Cash-Strapped Tunisia Exhales With Delayed IMF Loan on the Way

TUNIS (Capital Markets in Africa) – Tunisia is readying for the next installment of its International Monetary Fund loan after months of delay, a sorely needed cash injection for a North African nation whose government is struggling to cut costs, curb inflation and boost economic growth.

The tranche of around $250 million, part of the $2.9 billion loan Tunisia secured in 2016, is expected to be paid out after the fund conducts its sixth review and its board meets by early June. The IMF said in a statement late Wednesday that it “will help unlock additional financing from Tunisia’s other external partners.” The government plans to tap international financial markets, according to central bank Governor Marouane El Abassi.

Payment had been delayed as the government of the nation that gave birth to the 2011 Arab Spring uprisings was locked in battle with powerful labor unions over pay increases for public-sector workers.

The dispute and the way it played out spoke to the gains in democracy in Tunisia since the 2011 revolt. But the accomplishments have largely stopped there, with the government unable to cure a litany of ills ranging from the impact of militant attacks on tourism to weak growth and the dearth of foreign investment. What’s more, annual inflation is stuck at over 7 percent, youth unemployment hovers around 30 percent and international reserves cover just 84 days of imports.

The fund said that meetings with Tunisian officials resulted in agreements on “on policy and reform measures to ensure that the budget deficit target” of 3.9 percent of gross domestic product, before grants, for 2019 “can be met to contain the high debt and elevated financing needs.”

While Tunisian officials will work on ensuring that the changes don’t adversely impact the neediest segments of the population, the focus of the economic measures will also be on monetary and exchange-rate policies aimed at reducing inflation and cutting the current-account deficit, the IMF said.

Source: Bloomberg Business News