Tunisia Plans First Sukuk Issuance in 2027 as Borrowing Needs Rise

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Tunisia is preparing to enter the Islamic capital markets in 2027, with plans to issue its first sukuk, a financing instrument structured to comply with Islamic financial principles. The proposed operation could reach a ceiling of 9 billion Tunisian dinars, equivalent to approximately $3 billion, under the draft Finance Bill for 2027.

The initiative comes as the government faces growing financing requirements and seeks to broaden the range of instruments available to fund public expenditure and manage its debt obligations. By introducing sukuk, Tunisian authorities are looking to diversify their financing options at a time when borrowing needs remain substantial.

New financing instrument amid mounting debt obligations

Under the draft legislation, the maximum ceiling for state guarantees covering loans or sukuk issuance is set at 9 billion dinars. The proposal also establishes a limit of 250 million dinars for Treasury loans extended to state-owned enterprises.

These provisions form part of a broader financing strategy as the government's estimated borrowing requirements are expected to reach 28.122 billion dinars in 2027, up from 27 billion dinars in 2026.

The planned sukuk issuance would offer Tunisia an additional route to raise funds. Unlike conventional bonds, sukuk are structured around assets, usufruct rights or other arrangements designed to meet the requirements of Islamic finance. Their precise structure and terms will determine how the proposed Tunisian instruments are implemented.

Debt repayments account for a significant share of borrowing needs

A substantial portion of Tunisia's projected financing requirements will be used to repay existing public debt. According to the draft Finance Bill, 13.307 billion dinars will be needed to cover principal repayments in 2027, representing approximately 47.3% of the total borrowing requirement.

Domestic debt repayments are expected to account for 6.823 billion dinars, while repayments on external debt are projected at 6.484 billion dinars.

The figures highlight the pressure created by maturing obligations, which absorb a considerable share of the resources the government must mobilise. Against this backdrop, expanding the range of financing instruments could provide greater flexibility, although the proposed sukuk issuance alone does not resolve the country's wider debt challenges.

State budget set to increase by 8.37%

Tunisia's proposed state budget for 2027 stands at 68.895 billion dinars, compared with 63.575 billion dinars under the 2026 Finance Law. This represents an increase of approximately 8.37%.

Meanwhile, authorised government revenue is projected at 54.280 billion dinars. The difference between planned expenditure and revenue points to a budget deficit of 14.615 billion dinars.

The gap underlines the government's need to secure additional financing while meeting its spending commitments and servicing existing liabilities. The introduction of sukuk is therefore part of a wider effort to identify funding sources capable of supporting the state's financial requirements.

Islamic finance enters Tunisia's funding strategy

The planned 2027 issuance would mark a new development in Tunisia's approach to public-sector financing. Sukuk can attract investors seeking Sharia-compliant financial products, potentially widening the pool of available capital beyond conventional debt markets.

However, the proposed ceiling should not be interpreted as confirmation that the full amount will necessarily be issued. The draft legislation sets out the intended framework, while the final structure, timing and conditions of the operation remain dependent on the government's implementation decisions.

As Tunisia prepares its 2027 budget, the first planned sukuk issuance will be one of the financing measures to watch. Its significance will depend not only on the amount ultimately raised, but also on investor demand, borrowing costs and the role the instrument eventually plays in the country's public-debt management strategy.