The International Monetary Fund and the Tunisian government have reached an agreement in principle to release a $1.9 billion loan as the North African country faces serious economic and political challenges.
As part of the four-year deal, Tunisia’s government – hit by growing public protests at home amid food and fuel shortages – has pledged to undertake a “comprehensive economic reform programme” as and as it gets access to the money, according to an IMF statement on Saturday. .
These reforms would include measures to extend taxation to the informal economy, ensure greater public sector transparency, and phase out “unnecessary price subsidies” while expanding social safety nets.
The agreement in principle, reached between IMF staff and the Tunisian authorities meeting this week in Washington, still requires the approval of the IMF’s board of directors, which is due to discuss the matter in December.
Earlier Saturday, thousands of people took to the streets of Tunis to protest against the policies of President Kais Saied, who seized power last year in what critics call a coup, and which many accuse of the country’s economic crisis.
Pressures from both the deteriorating global economic environment and high commodity prices “weigh heavily on the Tunisian economy, adding to underlying structural weaknesses in a challenging socio-economic environment”, Chris Geiregat said. and Brett Rayner, IMF staff members, in a statement.
They led the IMF team that met with Tunisian officials in Washington this week.
The resulting agreement “will support the authorities’ economic reform agenda to restore Tunisia’s external and fiscal stability, strengthen social protection and promote higher, greener and inclusive growth”, the statement said, while providing a short-term slowdown in growth.
The release of funds should relieve the heavily indebted country, which is no longer able to borrow on international markets.
Tunisia’s budget deficit, which is rising sharply, is expected to exceed 9% of GDP this year.
Meanwhile, year-on-year inflation hit 9.1% in September, while food and fuel prices rose further, up 13% from the same period in 2021. — AFP