Following the press report published last week in “Al Ghad” newspaper on the government’s success in curbing the growth of debt interest costs, it becomes necessary to shift the discussion from the question of how large the debt is to a more important question: how is it managed, and how much does its financial portfolio cost the Treasury annually?
Public debt cannot be viewed as an absolute number, but rather as a financial portfolio with maturities, costs, interest, risks, and funding sources. Therefore, the success of debt management is measured not only by the size of borrowing, but by the state’s ability to improve the structure of this portfolio and reduce its cost and risk over the long term.
Recent figures illustrate the importance of this shift in how debt is viewed. The annual increase in interest on domestic and external loans fell from 396 million dinars in 2024 to 90.9 million dinars in 2025, while the growth rate of the interest bill dropped from 22.6 percent to 4.2 percent. This does not mean the interest bill itself declined, as it actually rose from about 2.15 billion dinars to 2.24 billion. Rather, it means the acceleration of its growth was clearly curbed.
The improvement is even more pronounced in domestic debt, where the interest growth rate fell from 21.3 percent in 2024 to 2.5 percent in 2025, and the annual increase dropped from 223.7 million dinars to just 32.4 million. In external debt, the interest growth rate fell from 24.4 percent to 6.7 percent, and the annual increase dropped from 172.3 million dinars to 58.5 million.
These results provide a practical foundation for moving toward a national debt management strategy that goes beyond handling each maturity separately, and instead sets a clear path for the coming years.
The first pillar of this strategy is continuing to curb the growth of debt interest by replacing high cost loans with concessional, long term financing whenever available. The experience of retiring one billion dollars in Eurobonds in June 2025, through a package of concessional financing that saved the Treasury, according to the government’s announcement, about 40 million dollars annually, offers a model of what active management of the debt portfolio can achieve.
The second pillar is minimizing borrowing to finance current expenditures as much as possible, because borrowing that does not raise the economy’s productive capacity keeps the need for financing alive in subsequent years. Here, borrowing should be linked more closely to capital expenditures and projects capable of generating direct or indirect economic returns.
The third pillar is reducing the deficit and the need for borrowing at its root. Improving financing terms does not eliminate the principal of the debt, and a concessional loan, however low its interest rate, remains a financial obligation. Debt management therefore represents only half of the equation, while the other half lies in improving spending efficiency and boosting domestic revenues without increasing the burden on economic activity.
The decisive factor remains growth, because an economy that grows at higher rates and expands its base of production, exports, and investment is able to generate greater revenues and gradually ease the burden of debt relative to the size of the economy.
What is needed today is to build on the improvement achieved in managing the cost of debt and turn it into sustainable institutional reform, through a long term framework that defines borrowing priorities, costs, maturities, and sources, reduces refinancing risks, and links debt management to the path of reform and growth.
Only then does dealing with debt become a policy of the state rather than a decision of a single government. The true measure is not merely how much the state borrows, but why it borrows, at what cost, for what term, and how it uses this financing in a way that makes the economy more capable, in the future, of bearing debt and reducing the need for it.
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