign risk is primarily attributed to the growing indebtedness of public enterprises and the financing of the budget deficit through domestic market financing. Indeed, the government raised TND 19 billion in the local market through Treasury bills and national bond issuance. Consequently, the reliance on refinancing from the BCT has intensified, reaching nearly TND 15 billion by the end of 2022, compared to TND 10 billion the previous year, marking a 48% increase. According to the BCT, the heightened reliance of the Treasury on domestic borrowing, amidst challen ges in mobilising external resources, has led to increased pressures on banking liquidity. The share of BCT refinancing in the total resources of banks has increased from 5.6% at the end of 2021 to 6.8% at the end of 2022, reflecting the growing financing needs of the government and public enterprises, which constitute 20.7% of the total assets of the banking sector. Efforts by the banking sector to collect deposits in dinars, with a growth rate of 10.1%, have helped alleviate liquidity pressures, particularly benefiting from the increase in the savings interest rate to 6.25%. Source: Agence Tunis Afrique Presse